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.
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