The UKCS infrastructure is vast, comprising over 320 fixed installations, 250 subsea systems, 20,000km of pipelines and 7,800 wells. Notwithstanding the increased focus on the opportunity to reuse and repurpose existing infrastructure to support the energy transition (as required by the Oil & Gas Authority (“OGA”) Strategy, published earlier this year, and supported by its new “net zero” Stewardship Expectation 11), most of this infrastructure will require to be decommissioned in due course.
One of the OGA’s key targets is a reduction in the overall cost of that decommissioning of 35% against a 2017 baseline of £59.7bn. The new OGA Decommissioning Strategy, published on 10 May 2021, updates the first version of the Decommissioning Strategy (which was published in 2016) to reflect lessons learned and the shift in focus of the new OGA Strategy. It aims to establish a clear framework to explain what is required of infrastructure owners in respect of decommissioning in order to comply with their obligations under the OGA Strategy and how the OGA will engage with them.
Objectives and Priorities
The regulation of decommissioning remains the responsibility of OPRED, a division of BEIS, which approves decommissioning programmes. Additional provisions in respect of the plugging and abandonment of wells are set out in production licences. The priorities set out by the new OGA Decommissioning Strategy reiterate the focus of the OGA Strategy on delivery of cost-efficient decommissioning and repurposing and reusing infrastructure in order to support CCS and hydrogen projects. There are four main aspects:
1. Planning for decommissioning
Reenforcing the OGA’s Stewardship Expectation 11, it is emphasised that continued late-life decommissioning-focused stewardship will require a clear and detailed plan. The focus is to be on improving efficiency and minimising decommissioning costs by establishing a long “Glidepath” to ensure success. The OGA expects infrastructure owners to ensure they have a clear strategy three to six years in advance of cessation of production. The Priority Actions identified by the OGA in this respect for the period 2021 to 2024 arising from this Strategy are:
- Structured engagement with infrastructure owners to ensure plans are being progressed; and
- Promotion of learning, sharing of knowledge and continuous improvement.
2. Commercial transformation
A frequent complaint of the contractor community in relation to decommissioning, which has the potential to inhibit investment in decommissioning, is that although the market is expected to be at least £1bn per year for the next 40 years there is a lack of transparency about opportunities. The OGA expresses concerns as to the fragmentation of the market, which is attributed to the inconsistency of range and size of infrastructure owners, and their different business drivers. This might impact their approach to decommissioning planning, thus the OGA is focused on improving market efficiency and establishing a competitive and sustainable market, through continuous promotion of collaboration (both with the supply chain and between operators to support campaign approaches) and data transparency. The Priority Actions here are to:
- Support infrastructure owners in meeting Supply Chain Action Plan requirements.
- Improve the disclosure and publication of UKCS data.
- Gather and analyse data to produce benchmarks that support ongoing performance improvements.
- Explore opportunities to enhance the OGA’s Digital Energy Platform.
- Enhance the Oil and Gas Pathfinder (see below).
- Work with infrastructure owners and the supply chain in accordance with obligations set out in the OGA Strategy to aggregate work scopes, develop campaigns and area based approaches.
3. Supporting energy transition from late life into decommissioning
Reducing GHG emissions and repurposing and reusing of infrastructure have been deemed the focal points in supporting the industry towards reaching Net Zero targets with one of the priority actions being actively seeking opportunities for increased reuse and repurposing of redundant offshore infrastructure and reservoirs. The other priority action of delivering a Net Zero Stewardship Expectation has already been achieved.
4. Technology, Processes and Guidance
The Oil and Gas Technology Centre and National Decommissioning Centre are expected to continue to lead the way of promoting innovation and investment in research and the development of new technology. The OGA will continue to work with the industry and stakeholders in order to support the development of technology that delivers both cost-efficient decommissioning and reduction in GHG emissions, further identifying and addressing barriers for investment. The OGA suggests that new approaches to delivering decommissioning such as flexible contract schedules and campaigning could be adopted, and work will be undertaken in conjunction with the supply chain and other regulators, including through the DecomRegHub (a partnership of regulatory agencies with an interest in decommissioning), to ensure the regulatory process supports the delivery of efficient decommissioning.
Pathfinder website
In order to further facilitate collaboration and data transparency, the Pathfinder website was relaunched on 13 May 2021. Pathfinder was established over 10 years ago by DECC and is a website through which contractors can obtain information about upcoming projects on the UKCS. It will now feature not only capital projects but also forward work plans for operations and maintenance. It will provide more detailed information on projects including wells to be decommissioned, as well as opportunities for campaigning, operators seeking innovative solutions for challenges they face, and details of Tier 1 suppliers that have won a contract so as to incentivise smaller suppliers to bid for sub-contracts. It has also been extended to cover energy transition work such as carbon capture and storage, offshore electrification, hydrogen and floating wind.
The OGA Strategy can be found here.
The Net Zero Stewardship Expectation can be found here.
The OGA Decommissioning Strategy can be found here.
The Pathfinder website can be found here.
