Publication - Independent report

Ultra-deep water port: feasibility study

Published: 27 Nov 2018

Report compiled by Ernst & Young following their feasibility study looking at the most cost effective locations for an ultra-deep water port in the UK.

122 page PDF

2.0 MB

122 page PDF

2.0 MB

Contents
Ultra-deep water port: feasibility study
3. Decommissioning market

122 page PDF

2.0 MB

3. Decommissioning market

Key Messages

  • The overall expected expenditure on UKCS platform decommissioning is estimated at £59.7bn.
  • An UDW port would participate in onshore recycling and disposal activities and this is estimated to account for £1.2bn.
  • There are three primary decommissioning removal methods for transporting topsides and substructures to ports for onshore recycling and disposal. Only one of these methods, reverse engineer using UHLVs, requires an UDW port.
  • Recent UKCS decommissioning projects using UHLVs have been taken to Norway where current ports already have the required water depth requirements.
  • Having UDW enhances a port's ability to attract decommissioning projects for onshore recycling and disposal. The UK currently does not have an UDW port.

3.1 Introduction

There are more than 300 oil and gas (O&G) platforms in the UK Continental Shelf (UKCS[3], many of which have reached or are nearing the end of their useful lives. Operators have a legal obligation to decommission the asset unless derogation is granted for it to remain in place. The purpose of this section is to outline the scale of the decommissioning market, the proportion of this that relates to onshore recycling and removal and explain how a specific decommissioning method generates the need for an UDW port.

SG recommended we use the data published by the Oil and Gas Authority (OGA) and OSPAR as our primary sources. Further detail on the decommissioning sector is set out in Appendix D.

3.2 Decommissioning cost forecast

Using operator surveys, the OGA has performed a costing exercise to estimate the total costs of decommissioning across the UKCS[4]. The approach employed captures the high degree of uncertainty in operators' current estimates and outlines an expected total cost of between £44.5bn and £82.7bn, with the OGA using £59.7bn[5] as its base for future cost reduction targets.

Using the information provided by operators, the OGA is able to apportion the expected future costs to different activities in the decommissioning process, as outlined in the figure overleaf.

Figure 1: Decommissioning costs by activity

Figure 1: Decommissioning costs by activity

Source: OGA: UKCS Decommissioning 2017 Cost Estimate Report

Well abandonment is the most significant category of cost, accounting for 48% of expected expenditure. Topside and substructure removal combined account for 21% of expected future costs. Therefore, operators are expected to spend between £9.3bn and £17.3bn in removing platforms from offshore locations to onshore ports.

Onshore recycling and disposal accounts for 2% of expected future decommissioning costs. When considering this within the context of the decommissioning cost estimates provided by the OGA, this amounts to an expected expenditure of between £890m and £1.7bn. According to the OGA's base estimate, the cost of onshore recycling and disposal is forecast to be £1.2bn.

3.3 Decommissioning removal methods

Three decommissioning removal methods of fixed structures are used in the market[6]. These are described in the table below.

Table 3: Decommissioning removal methods

Method

Description

Piece Small

  • The platform is deconstructed offshore and smaller parts are collected then transported onshore using supply vessels for further processing and waste management.
  • Supply vessels do not have a significant draught requirement and therefore do not require an UDW port.
  • This method requires a significant amount of time spent offshore deconstructing the platform at site. This has led to escalating levels of expenditure.

Single Lift

  • A relatively new method where full topsides are removed and transported onshore in a single lift. This can only be performed by a specialist single lift vessel (SLV), of which there is only one currently operating in the market: Allseas' Pioneering Spirit.
  • In performing the lift, the twin hulled Pioneering Spirit will move around the platform so that it is positioned between the vessel's 122m long and 59m wide slot at the bow. It will then use eight sets of lifting beams to lift the topside and then transport it in one piece.
  • Due to the size of the ship and the substantial weight of the topside the SLV cannot come straight to port. Instead, once the Pioneering Spirit reaches sheltered waters close to the disposal yard, it will transfer the topside onto a purpose built barge, the Iron Lady.
  • This barge will then be used to transfer the topside to the quay without the need for UDW.

Reverse Engineer

  • A crane vessel will remove modules from the platform in the reverse of the installation sequence. Modules can either be placed on the deck of the crane vessel or onto a barge for transport onshore.
  • The largest reverse engineer decommissioning projects require removal of modules in excess of 5,000 tonnes. There are two ultra-heavy lift crane vessels (UHLV) operating in the North Sea decommissioning market which are capable of this: Heerema Marine Contractors' Thialf and the Saipem 7000 (S7000).
  • Generally, UHLVs transfer modules to shore on the vessel's deck. Once the vessel reaches the quay, it will use its cranes to place the modules directly on the quay. In order to do this, the UHLVs need UDW by the quayside.
  • Norway has UDW ports capable of accommodating these UHLVs. The UK currently has no UDW ports.
  • It is possible to transfer a module onto a barge for transfer to the onshore recycling centre. However, this increases the cost, timing and risks of decommissioning programmes making it unpopular with UHLV operators.
  • Smaller platforms (typically those located in the Southern North Sea) can use smaller heavy lift vessels which do not need UDW ports to transfer modules to the quay.

Source: EY Analysis

Of the 28 UKCS platform decommissioning programmes approved by BEIS since 2007[7], reverse engineer has been used in some form in all occasions except two:

  • The Janice Floating Production Unit was towed to shore.
  • Brent Delta was removed by single lift.

The largest decommissioned structures, located in the NNS and CNS, were all taken to the Norwegian UDW ports (Vats and Stord). The MCP-01 and Miller platforms were taken to Norway as a direct result of the UK not having an UDW port.

None of the reviewed decommissioning projects (those approved by BEIS since 2007) using the S7000 or Thialf used a barge transfer method.

UDW capability is therefore key to attracting projects using this form of removal, particularly when larger platforms are being removed. It allows UHLVs to directly unload modules to the quayside without the need for barge transfer, lowering the risk, cost and timescales of the decommissioning project.

As such, evidence suggests that without an UDW port, it may be challenging for UK businesses to successfully compete with other locations (which have UDW ports) for future large reverse engineer decommissioning projects.


Contact

Email: Claire Stanley