Decommissioning and Abandonment
Is there a value proposition for decommissioning?
Our industry is governed by rules that require cleanup and closure of oil and gas facilities after they cease to produce. Unlike a capital project, decommissioning is not something that you can choose to do or not to do. The choices for a decommissioning project are really when and how, with a resulting “how much?” The “when” typically defaults to “not now,” representing a belief that deferral results in the lowest cost outcome. Is “not now” really the value proposition for decommissioning?
I assert that the value proposition for decommissioning is really one of value retention through proactive late-life planning. Perhaps a suitable time frame to invoke a value metric is when the remaining hydrocarbon value equals the estimated decommissioning costs. Good planning decisions would then balance capturing the remaining hydrocarbons with delivering a cost-effective decommissioning project. The goal then becomes maintaining this value equilibrium; far too often, it is only the remaining hydrocarbons or a deferral that receives attention. Governance for late-life asset and project planning decisions could then be tested against maintaining this value equilibrium. For example, the foresight to select a cessation-of-production date to capture a downcycle decommissioning market could capture value that would have been lost in a blind drive to deferral. Like a capital project, there are a number of early planning decommissioning activities that can be deployed to maintain that value equilibrium. Let us consider this value metric and approach for future decommissioning projects.
This Month's Technical Papers
Recommended Additional Reading
SPE 180040 Plug-and-Abandonment Solution for Oilfield Decommissioning in the North Sea by P. Aguilar, Schlumberger, et al.
OTC 27152 Integrated Decommissioning—Increasing Efficiency by William R. Price, Oceaneering International, et al.
OTC 27128 Practical Applications of Structural-Analysis Support to Decommissioning by Ahmed M.A. Abdelaah, Atkins Energy, et al.
Decommissioning and Abandonment
Win Thornton, SPE, Vice President of Decommissioning, Global Projects Organization, BP
01 January 2017
New OGA Wells Strategy Focuses on Improving Economics of UKCS Oil and Gas
The strategy supports the Maximise Economic Recovery from UK Oil & Gas Strategy and Vision 2035, whose goal is to achieve £140 billion additional gross revenue from UKCS production by that time.
Well-Abandonment Solutions Use Bismuth and Thermite Effectively and Safely
This paper demonstrates a new way to create gas-tight seals during well abandonment, overcoming the limitations of traditional methods and reducing the operator’s liability and potential environmental impact after decommissioning has been completed.
Mature Fractured Reservoirs Can Be Repurposed for Gas Storage
This paper discusses studies conducted on two California offshore fields that may be abandoned in the near future. These studies examined the feasibility of repurposing these fields for offshore gas storage by using their reservoir voidage and existing pipeline facilities.
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13 August 2019
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