DECOMMISSIONING: ADDRESSING THE ISSUES -

WHEN? WHAT? HOW? AND HOW MUCH?

N. J. Hughes, Foster Wheeler Petroleum Development Ltd
P. R. Fish, Tecnomare (UK) Ltd

ABSTRACT

Foster Wheeler and Tecnomare have recently conducted a number of

case studies to address the essential issues of decommissioning offshore
gas installations:

When is the optimum time to begin decommissioning production

facilities taking account of production tail-down, field economics,
future modifications, decommissioning logistics and market
considerations? Should it be done in a single campaign or are
there benefits in a phased approach?

What facilities have to be decommissioned and what are the

options for removal and disposal? What factors need to be
considered and what is the best method for evaluating the
options to arrive at the best practical environmental option?

How are the facilities to be decommissioned? Is it a simple

reversal of the installation sequence? Will new technology make a
difference? Can pipelines be abandoned in-situ safely?

Most importantly, how much will decommissioning cost? Could

operators reduce their financial provision for decommissioning
and thereby release capital for exploration and development?

The paper will seek to illustrate how important questions such as these
can be addressed in a systematic way that enables field operators to
make logical decisions regarding further investment for field modifications
as well as appropriate financial provision for the eventual
decommissioning.

Index

1. Introduction
2. Condition of facilities
3. Production tail-down and cash flow
4. Removal timing options
5. Legal requirements and industry guidelines
6. Disposal options
7. Selection of preferred scheme
8. Decommissioning Methodologies
9. Decommissioning Technology
10. Environmental impact
11. Safety impact
12. Life of field strategy
13. Decommissioning costs
 14. Conclusions and recommendations
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15. Acknowledgements
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1.0 INTRODUCTION

Under UKCS regulations, the operator of an offshore oil and gas field in
the North Sea is required to decommission the facilities at the end of the
field life. The aim of a long term decommissioning study is to assist the
operator and its partners to make long term strategic decisions, including
appropriate financial provision, in a timely manner.

A long term decommissioning study requires undertaking an independent

and objective review of possible decommissioning options and tail down
scenarios specifically for a particular facility or group of facilities, including
pipelines, flowlines and umbilicals, and to report on the findings and
recommendations. The execution process for such a study is shown on
Figure 1.
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The key philosophies, or 'critical success factors', for any

decommissioning plan were seen to be as follows:

Maximize reservoir performance whilst minimizing

decommissioning costs

Evaluate alternative field management strategies (this review

would normally include new prospects)

Comply with relevant government legislation and guidelines

Develop a contracting strategy to optimize overall field revenue

and profitability

Develop a plan to ensure that decommissioning activities are

correctly phased with offshore removal operations so as to
minimize unnecessary loss of production

Establish safe and economical removal methods for the platforms

that are not solely dependent on the use of any single
methodology

Adopt safe engineering procedures

Minimize environmental impact

Recommend re-use of facilities where shown to be technically

and economically viable

Promote acceptable disposal methods where re-use or recycling

is not the preferred option

By following an agreed strategy, as outlined above, decisions can be

made on the most appropriate decommissioning methodology and
technology which in turn will allow an auditable cost estimate to be
derived.

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2.0 CONDITION OF FACILITIES

The condition of the facilities to be decommissioned can vary

considerably. In some cases, such as the earliest Southern North Sea gas
platforms, the facilities may have been installed thirty or more years ago
and have been extensively modified and repaired since that time. At the
other end of the scale, the facilities may have been installed within the last
ten years and are capable of many more years' service subject to
adequate reserves infield or being reused.

In the case of the older facilities, it is not unusual to find that the original
design documentation is missing, or incomplete by today's standard. The
older structures were generally 'copied' from the Gulf of Mexico rather
than individually designed, as they would be today. Furthermore, the
current status of the structures often has to be inferred from periodic
inspection reports. Nevertheless, any platform still operating in the North
Sea is required to have a valid Safety Case and it is often this
documentation which provides the best source of reference data.

By comparison, facilities installed within the last ten years are unlikely to
have undergone change of use, and it can generally be assumed that the
facilities are still in good condition and operating as planned. Corrosion
aspects, for example, are therefore not considered a significant factor in
planning the decommissioning process.

