Skip to content

Maximising economic recovery in the UK through decommissioning, exploration and collaboration

Lifecycle stage
Decommissioning

 

Estimation

One of OGA’s goals, alongside the support of the industry, is to standardise how decommissioning proposals and estimates are prepared and create best practice tools to make this happen. This standardisation should increase the accuracy of initial costs, give true cost benchmarks, and will become a useful tool that the OGA can report back to the industry with.

Definition

Getting tough on the industry, OGA expects all decommissioning projects and strategies to be “kept current” and made available to the OGA upon request. These decommissioning documents are required to be sent before implementation has begun, and no less than three years prior to cessation of production (CoP) – although the OGA would like to extend this to six years as a future expectation. These steps have been created to facilitate a more transparent and collaborative industry, as well as enhance relationships with the OGA and the supply chain.

2.  EXPLORATION

Exploration and New Ventures Manager at OGA, Nick Richardson, took to the stage and opened up the discussion about tapping into the final reserves of the UKCS. Supported by the words from three operators Statoil, Nexen and Azinger, Nick shared the OGA’s plans to make exploration in British waters a more viable opportunity for all operators.

Incentivising Exploration (Promote) image with stats from the Oil and Gas Authority with £40m UK Government funding to incentivise frontier exploration

A three-strand strategy to stimulate exploration was also headlined by the news that the UK Government are set to incentivise frontier exploration to the tune of £40 million. This was joined by the news that 40,000 km of legacy data on British waters is to be opened up to operators to assess potential projects. A big move from the OGA.

Regulation and influence

“Flexibility” was the word used to describe how existing and future licenses would be regulated by the OGA. Naturally, they want to stimulate exploration and stripping back regulation around this activity should help.

Stimulating near-term activities (influence) - a chart from the Oil and Gas Authority (UK)

Another way the OGA is helping to stimulate exploration is by working with operators to understand the barriers and encourage activity in the future. From the graph above, the influence that the Government has had over the past three years shows that a continued push towards exploration is being achieved – making exploration on the UKCS a viable option once more.

Initiatives such as stimulating collaboration, transparency on cost, and funding, is beginning to rule out the ‘barriers to activity’ highlighted by operators previously.

3.  COLLABORATION

The OGA has been positioned as the facilitator of collaboration in the region – and the industry is embracing this with open arms. OGA’s Director of Exploration and Production, Gunther Newcombe, explained at the event that “there are great examples of collaboration”, but the OGA is “often called in” to make projects happen between operators and the supply chain.

Initiatives and tools

As well as facilitating, the OGA is working with operators to instil a collaborative initiative and behavioural tool to encourage and monitor the performance of the industry, as they aim to work together.

The behavioural tool, which was based on the BS 11000-1 collaborative business relationship framework, and was piloted with Chevron in Q3 2016, is set to go live in 2017. To be rolled out to the key operators first, the tool will use a scoring system to monitor the collaboration and communication between other operators. This provides both the OGA and operators with a benchmark to assess and improve on these scores in the future.

Why collaboration is so important

A Chart from the OGA UK entitled Hub Evaluations

The above presentation slide from Gunther Newcombe explained just why collaboration is so important between the OGA and operators. With many potential exploration projects in British waters, and plans to expand beyond the existing fields, investment and focus will be required from all corners of the industry to maximise economic recovery in the UK.

Of course, the issue around the constraints of the competition law is something that the industry needs to be aware of, but as OGA said about collaboration, “if approached properly, the constraints of competition law should not frustrate the objectives of MER UK”.

SUMMARY: HELPING MAKE DECOMMISSIONING PROJECTS HAPPEN

While OGA was clear in showcasing their future plans and goals, they weren’t dismissive of what’s been achieved in UK waters to date. Amongst the various statistics shared during the event, OGA highlighted the facts that:

  • 330,000 jobs in the UK are supported by the UK’s upstream oil and gas activity
  • 3 billion BOE (barrel of oil equivalent) of resources is either in production or under development
  • Production efficiency increased from 65% in 2014 – to 71% in 2015

With a stabilised and secure oil and gas industry in the UK, coupled with the fact that there is 30 billion remaining resource potential in the region, now is the time for operators to focus on their next exploration project.

This process starts by operators assessing and identifying the wells that are set for abandonment in the coming years – and making clear strategic plans for these decommissioning projects as well. The OGA’s plans look promising in bringing together the industry and making these decommissioning projects happen. It’s now time for operators to respond and prepare themselves for a busy twenty years in the industry.

Claxton Offshore workers

CLAXTON AT THE FOREFRONT OF DECOMMISSIONING

Here at Claxton Engineering, we have continually invested in our team and proprietary tooling with the result that today the company has completed over 280 cutting and recovery projects, over 85 wells cut, and over 130 suspended wells abandoned.

With this much experience and expertise, operators can rely on the Claxton team to deliver their project, allowing their core team to focus on exploration projects coming up in the future. To see how Claxton have made these kinds of projects happen for other operators, take a look at our collection of decommissioning case studies, available to read here.

Decom case study pack
E-book download

Decommissioning Case Study Pack

The Claxton offshore decommissioning case study pack showcases our vast experience of delivering successful decommissioning projects.

Download