The sudden drop in the oil price and the prospect of a slow recovery is leading operators to plan and possibly set dates for abandonment and the subsequent decommissioning of North Sea infrastructure.
For some installations this will be the right answer, for others the answer may be more complex. For all, commitment to decommissioning is a decision that should be carefully taken with consideration of all factors.
Many years ago I worked for an operator that decided it could see the end of field life and we restructured our maintenance and asset integrity programmes to suit, with the objective that “the handrails would fall-off as the last person left the platform”.
However, as is often the case, prices recovered, new fields were tied in and the platform got a new lease of life but the operational expenditure and production efficiency for the asset never recovered from the consequence of the planned neglect.
The operator now faces substantial investment to be able to decommission because of the unknown state of the facilities.
In many cases the decision to decommission is the right one. Once taken, the operator must decide how to approach it and evaluate the consequential changes in operations that are required to minimise the cost prior to work getting underway.
With decommissioning happening faster than some had foreseen there are a few basic tenets that may make the process a lot less painful than it could be.
Firstly, before cutting offshore maintenance and integrity activities make sure this is really the end of the road for the asset. If not absolutely certain ensure that the basic level of activity required to keep the licence to operate are continued. It is too expensive to go back.
Secondly, it is important to carefully consider the most important drivers of decommissioning for your company. If costs and schedule are of prime importance place contracts in a way that meet your needs. If the drivers are different and include reputation and financial exposure to a less than perfect outcome you may wish to contract in a different way.
Finally, it is also important to examine the benefits of splitting the outsourcing of the decommissioning between specialist management contractors and those that will provide the bulk of the engineering and equipment so that compensation can be better structured to align with the drivers.
Companies must focus on surviving the upturn as much as focusing on surviving the current crisis. It would be disappointing if the decisions taken now are self-fulfilling when there were other options available.