Installation methods have also changed. The jackets for the earlier
platforms were generally launched and the piles were driven through the
legs and grouted inplace, which considerably increases the weight of
substructure to be removed. The topsides comprised a module support
frame (MSF) structure supporting various equipment packages and utility
and process modules, each of which could be a separate lift. Padeyes
were normally cut off the MSF to provide an unobstructed deck area for
the modules.

All jackets (except for the very largest) for platforms installed within the
last ten years have been lift installed and secured using a skirt pile
arrangement. Topsides are now more often designed as integrated
structures to minimize the number of offshore lifts and associated hook-up
work. In these cases it is more common to find that the lifting padeyes or
trunnions have been left in place. Structures installed since January 1998
have in fact to be designed with removal operations in mind.

The condition of the platform cranes and accommodation facilities are

also important factors when considering the logistics of offshore removal
operations. Due to the high cost of maintenance, cranes on older
platforms may have been decommissioned or down-rated which
effectively limits the amount of topside dismantling work, which can be
performed from the platform. Similarly, if accommodation facilities have
been mothballed (for example when converting to unmanned status) then
accommodation support vessels will be required while platforms are being
prepared for removal.

Thus it is very important to establish the condition of the facilities at the

outset as this can have a significant impact on the decommissioning
methodology and cost. Furthermore, strategic operational decisions such
as whether to mothball accommodation units or downrate cranes can
impose an unexpected constraint on future decommissioning procedures.

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3.0 PRODUCTION TAIL-DOWN AND CASH FLOW

The key to determining probable abandonment dates is to examine the

field production tail-down and cash flow forecast (Figure 2 ). The most
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thorough method, requires that the operator provides the reservoir model
simulation output. These data are analysed to determine the well capacity
forecast and wellhead flowing pressure forecast for individual wells and
groups of wells for each platform. The well capacity figures are further
analysed to develop production rates and revenues for the sales gas.
Charts can then be produced to show periods of uneconomical operations
for the platforms when operating costs exceed revenues.

The determination of preferred tail-down scenarios is dependent on a

number of assumptions including imponderables such as the future price
of gas and the Petroleum Revenue Tax. A sensitivity analysis will show
how a particular tail-down scenario is affected by changes in the gas
price, for example.

A small imaginary gas field consisting of a not normally manned wellhead

platform (Alicante) and two subsea wellheads (Benidorm & Almeria) is
shown on Figure 3. A typical gas production forecast for the field
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comprising the three groups of wells is shown in Figure 4. The annual

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cash flow forecast for the same three groups of wells, as well as the
overall field forecast, is shown in Figure 5. Based on the production flows
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and simple economics, the earliest dates for removal of the facilities
associated with each group of wells would be Almeria year 6, Benidorm
year 8 and Alicante year 11. The cash flow forecast assumes the facilities
are decommissioned in these years.

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4.0 REMOVAL TIMING OPTIONS

In order to arrive at the recommended time for removal of each facility, it

is first necessary to identify the optimum date for Cessation of Production
(COP).

Earliest dates for COP have been discussed above based on production
flows and simple economic criteria. However, in the future, other factors,
such as more sophisticated financial models, the condition of the facilities
and changed processing requirements, may affect the decision.

Cessation of Production will inevitably occur as recoverable gas reserves

diminish, and the incremental recovery costs prove financially
unattractive. In many cases, the situation is complicated by the fact that
gas is taken from several reservoirs and is produced through multiple
facilities (i.e. platforms, subsea manifolds, etc). Other fields may also be
completed in the future. As the field approaches the end of its producing
life, the operator is looking for opportunities to ensure that the fixed assets
are employed as productively as possible. Two basic options are
available:

To tie-in new wells to the field to generate further gas revenue.

To invest in schemes which reduce the operating costs of the
field.

Ongoing exploration work may have an impact in the form of additional

wells extending the field life. For the second option, modifications that
involve capital expenditure in order to save on future operating costs have
to be evaluated.

As stated above, a relatively simplistic approach may be adopted to

establish dates for COP. This method is appropriate for simple cases.
However, other aspects or more complex fields may dictate a more
detailed investigation in the future, which could lead ultimately to an
alternative timing strategy.

Firstly, there are different financial models, which could be used to identify
the optimum COP timing:

Negative net profits, being the point where operating costs,

including royalty and tax liabilities, exceed revenue from
production.

Minimum margin on ongoing expenditure, which looks for an

additional return above costs to justify further effort.

