SPE International: London Section 30 th September 2014, London. - PowerPoint PPT Presentation

Decom North Sea SPE International: London Section 30 th September 2014, London. Nigel Jenkins Chief Executive Decom North Sea

Today’s discussion  State of play; a brief update  Challenges & opportunities  The Wood Review  Decom North Sea Leadership  Conclusions courtesy Peterson SBS / Veolia

since 2010 - the industry forum for decommissioning  not-for-profit organisation, privately funded  c230 member companies from Denmark, Germany, Norway, The Netherlands, the UK and USA  membership across the whole sector:- operators (large & small), contractors, marine, subsea, onshore disposal, wells P&A, legal, environmental, specialist services, consultants etc

Decom North Sea strategic and regional partnerships stimulating collaboration in decommissioning Norway Caithness & Dounreay Inverness & Invergord on Denmar k Tyneside & Teesside SNS / Gt The Yarmout Netherlan h ds Belgiu Londo m n Franc e

Decom North Sea’s role in the industry  stimulating a vibrant, efficient and cost effective industry  promoting stakeholder collaboration, innovation and the sharing of knowledge and learning  developing models, templates and guidelines for the decommissioning sector  responding to economic and technical challenges facing the sector  researching other sectors for synergies and experience (GoM, nuclear, salvage)

State of Play: General situation in UK Continental Shelf  £14.4 billion CAPEX in 2013 with forecast of £13 billion in 2014  £39 billion of capital investment approved and under development however:-  production in UKCS has fallen for 11 straight years (38% over the past 3 years)  concerns over unplanned shutdowns, reliability of equipment etc.  operating costs rising – produced water, energy consumption, asset integrity, etc.  production efficiency falling  Some operating assets are more than 30 years old resulting in several assets nearing CoP and decommissioning

State of Play: Regulations for offshore decommissioning The Convention for the Protection of the marine Environment of the north east Atlantic - ‘OSPAR Convention‘. Signed and ratified by all Contracting Parties to the original Oslo or Paris Conventions (Belgium, Denmark, the European Union, France, Germany, Iceland, Ireland, the Netherlands, Norway, Portugal, Spain, Sweden and the United Kingdom and Northern Ireland) and by Luxembourg and Switzerland.

Sate of Play: What has been decommissioned so far? £m (Real Potential Decommissioning Expenditure 2011) $70/bbl and 40p/therm Hurdle : Real NPV @ 10% / Devex @ 10% > 0.3 3000 • 3 installations with large concrete substructures 2000 • 1 with large steel jacket (> 10,000 tonnes) 1000 • 15 other steel jackets • 7 floating production systems 0 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 • 2 subsea production systems Cns Irish Sea MF NNS SNS WoS • 10 other facilities (loading buoys, flares etc) • 16 pipeline programmes 10% of installations decommissioned to date

State of Play: Infrastructure still in place £m (Real Potential Decommissioning Expenditure 2011) $70/bbl and 40p/therm Hurdle : Real NPV @ 10% / Devex @ 10% > 0.3 3000 • 8 installations with large concrete 2000 substructures 1000 • 32 with large steel jackets (> 10,000 0 tonnes) 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 • 244 other steel jackets Cns Irish Sea MF NNS SNS WoS • 311 subsea production systems • 30 floating production systems • 3,300 pipelines – around 25,000 kms • <5,000 wells • <200 cuttings piles Total expenditure until 2040 – c£40.6 billion

subsea infrastructure  wells P&A  manifolds  flowlines  umbilicals  mid height arches  protection covers  mooring systems

Summary of Forecast Activity Operators current expectations are being outlined, however scopes are sometimes not firm and still subject to change/approval. Brian Nixon, Chief Executive

Steel Piled Jacket (SPJ) structures CNR International – Murchison Platform  programme to DECC June 2013 – CoP in 2014  topsides - 24,548 tonnes – 26 modules  steel jacket - 24,640 tonnes (excl piles)  water depth 156m – 150 km NE of Shetland  33 platform & subsea wells  drill cuttings pile – degrade naturally in time  export pipeline – remedial rock placement  infield pipelines & branches - removed

