Decommissioning and Abandonment

So you don’t want to do decommissioning; just get over it. Decommissioning is a part of the life cycle of any oil and gas asset. Publicly traded firms account for these future liabilities on their books through the requirements of Financial Accounting Standard 143 from the Financial Accounting Standards Board and International Accounting Standard 37 from the International Accounting Standards Board. These costs have been considered and accounted for in the development economics for every project. Delaying decommissioning through life extensions or divestiture is laudable; but, ultimately, decommissioning will need to occur. 

As discussed last year, early planning for decommissioning, along with an integrated late-life/decommissioning strategy, can deliver value. The supply chain is now actively working to develop low-cost solutions and is gaining valuable experience through recent projects (as documented in many recent SPE papers). Owners need to engage the supply chain early with the relevant asset data for planning and execution of decommissioning. Don’t tell them how you want it done. Owners need enough internal expertise to be informed buyers and to select the optimal market-driven solutions offered by the supply chain. Owners then must step back and let the supply chain deliver. 

Another value opportunity lost appears to be decommissioning during the down cycle. Minimum costs and maximum supply-chain engagement occur during the periodic down cycles; plan to take advantage of these guaranteed cost-saving opportunities. Decommissioning—just get on with it, using the right integrated late-life/decommissioning strategy delivered during a down cycle.

This Month's Technical Papers

Decommissioning Optimization in a Multioperator Landscape

Reducing Costs of Well Plugging and Abandonment While Verifying Risk

Multiwell Deployment of a New Abandonment System

Recommended Additional Reading

IPTC 18982 Net-Environmental-Benefit-Analysis Application for Jacket-Decommissioning Techniques by J. Kanmkamnerd, PTTEP, et al.

OTC 27672 Baseline for Planning and Cost Estimation of Brazilian Decommissioning by F. Mimmi, Genesis, et al.

SPE 186133 Brent Charlie Ultralate Life: Managing for Optimal Decommissioning by F. Sanwoolu, Shell, et al.

Win Thornton, SPE, is vice president of decommissioning, global projects organization, at BP. He has more than 35 years of experience in offshore construction and decommissioning projects working as an operator for BP, Chevron, and Oxy; as a contractor from Brown & Root and WorleyParsons; and as a consultant for Winmar and TST. Thornton holds a BS degree from the Georgia Institute of Technology and an MS degree from the University of Houston. His recent work includes offshore decommissioning and reuse projects in the Gulf of Mexico, West Africa, California, Alaska, Southeast Asia, and South America. Thornton has championed the environmentally sound and cost-effective disposal of obsolete platforms through placement in state-sanctioned “Rigs to Reefs” programs. He is a member of the JPT Editorial Committee and can be reached at win.thornton@mac.com.

Decommissioning and Abandonment

Win Thornton, SPE, Vice President of Decommissioning, Global Projects Organization, BP

01 January 2018

Volume: 70 | Issue: 1

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