Maximizing remaining Net Present Values (NPV)

Maximizing the remaining NPV, being the most comprehensive method, is

the preferred means of identifying the optimum time for COP and the
approach closely follows the financial techniques used in new project
evaluations.

Any financial model used to identify the optimum point in time for COP will
also be affected by other key factors such as operating and maintenance
costs, decommissioning costs, etc. The way in which these other factors
are likely to influence the COP date is summarized in Table 1.
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In general, there are three possible scenarios for the timing of the removal
of facilities as defined below:

Option 1 remove facilities progressively as each becomes

redundant

Option 2 remove in best contractual groups

Option 3 remove all facilities at end of field life, except the

pipelines, which are abandoned in-situ

In the case that future legislation should require the removal of pipelines,
a fourth option is also considered:

Option 4 remove all facilities at the end of field life, including the
pipelines

It is not clearly possible to differentiate clearly between these options.

However, option 3 - remove all facilities at the end of field life and
abandon pipelines in-situ - was found to have the lowest
decommissioning cost. The marginally preferred timing for the removal of
the facilities occurs at the end of the field life when all the facilities are
removed in one campaign. This option is not a clear winner and on further
study, nearer the real dates for decommissioning the facilities, alternative
removal sequences may be more attractive.

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5.0 LEGAL REQUIREMENTS AND INDUSTRY GUIDELINES

The relevant International, European and UK legislation for the

decommissioning and disposal of offshore installations is listed in Table 2.
Most of these documents are concerned with what may legally be
'dumped' at sea.

In accordance with the UK Government directive that abandonment of

offshore installations shall be in accordance with the IMO guidelines,
operators of Southern North Sea platforms are legally obliged to remove
their installations to sea-bed level.

Current legislation does not specifically address pipelines and umbilicals

although the DTI published Guidance Notes in 1995 which requires that
an Abandonment Plan be submitted for approval. Paragraph 5.3.7 of the
DTI Guidance Notes issued in May 1995 states that pipelines (including
any piggyback lines) could be abandoned in-situ provided:

a. They are buried or tenched now and will remain so

b. They are likely to self-bury within a reasonable time and will

remain buried
 c. They will be buried or trenched within a reasonable time and will
remain buried

It should be noted that the operator must retain liability for any remains
left on the seabed. The operator will also be liable for any pollution that
may occur if the pipelines are damaged. Claims can also be expected
from fishermen if they snag their equipment on any remains left on the
seabed. If pipelines and umbilicals are to be left in situ, then burial or
covering of any exposed section should be considered. The pipelines
should be purged and cleaned during decommissioning and left either
inert or with corrosion inhibitor. There will also be a requirement for
periodic monitoring of the remains, usually an annual survey. Specific to
fields nearer to shore is the requirement to pay rent to the Crown Estate.
Nevertheless, it should be recognized that legislation could change
requiring pipelines to be totally removed.

In July 1998 in Sintra, Portugal the UK government along with 14 other

European countries was signature to the OSPAR convention. This had a
major impact on the legally permissible abandonment methods for deep
water steel platforms. It was no longer permissible to topple or dump the
steel jacket structures; they must now be removed and returned to shore
for recycling or reused in a new location. For steel jackets weighing over
10,000 tonnes the option of partial removal may be considered. As a
result of the OSPAR convention each contracting Party has first to review
and amend where appropriate its current legislation. For the UK we may
expect revised guidelines and regulations - the most recent publication
was the Consultative Document issued in May 1995 whose finalization
into a formal policy was delayed pending out come of the OSPAR
negotiations.

For disposal of a structure onshore i.e. through dismantling and recycling

or re-use, the operator has, under The Environmental Protection Act
1990, a "duty of care" through the disposal process. Therefore it is
important to use licensed carriers and licensed dismantling/disposal sites
(Table 2).
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6.0 DISPOSAL OPTIONS

A "brainstorming" session is conducted at the start of the study to identify

all possible schemes for the eventual disposal of the facilities. Key
members of the study team, as well as operator representatives,
participated in this meeting.

The disposal options proposed may be grouped generically as follows:

Re-use/Alternative use
Abandonment in situ (applicable to pipelines only)
Deep sea disposal( no longer an option for steel platform)
Artificial reefs
 Onshore disposal (recycle and landfill)

The accepted best practice for disposal of the various waste streams from
decommissioning activities is given in Table 3.
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7.0 SELECTION OF PREFERRED SCHEME

A detailed analysis of the generic disposal schemes is carried out during

this phase with the objective of identifying the preferred scheme, or
schemes.