Schiehallion/Loyal  regulatory approval obtained in June 2013 £m (Real Potential Decommissioning Expenditure 2011) $70/bbl and 40p/therm  offshore removal & onshore disposal is underway of subsea 5000 Hurdle : Real NPV @ 10% / Devex @ 10% > 0.3 pipelines and production flowlines etc. Don 0 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042  expected start date of 2015/16 – subsea flowlines, injection Cns Irish Sea MF NNS SNS WoS equipment, control umbilicals and manifolds etc. Miller  removal of ~28,000 tonnes topsides scheduled for 2016  removal of ~18,000 tonnes six leg jacket scheduled for 2017  overall completion by end 2018

Activity in Central & Northern North Sea Brae Field Decommissioning Programme • Three fixed steel jacket platforms (Brae Alpha, Brae Bravo & East Brae) • 85 platform drilled wells to P&A • 87kT topsides to remove DECC Bar Chart in Here • 33kT sub-structures to remove • Three subsea tiebacks (Central Brae, West Brae & Braemar) • 19 subsea drilled wells to P&A • 1000 T manifolds, templates and structures to remove • 75 km flowlines, 38 km umbilicals • 195 km of pipelines, 57 km submarine cables • Decommissioning Activities • Project team established • Compliance activities on-going • Studies in support of Decommissioning Programme • Drill cuttings piles survey and sampling • Brae Alpha drilling rig reactivated – completion Q1 2014 • Pilot well plug and abandonment to commence (3 – 4 wells) – completion Q1 2015 • Brae Bravo / East Brae rig recertification study to commence Q1 2015

Activity in Central & Northern North Sea  BRENT Field:  4 Platforms (Alpha, Bravo, Charlie, Delta), 3GBS, 1 Steel Jacket.  PreDecom Programme Study being finalised, robust stakeholder engagement ongoing.  Finalising DECC Submission.  P&A complete on Delta, ongoing on Bravo, 57 of 142 complete.  Engineering Down Delta prior to single lift  Onshore working closely with Able, Quay Upgrading ongoing  Contracts with:  Allseas (lift), Able (onshore disposal),  WGPSN (decom services), Baker Hughes (Conductor Cutting/Removal, Archer (drilling services).

SNS steel piled jackets / platforms - ~400 installations  typically less than 1,500 tonnes jacket weight  up to ~ 1,400 tonnes topsides weight  many unmanned (i.e. no accommodation)  mainly gas producers  total removal expected courtesy Veolia / Petersen SBS – Shell Inde

Activity in Southern North Sea • Planning for decommissioning projects: • Stamford (6 wells 1,250Te topsides / 1,000Te jacket) • Markham ST-1 (Single Tree) • Rose • Audrey 7X • Bains • Forecast timetable: 2014-2017 • Potential for A-field: • Ensign • 4-legged Steel jacket NUI4 wells slots, 2 production wells 1 SS tie-back • Alison, Ann, Annabel • 5 production wells • Export to TGT via LOGGS & WD • Audrey A (WD) • Steel Jacket NUI • 8 Production wells

Challenges & Opportunities Typical oil & gas life cycle +$ regular industry perception of life cycle exploration production & appraisal Years operations • Exploration & appraisal abandonment development -$ decommissioning often overlooked

some market observations  little thought of decommissioning at design and build stage, or through life of asset  most operators preparing for first project  forecast costs rising  multiple drivers to defer  limited experience – operators or contractors  decommissioning projects unique and stand alone

decommissioning expenditure - UKCS 100% £m (Real Potential Decommissioning Expenditure Monitoring 2011) $70/bbl and 40p/therm Hurdle : Real NPV @ 10% / Devex @ 10% > 0.3 3000 90% Topsides and Substructure Recycling 2000 Proportion of Total Expenditure For Each Work Removal: 13% 80% Site Remediation 21*% 1000 Breakdown Structure Component Subsea Infrastructure 0 70% 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 Cns Irish Sea MF NNS SNS WoS Topsides Removal 60% Substructure Removal 50% Topsides Preparation 43% Wells: 43% 40% Facility/Pipeline Making Safe 30% Wells 20% Facility Running/Owners' Costs 11% 10% Overheads:19% Operator Project Management 0% Source: Oil & Gas UK *This relates to expenditure clearly identified as removal

Today’s discussion  State of play; a brief update  Challenges & opportunities  The Wood Review  Decom North Sea Leadership  Conclusions courtesy Peterson SBS / Veolia