IMCA gives insight into the $75 billion decommissioning market
Posted: 19 April 2006
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For the past ten years, huge decommissioning programme for North Sea offshore oil and gas installations has been predicted. Despite the fact that this has not yet happened, latest predictions say, sooner or later, the worldwide expenditure for decommissioning in the region will be up to £50 billion ($75 billion).
With this in mind, IMCA – the International Marine Contractors Association – has published a far-ranging position paper on this potential market.
It points out, for example, research and development topics which should be considered, and suggests that the contractual risks on decommissioning projects should be more appropriately shared.
Hugh Williams, the association’s chief executive, said: “The paper has been prepared to assist and inform our 300 plus member companies around the globe. It gives an overview of the challenges and opportunities, outlining some of the important engineering, safety, commercial and contractual issues and a number of the technological developments that are of interest to our members based in 35 countries. We want feedback from them - sharing knowledge is, after all, beneficial to the industry as a whole.”
Decommissioning has had a high profile in the North Sea for the last ten years. This has been due to such factors as cost; opportunities to influence legislation; realisation that the first North Sea structures should soon be ready for removal, with the first larger removals looming; catching the public eye; and because some of the bigger oil companies were getting ready to sell their older fields to smaller or new players and the decommissioning unknowns hindered the sales.
Williams added: “However, the ‘bulldozer’ effect has been strong. Decommissioning has been seen as a big market which has been predicted to occur ‘in about five years’ time’ since the early 1990s. To a large degree, the market has still not arrived; there are a variety of possible reasons for this such as more tiebacks to use existing infrastructure; better field depletion methods and well stimulation; delayed removals (e.g. Ekofisk); and high oil prices are keeping older assets viable for longer.”
IMCA members are involved with offshore, marine and underwater engineering so all will be fundamentally involved in decommissioning. The newly published paper, produced by IMCA’s decommissioning workgroup will provide them with useful information and some fascinating statistics on this large-scale business:
• There are about 6500 offshore facilities in the world, nearly two thirds of which are in the Gulf of Mexico. There are some 600 in the North Sea, 400 of which are on the UKCS
• In the UK, over the next 10-20 years, on average, 15-20 installations are expected to be decommissioned annually. In addition, several thousands of kilometres of pipelines may have to be removed, trenched or covered. The continental shelf bordering the states of the European Union and Norway has more than 600 offshore oil and gas platforms and several thousand kilometres of pipelines
• Some 1200+ platforms have already been removed world-wide
• The largest number is removed in the Gulf of Mexico (about 100 pa)
• A large proportion of the world’s biggest platforms is in the North Sea
• Estimates of expenditure for future North Sea removal vary depending on a number of factors, but it may be assumed that it is about £15-30 billion (US$20-50 billion) for the North Sea’s 600+ facilities
• World-wide expenditure could exceed £50 billion (US$75 billion)
• Current estimates (third quarter 2005) suggest that there will be decommissioning work available, particularly in the North Sea, throughout the next decade, into the 2020s and beyond
Posted by Editor Offshore Arabia Magazine
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