The technique used might be based on the methodology such as that

developed by Kepner and Tregoe, often used to evaluate bid proposals.
This is a system of assigning scores to each option based on
predetermined selection criteria for objectives in order to arrive at a
ranking of the options (Figure 6). After the requirement to meet legal
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requirements has been satisfied, the following objectives are considered:

Environmental

Safety

Technical feasibility

Cost

Public acceptability

The method by which the Kepner-Tregoe analysis is carried out is

outlined below:

1. Set the objectives which each of the disposal options is to be

evaluated against?

2. Classify the objectives into two categories. The 'must' objectives

are mandatory whilst the 'want' objectives are desirable.

3. Assign each 'want' objective a weighting to indicate its relative

importance, giving the highest weighting to the most important
objective.

4. Define the options to be considered

5. Determine which options satisfy the 'must' objectives. Any that do

not are not considered further.

6. For a particular 'want' objective allocate a score to each option.

These judgements can be based on qualitative or quantitative
information, but are best arrived at as a team, rather than
 individual, effort.

7. For each option, calculate the weighted score for each 'want'
objective. Then calculate the total weighted score for each option

8. The option(s) having the highest weighted score are the preferred
option(s).

9. Look at the sensitivity of the ranking to the weightings.

10. For the options having the highest scores, consider the ways in
which these may not go according to plan (this includes the option
not being feasible at the time of decommissioning and problems
occurring during the actual decommissioning). Determine whether
the probability of failure of the option is high, medium or low and
whether the resulting consequences are high, medium or low.
Use Table 4 below to determine whether the possibility of the
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option failing can be accepted.

11. Decide on the preferred option

Figure 7 illustrates the selection process.

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A separate analysis will be performed to determine the preferred disposal

options for each of the following components of an offshore development:

Jackets

Topsides

Sub-sea manifolds and protection structures

Pipelines and flowlines

Umbilicals and flexible pipelines

Figure 8 illustrates a typical score sheet from the analysis.

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The results and conclusions from this Kepner-Tregoe analysis are

discussed below:

Jackets

The highest scores were associated with alternative use, onshore

recycling and re-use in that order. The potential problems with
alternative use and re-use relate to finding a purchaser. It is
concluded that, at the appropriate time, the possibility of putting
the jackets in good condition to some other use should be
explored. If no such use can be secured then the jackets
should be removed and recycled onshore.
Sub-sea Structures

The highest scores were associated with re-use, onshore

recycling and disposal in landfill. The potential problems are again
associated with finding a purchaser. It is therefore concluded that,
at the appropriate time, attempts should be made to sell these
structures. If a purchaser cannot be found then they should
be recycled onshore.

Pipelines

The highest scores were associated with leaving in place without

burying exposed sections, re-use in situ and burying exposed
sections in that order. The main problems occur if legislation
changes such that it becomes mandatory to remove these
pipelines. Whilst the risk of this happening may be low, it is
prudent to establish the costs now for pipeline removal in case the
law should change in the future. It is concluded that, subject to
changes in the law, the pipelines should be left in place
without burying the exposed sections. Note that most gas
pipelines located in the Southern North Sea when flooded with
seawater will naturally bury themselves over a period of time.

Umbilicals and Flexible Pipelines

The highest scores were associated with leaving in place without

burying the exposed sections and leaving in place with the
exposed sections buried in that order. Whether umbilicals and
flexible pipelines will from the legal point of view be treated as
pipelines has not been established. The conclusion from the
analysis is that subject to the law changing the umbilicals
and flexible pipelines should be left in place. Similar
comments apply to those made regarding pipelines; it is prudent
to establish the costs now for removal.

Topsides

The highest scores were associated with alternative use, onshore

recycling and re-use in that order, similar to those for jackets. It is
concluded that, at the appropriate time, efforts should be made to
identify an alternative use for the topsides. If no such use can be
found then the topsides should be recycled with the re-use of
some equipment items onshore.

These results are summarized on Figure 9.

