DNS News and Industry News
According to the Oil & Gas UK Economic Report 2013 (pdf), in the UK continental shelf – an area of the North Sea with large resources of hydrocarbons – some 475 installations, 10,000km of pipelines, 15 onshore terminals and 5,000 wells will eventually need to be decommissioned. Over the next 25 years, decommissioning costs are forecast to be in the region of £31.5bn. Prioritising smarter end-of-life approaches such as reuse, remanufacture and design for repairability could help to reduce some of this expenditure for a sector under pressure to cut the environmental impacts of its operations.
In Scotland, moves are under way to capitalise on this. Zero Waste Scotland (ZWS) is working with a number of stakeholders to explore how circular economy principles can be applied in this field. Decom North Sea (DNS) is leading on much of this work through facilitating closer co-operation and collaboration between North Sea operators and the decommissioning supply chain.
Nigel Jenkins, DNS chief executive officer, says the appetite is there. "Oil operators, large and small, are very keen to address the key themes of the waste hierarchy. Now that decommissioning programmes are picking up in volume and expense, there's a real desire to investigate how we can make best use of those assets."
The primary material used in the oil and gas industry is steel: it forms the base structure for many oil platforms. It's also widely recyclable. "Decommissioning projects can achieve very high levels of recycling, up to 97% by weight," notes Alastair Carruth, principal consultant for environment and infrastructure at Amec Foster Wheeler. "However … reuse and refurbishment has a much higher value than scrap recycling, but this may not lie within the largest structures."
Carruth points out that the topsides (the oil platform "upper half" comprising the production plant, accommodation block and drilling rig) and substructures are often designed for specific environments which can minimise interchangeability to other locations. "They also stay in place for decades in harsh environments which can further reduce the prospect of reuse," he says. "There are instances of large structures being redeployed elsewhere, but in general it is the smaller equipment which has greatest potential for reuse as it can be extracted, refurbished and redeployed more easily."
The amount of reuse that currently takes place during the decommissioning process is very small; some observers estimate the figure to be just 1% by weight. Jenkins is reluctant to put a number on it as he says it depends on "how you measure it and where the data comes from. All I'll say is that it's low and it needs to be improved."
Encouraging greater uptake of reuse – particularly with smaller assets – comes with its own challenges. One is economies of scale. "The savings achieved from reuse and refurbishment of equipment and structures can be small in the context of overall decommissioning costs," Carruth says. "Savings from increased reuse will only be attractive where they make a significant contribution to the cost in the context of overall operating and decommissioning costs."
It's a view echoed by Louise McGregor, head of circular economy at ZWS. "We are trying to ascertain whether it makes economic sense for [the operators]. It's probably such a small amount of money that they make during operation of the rig. We've got to make that economic case."
There are also concerns about ownership risk and liability for reused items. "The sector is quite rightly safety driven so there is a perception that equipment needs to be new to ensure its integrity," Carruth says. Changing mindsets on such issues requires extensive engagement across all professional tiers of the industry.
OilMac, a specialist broker for redundant oil and gas equipment, is keen to maximise reuse opportunities and believes that demand can be stimulated by reaching key decision-makers and purchasing influencers: these could be the process engineers that specify sub-components, equipment designers or the more entrepreneurial individuals within oil production.
DNS is currently developing a reuse guide for oil operators that it hopes to launch in the first quarter of 2015. Jenkins points that decommissioning is a relatively new activity for this sector and so established routes for reuse need to be built up.
Looking ahead, there are opportunities for knowledge transfer on other circular approaches. For example, certain offshore practices already exist such as asset lifecycle extension and equipment hire, where used assets are taken in for refurbishment before being rotated back out again.
Carruth is keen to see an evidence base built up. "As oilfields age and become more depleted, then the benefits of circular approaches will be considered and recognised more. If certain approaches can be demonstrated to produce results in terms of cost savings without compromise in quality then the sector will be very open to them."