7. Technical alternatives
- Developments in platform removal technology and the contractual arrangements across the supply chain have the potential to impact the market for an UDW port.
- Alternative approaches to removal and transfer of platforms onshore are being considered, such as barge transfer or float and tow of structures.
- Market feedback indicates:
- At present the barge transfer concept is more risky and costly compared to a direct vessel to port transfer. However, vessel operators are investing to improve the concept to broaden the choice of ports available to them.
- There is also some interest from non-vessel operators to develop the barge concept and partner with existing UK ports.
- If the barge concept is improved sufficiently to become a viable alternative to direct port access, it could open up existing UK ports for reverse engineer decommissioning projects and reduce the reliance on UDW ports.
- The float and tow of structures is an early stage concept and due to its high risk is unlikely to be used in the foreseeable future.
- The standard industry approach is for platform operators to have a contractual relationship with a single contractor, commonly a vessel operator, transferring substantially all of the risk on a fixed price basis (EPRD contract). Only one alternative structure, alliancing, was identified and market feedback indicated this was unlikely to be adopted for future projects.
This section examines potential technological alternatives that could be used to attract onshore decommissioning to the UK without the need for an UDW port. It also, outlines the current main contracting strategy for onshore decommissioning and reviews an alternative contractual strategy that could impact an UDW port's contractual position in the market.
7.2 Removal alternatives
During the market consultation a number of interviewees mentioned barge transfer as an alternative to direct to quay module transfer via UHLV. We are also aware of one market participant outlining a potential float and tow removal method. The alternative removal options are considered in the following section.
7.2.1 Barge transfer
The most frequently mentioned alternative during market consultation was the use of a barge to transport the decommissioned structures to port. In this approach, an UHLV would remove the decommissioned module from the platform and take it to a sheltered offshore location. There the module would be offloaded onto a barge and towed to port. As the water depth requirements for a barge are considerably lower than those for an UHLV it would allow existing UK ports to accept reverse engineer decommissioning projects.
The barge concept is not new, and has been used by HLV operators prior to UDW ports being developed. Further, the same approach is being used for single-lift decommissioning whereby the Pioneering Spirit utilises the purpose built 'Iron Lady' barge to transfer decommissioned topsides to a disposal yard. However, this alternative has fallen out of favour with UHLV operators due to the risk and cost of using a barge. The process of offloading the decommissioned structure in open water carries the inherent risk of accidental waste spillages or the entire structure falling into the water. A key risk is that the offloading is postponed due to bad weather conditions, with the UHLV having to remain idle until the weather improves. This is a potential cost to the UHLV owner, who acting as the EPRD contractor, risks delays to the overall decommissioning programme and any other work which it has lined up after the project. As the EPRD contract owner, it takes the risk for delays due to weather.
Due to the bespoke nature of many of the offshore O&G structures standard barges may not be suitable for the removal process. As such modifications would have to be performed, which may end up being very costly. However, during the market consultation interviews some vessel operators did note that they have not abandoned the barge transfer concept and are instead investing into research and development to improve the barges and the offloading process.
The reasoning for the investment is to broaden the choice of ports to which structures can be taken, as only being able to go to UDW ports limits UHLVs to non-UK locations. This is viewed as a concern especially if the volume of decommissioning projects increases. Due to the significant size of the larger topsides a port may only have the capacity to accommodate one removal project a year. Therefore, if there are several decommissioning projects in a given year the UHLV operators will need to be able to access numerous ports to perform all of the removals.
During the market consultation interviews it was also proposed that other stakeholders in addition to vessel operators could own barges. It was proposed that an individual port, a consortium of ports or a separate company could develop and own a barge. In addition, it was also noted that the Scottish and/or UK governments could finance the development of a barge. There has been some interest by parties other than vessel operators to develop the barge concept. For example, it was brought to our attention that a company specialising in heavy-lifting is looking to develop a multi-purpose barge, which it would manage and offer to UHLVs operating in the North Sea. The company is planning to partner with UK ports, which would open up those ports to accept structures from UHLVs without the need for UDW. Ultimately, this would require the barge owner, onshore contractor or port authority to take the risk on weather delays to the barge transfer. Currently, we understand they have been unwilling to take this risk to date.