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8.0 DECOMMISSIONING METHODOLOGIES

A detailed review is carried out of the decommissioning methodologies,
relevant to the size, condition and type of facilities, covering the following
areas:

Plugging and abandonment (P&A) of platform wells

Well conductor cutting and removal

Topsides dismantling/removal and disposal

Pile cutting and jacket removal

Pipeline, flowline and umbilical decommissioning

Subsea well plugging and removal of Xmas trees and protective

structures

Drill cuttings

One of the major issues regarding wells is whether the well should be
abandoned with the production tubing left in-place or whether it is
necessary to remove (and then dispose of) the production tubing. Cost
considerations indicate that provided a) all the permeable zones are
isolated and b) there is laterally extensive cementing of all the casing
strings out to the original open hole, then the production tubing should be
left in-place. Thus detailed knowledge of individual wells is required
before a definite decision can be made.

As part of the evaluation of decommissioning methodologies,

environmental and safety aspects have been addressed. By way of
example, alternative decommissioning methodologies for jackets are
listed in Table 5a and Table 5b which includes bullet points summarizing
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the technical, commercial, environmental and safety issues associated

with each methodology.

The preferred decommissioning methodology will influence the technology

selection as discussed below. However, there is a close relationship
between the two as the advent of new technologies can open up the
possibility of new methodologies.

A particularly difficult question is the best method of disposing of drill

cuttings. The Norwegian research institute RF-Rogland Research has
recently completed a comprehensive study of oil-based cuttings disposal.
The study investigated 19 operations for dealing with cuttings piles,
ranging from bioremediation in situ to removal and treatment onshore. All
options were found to have pros and cons, leading the investigators to
conclude that no accurate ranking of the techniques could be established
and that each cuttings pile must be assessed on a case-by-case basis to
determine a balanced solution.

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9.0 DECOMMISSIONING TECHNOLOGY

There would seem to be a steadily increasing range of marine

technologies available for plugging and abandoning wells as well as for
cutting and removing the facilities. Some of these new technologies have
been tried in the Gulf of Mexico (such as the Versatruss lifting system) but
have yet to be tested in North Sea conditions. Two areas where new
technology is making rapid advances are well P&A techniques and
platform lifting devices (Figure 10).
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Plugging and Abandonment (P&A) of platform wells is carried out by

injecting cement plugs down-hole. The cementing and down-hole access
equipment can be located on the fixed platforms (and moved by floating
vessel) or on a mobile jack-up rig or well service vessel (for subsea wells).
Lightweight composite equipment, such as coiled tubing or wireline units,
are designed to be operated from the platform deck thereby saving the
costs of a jack-up rig for P&A work (provided accommodation is available
on the platform). But these systems have more limited capacity for
problem wells where corrosion of the production tubing has led to gas
seepage into the well casings.

Regarding heavy lifting equipment, in 1997 there were five crane vessels
in the North Sea, all operated by different contractors, capable of lifting in
excess of 1000 tonnes of structure in a single operation. This reduces to
three crane vessels capable of lifting in excess of 2000 tonnes. The
availability (and cost) of heavy lift crane vessels in the North Sea at some
future date is heavily dependent on the world-wide market for platform
installation work; for example the S7000 has had installation contracts in
the Gulf of Mexico during 1998. Jack-ups have been converted for
performing heavy lifting operations (e.g. the Rowan Gorilla Terminator)
but their availability (and cost) is similarly dependent on the world-wide
market for drilling rigs.

However, there is an assortment of alternative marine technologies

currently under development designed to perform platform removal
operations without dependence on heavy lift crane vessels, although none
of these technologies is currently at the stage where it could be used with
confidence and safety for removal of platforms in the Southern North Sea.
These alternative technologies include the Versatruss system already
mentioned, the Master Marine catamaran system proposed for lifting the
Brent Spar, the RAMBIZ catamaran dual crane vessel used for bridge
installations, the Norwegian Offshore Shuttle system which is planned to
be operational by the year 2000, and the Controlled Variable Buoyancy
System (CVBS) for refloating substructures. All systems are at the
development stage for North Sea applications and still require significant
financial investment. Thus the costs of deploying alternative technologies
cannot be determined reliably at this stage. However, a climate of
competition existing between different marine contractors offering
alternative systems is likely to exert a downward trend on offshore
removal costs.
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10.0 ENVIRONMENTAL IMPACT

All the disposal options require the expenditure of energy and emissions
of CO2 and other gases to the atmosphere. From this perspective, if the
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facilities are to be disposed of offshore, the material in these facilities

would be lost and there would be a cost in replacing this lost material.
Hence the total energy expenditure and CO2 emissions could be reduced
B B

by recovering material from the facilities for recycling.

