Decommissioning in the UKCS

Despite continued productivity in the UK oil and gas (O&G) industry, the North Sea remains one of the world’s mature petroleum provinces and, despite new developments, many assets are reaching the end of their field lives and will require decommissioning. Scottish Enterprise (SE), in partnership with Decom North Sea and Accenture, carried out an exercise to understand the nature of opportunities and challenges that exist for supply chain companies in the decommissioning sector. The aim of the study was to: map the decommissioning supply chain; assess capability and capacity; identify strengths, weaknesses, opportunities and threats; and make recommendations for the improvement of the supply chain.

Research was carried out in collaboration with suppliers and operators in the UK Continental Shelf (UKCS) decommissioning supply market and had four key elements: a supplier questionnaire, a supply chain mapping workshop, face to face operator meetings and desktop research. Supplier capabilities and capacities were mapped for each phase of the decommissioning lifecycle and for the activities that sit within each phase. Suppliers rated themselves on a capability index of 1-5, with level 4 being classed as the ‘industry desired capability’.

The results showed that there are varying capabilities across the nine supply chain phases of the decommissioning lifecycle (preparation for cessation of production (CoP); suspension live; well abandonment; cleaning and decommissioning; disconnection; suspension cold; removal; disposal; and continuing liability). The analysis identified two key conclusions: pockets of strengths and weaknesses exist throughout the O&G supply chain, with capability varying by up to 27%; and with the average capability for the whole supply chain being 2.95, intervention is required in order to position services appropriately to meet forecast future demand. The capability gaps varied from 0.78 to 1.46 below the industry desired capability, with cleaning and decommissioning, disconnection and disposal displaying the smallest gaps, while continuing liability, well abandonment and removal showed the greatest. It is suggested that the industry would have to improve its current capability by 35% to be in line with the desired level of service provision. The study concluded that while there may be an average gap of 35% between actual and desired capability across the supply chain, by focusing on how areas of strength can be framed to optimise the supply and demand balance along the supply chain, the challenge ahead may be much reduced.

Recommendations were made to address the challenges and harness the opportunities that exist across the supply chain phases. The report highlights the need to: integrate planning; develop collaboration and bundling; plan and execute earlier; develop talent and resourcing; and leverage supply strengths.