If the barge concept is improved sufficiently to become a viable alternative to direct port access, it could open up existing UK ports for reverse engineer decommissioning projects and reduce the reliance on UDW ports.
7.2.2 Floating and tow method
Under this approach the topside would be cleaned and then fully welded. It would then go through extensive testing to ensure that there are no open spaces for water to enter. Subject to successful testing the platform would eventually be lowered into the water and then towed to port for deconstruction. To our knowledge, this has not been used for platform decommissioning as yet. Interviewees highlighted, that it was unlikely that this approach would be used any time soon due to its high risk as well as the heavy reliance on precision welding and testing.
7.2.3 Floating quay
EY has noted that one port operator in Scotland has considered developing a floating quay which could help it attract new work. EY have not been able to obtain any detail on this development, however we have been advised that it would consist of a series of barges which are connected to the quay. It may be possible to operate on these barges or be able to transfer modules from the barge to shore via SPMT's. We are unaware of the feasibility of such an operation. During market interviews, no stakeholders mentioned this option as a viable alternative they had considered or heard of.
7.3 Contractual structure alternatives
This section reviews the main contracting structures which are used in the decommissioning market.
7.3.1 Current industry approach - EPRD
The current standard approach for removal and onshore disposal and recycling is to use an Engineering, Preparation, Removal and Disposal (EPRD) contract. This allows the platform operator to have multiple activities such as platform preparatory works, topside removal, substructure removal and onshore disposal included in one contract. This is viewed by platform operators as providing the maximum amount of risk transfer for a fixed price.
The EPRD contractor is then responsible for contracting with the supply chain for the various activities within the scope of the contract, including the form of removal and selecting the onshore destination for the decommissioned platform. EPRD contractors historically have been the vessel operators, with awards made to both UHLV operators and SLV operators:
- UHLV - Saipem recently won the Miller EPRD contract. The HAF consortium, which includes Heerema Marine Contractors (owner of Thialf) and AF Offshore Decom (operators of an UDW port in Vats Norway) won the Murchison platform EPRD contract.
- SLV - Allseas completed the Brent Delta project using the Pioneering Spirit and the Able Seaton port in Teeside.
When bidding into an EPRD contract, the onshore disposal contractor is required to outline how it will deliver the entire scope of the onshore decommissioning process and exhibit a clear understanding of the approvals process necessary to carry out the contract works. It is therefore the EPRD contractor (rather than the platform operator) who selects the location of onshore decommissioning activity. The result is that at present, an UDW port would be expected to have a contract with one of the three main vessel operators (Heerema, Saipem or Allseas).
During the market consultation interviews, platform operators and vessel operators confirmed that this was the industry preferred contracting method and is the expected main strategy to be used going forward.
7.3.2 Alternative approach - Alliancing contracts
During the market consultation, a platform operator raised the possibility of using an alliancing form of contract. This type of contract was used in the early development of the North Sea fields but has not been commonly applied in either the UK O&G sector or the wider construction industry. We understand that it has been more popular in other regions such as Asia, Australia and New Zealand.
An alliancing contract differs from an ERPD approach in areas such as flexibility, collaboration, risk allocation and dispute resolution. Under this approach, relevant contractors form an alliance and jointly bid for work from the platform operator. Through a closer alignment of interests the intention is that parties act in the best interests of the project as a whole. This approach could present an opportunity for an UDW port to have a more active role in the supply chain, broadening contractual relationships from the vessel operators and giving direct access to the platform operators.
However, whilst this was mentioned during market consultations, the overall view remained that EPRD would continue to be the standard contractual structure for the foreseeable future.
The next section sets out the findings from the overall market consultation across a range of areas.
Email: Claire Stanley