It can be concluded that the total removal and recycling onshore of steel
platforms will result in a marginal saving of energy in comparison with
disposal at sea, if the energy cost of replacing the lost material is included
in the comparison.

The environmental impact of decommissioning will be acceptably low,

provided environmental management measures are planned and adhered
to, for example, to prevent accidental spills and releases. The disposal of
contaminants and residues from the topsides has a potential to cause
pollution, provided that these are contained and disposed off
properly/carefully the environmental impact will be reduced to an
acceptable level regardless of the disposal option.

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11.0 SAFETY IMPACT

The Offshore Installations (Safety Case) Regulations 1992 require an

operator to produce an abandonment safety case prior to starting
decommissioning. This safety case does not have to include quantified
risk assessments, but does require a risk-based approach. The quality of
the safety and reliability data available will influence the accuracy of the
safety case.

In order to ensure that the decommissioning operations are carried out as

safely as possible, safety must be given full consideration throughout all
the stages of planning.

It is important that safety is considered from the earliest possible point in

the planning for decommissioning. This should address:

the safety information to be obtained from potential contractors

during the pre-qualification and tendering stages,

the safety management system and procedures that contractors

are required to have,

how contractors' safety management systems are to be interfaced

with that of Phillips and each other,
 auditing of contractors' safety management systems by Phillips
personnel,

how the information obtained from surveys of the installations

prior to decommissioning will be utilized to ensure the
decommissioning operations are as safe as possible,

the overall management structure for the decommissioning

operations to ensure that there is no potential conflict between
scheduling and safety,

how personnel involved in the various stages of decommissioning

will be trained for the particular activities they will undertake,

what methods will be employed to identify the hazards associated

with the decommissioning operations and control these hazards
effectively.

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12.0 LIFE OF FIELD STRATEGY

The latter part of a long term decommissioning study involves developing

a life of field strategy for decommissioning the offshore facilities. This
master plan includes a contracting strategy for addressing
decommissioning in future years. Planning schedules are then prepared
for the various removal timing options. Generic schedules can also be
prepared for removal of the subsea wells and platforms (Figure 11).
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At the outset it is worthwhile to consider some general aspects of planning

decommissioning work:

Decommissioning can be a high profile activity and failure to

manage the process can severely affect the reputation of the
operating company. As well as managing the work, the
environmental and the public relations side must also be
managed.

A number of specialist services contractors will be required as

well as dealing with a number of government agencies.

The decommissioning of offshore oil and gas facilities will be a

high cost operation for which appropriate financial provision
needs to be made (refer following section).

Decommissioning work is in its infancy in the UK SNS and as

such there is the potential for new innovative removal
technologies to be developed, as well as optimizing the
contracting environment.

Platform removal and well-plugging activities are the two most

expensive items closely followed by topside decommissioning and
 preparation work.

The decommissioning operations require the same level of

professional skills, organization and planning that were required
to design, fabricate and install the facilities in the first place.

The implementation of a decommissioning plan has one asset not

available to front-end phases of a new project development constrained
by supply contract dates or requirements to realize returns on investment
capital, and that is "time". This time can be well spent in strategic planning
to minimize decommissioning liabilities. The steps involved in managing
the decommissioning process are well documented in the literature and
will not be repeated here except to mention that two key implementation
strategies can be identified:

Firstly, multiple managed decommissioning projects per season,

whereby owners may defer decommissioning operations to
coincide with other facilities to gain economics of scale or,
different owners may schedule decommissioning operations to
allow collective strategies to be developed.

Secondly, the use of flexible time-based contracts, in which

owners retain the option to decommission as soon as production
ceases, or to defer decommissioning to suit re-use schedules or
potential future third party tie-in.

Both of the strategies, whether based on multiple contracts, or the flexible

time based contracts, can only be realized by a much closer liaison
between operators and prime contractors, thereby ensuring the efficient
utilization of resources and marine equipment.

Flexibility must also be written into the contracts themselves; with flexible
operating windows, elimination of cost penalty clauses related to schedule
variation, or liquidated damage penalties. Contracts for decommissioning
could be placed with prime contractors at least one to two years ahead of
the facility planned shutdown dates thereby allowing contractor input into
the planning of platform shutdown operations and the resulting seamless
transfer of responsibility from the operating Offshore Installation Manager
to the contractors Offshore Decommissioning Manager.

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13.0 DECOMMISSIONING COSTS

The cost of decommissioning a Southern North Sea gas field has been
broken down into ten major activity categories and a contingency. The
percentage of the total costs allocated to each activity is shown on Figure HU

12. The percentage breakdown is based on specific decommissioning

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studies recently undertaken by Foster Wheeler and Tecnomare. Wherever

possible, contractors' estimates for the specific work (i.e. tonnage of steel
or equipment to be lifted and dismantled) were used rather than dayrate
estimates.

Whilst this breakdown of costs is specific to a particular gas field the

proportions are considered to be reasonably typical for other southern
North Sea fields. However, it should be noted that no allowance has been
included for disposal of drill cuttings, as these are likely to have been
dispersed by the strong currents. Similarly, no costs are included for
permanent abandonment of exploration wells which have been
temporarily plugged.

The cost data received from contractors offering alternative methods of

platform removal was minimal and made meaningful comparisons with the
cost estimates based on heavy lift crane vessels difficult. Therefore,
recommendations for future work would include paid studies to various
removal contractors to gain a better understanding of the cost and
schedule impacts of their respective methods.

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14.0 CONCLUSIONS AND RECOMENDATIONS

When a new field development is planned the cost of decommissioning

very often looks insignificant when examined using discounted cash flow
methods. But towards the end of the field life it becomes a real cost that is
by no means small. This is the price we pay for discounting the
decommissioning cost such that no one gave the problem much thought
when the platforms were built. The problem is exacerbated by the fact that
the expenditure on decommissioning is "dead money" as it will produce no
new revenue. The one saving grace is that some of the cost will be tax
deductible. Never the less it is in every bodies interest to reduce the cost
to a minimum.

Decommissioning is very often seen as being an isolated activity that

occurs at the end of field life. It is hoped that this paper has shown that
decommissioning is intricately tied to the production phase of the field and
that long term planning of the decommissioning operation is required.

In answer to the question "when will decommissioning take place?" then a

large number of factors need to be examined. What was clear was that as
a general rule decommissioning and removal of all the facilities at the end
of the end of the field life and abandonment of the pipelines in situ was
found to have the lowest cost. A single campaign offers the lowest cost
option as compared with a phased approach.

The Kepner -Tregoe decision making process has been used as a

systematic method to decide what facilities should be decommissioned
and how should this be executed. This analysis shows that abandoning
the pipelines and umblicals in-situ is the preferred option. It will be
interesting to see whether this remains as an allowable option and
whether lobby groups will try reverse this option. Past experience has
shown that new technology and methodology will refine the
decommissioning process and will have a downward pressure on costs
particularly as experience builds up. It is important that all operating
companies have a good handle on their decommissioning costs. The only
way to do this is to study in some depth the way in which
decommissioning will be carried out for their field.

Another important recommendation from the studies undertaken was that

the platform cranes and accommodation facilities should be kept
operational to the end of field life so that the choice of decommissioning
technology could be kept open, for example the use of composite
equipment to P and A the platform wells which could save the costs of
chartering a drilling unit.

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15.0 ACKNOWLEDGEMENTS

The novel approach to decommissioning described in this paper has been

applied recently by Foster Wheeler Petroleum Development Ltd, with the
support of personnel from Tecnomare UK, to formulate the long term
decommissioning philosophy for the clients Southern North Sea fields.
The authors would like to thank their employers for their assistance in
writing the paper and their client for permission to publish it.

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Graphs

Figure 1: Study Execution

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Figure 2: Production Taildown

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Figure 3: Imaginary Gas Field

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Figure 4: Daily Gas Production Forecast

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Figure 5: Annual Cash Flow Forecast Per Facility In Complex

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Figure 6: Selection Criteria for Disposal Options

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Figure 7: Selection of Preferred Disposal Options

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Figure 8: Kepner - Tregoe Jackets Analysis

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Figure 9: Selected Disposal Route

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Figure 10: Alternative Lifting Technologies

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Figure 11: Generic Schedule Durations

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Figure 12: Decommissioning Cost Estimates

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Table 1: Factors affecting the COP date

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Table 2: Decommissioning, Legislation, Regulations,

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Conventions, Directives and Guidelines UH

Table 3: Best Practice for Disposal of Waste Streams from

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Decommissioning Activities UH

Table 4: Risk Assessment based on Probability of occurrence and

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consequences UH

Table 5a: Jacket Removal Options - Overview of Issues

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Table 5b: Jacket Removal Options - Overview of Issues

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