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Making the most of late life and preparing for retirement

24 December 2015

This aspiration is something that many of us will strive for towards the end of our working lives, but it is also a good recipe for assets, say Dai Richards and Philip Lawson of ABB Consulting. As production facilities approach the end of their economic operating lives two conflicting priorities come to the fore; maximising production while maintaining safety and reliability; reducing operating costs to make economic operation viable.

Successful operation during this phase of the asset’s life means walking a very fine line between overinvesting in supporting the asset and not carrying out some maintenance that results in a production loss, or worse still a safety or environmental incident. Late life is also the phase of an asset’s life when the foundations are laid for decommissioning; the right choices leading to successful, cost effective and safe decommissioning; the wrong choices leading to overspend or incidents that could damage an operator’s reputation.

The economic turmoil over the last 12 months have accentuated the situation with the cut point for economic recovery coming forward, or being passed, by many assets.

Forecasting the actual timing of Cessation of Production (CoP) further complicates the picture and depends very much on maintaining economic recovery. There is a real benefit to extending the CoP date, if recovery can be made economic through reducing costs or Enhanced Oil Recovery (EoR) techniques. However there are many factors dictating whether recovery is economic or not and these factors constantly change, often driven by events which are hard to predict. This lack of certainty of CoP makes it harder to plan late life operations and any plans must be flexible enough to accommodate these changes. 

Despite the difficulties of doing so it is vital to maintain a coherent plan for managing late life operations if economic recovery is to be maximised and the preparations for successful decommissioning are to be completed. This article will highlight some of the essential elements for such a plan.

When it comes to decommissioning the tax rules in the UKCS encourage minimal spending on preparing for decommissioning during late life operation. However not completing some of the key preparation steps and taking the key decisions could significantly increase the costs and difficulties of the final decommissioning process.

The ingredients of a good approach

This section will discuss some of the key elements that need to be considered in a late life operational plan, including; smarter maintenance; managing redundant equipment and preparing for decommissioning; and finally collaboration.

Smarter Maintenance is about challenging the current practices to minimise the costs of maintenance while protecting integrity and reliability. The start point is to focus on sustaining the asset during its latter years of operation to enable maximum economic recovery, which requires safe and reliable operation. Equipment retirement dates based upon the CoP date need to be estimated. Based on the current status of the equipment the minimum levels of maintenance, and inspection necessary, to support the equipment up until the projected retirement date can then be determined. When considering the maintenance and inspection requirements there will be many opportunities to reduce the frequency or scope of the maintenance interventions.

Fig 1 - Key activities during the late life of an asset and linkages to CoP date
Fig 1 - Key activities during the late life of an asset and linkages to CoP date

A challenging process can result in significant reductions in maintenance and inspection tasks, as illustrated by the following examples. A review of pressurised equipment inspections carried out across eight offshore and three onshore facilities determined that over 50 per cent of the items reviewed were suitable for Non Invasive Inspection (NII), meaning that the items could be inspected on-line and without the need to open up the equipment for inspection. NII helps reduce the frequency of TARs, one of the main contributors to lower production efficiency, and reduces the workscope for planned events.

This reduction in workload allows for either shorter TAR durations or for other maintenance tasks to be substituted, which can help to address the increasing back log of maintenance in the North Sea. In another example the testing frequency of pressure safety valve was reviewed across six offshore platforms and an on-shore terminal. The risk based review resulted in the average inspection interval being increased by 27 per cent, resulting in significant cost savings. These sort of reductions are achievable particularly where good maintenance records exist. The benefits are not only down to the direct cost savings from reducing maintenance tasks, but the workload reduction frees up bed space to allow people to work on higher priority tasks.

When considering equipment retirement dates it is important to consider the requirements for equipment to operate beyond CoP, either as it is required to facilitate decommissioning, or as it is needed to maintain the essential systems required while the asset is maintained as a Normally Unmanned Installation (NUI), prior to decommissioning. The operating period as a NUI could be several years and the required equipment will need to have maintenance and monitoring plans in place throughout that time. Identifying retirement dates also provides a solid basis for the eventual decommissioning plans.

One of the common issues impacting reliable production during late life is obsolete equipment. When identifying retirement dates, any equipment that will be obsolete prior to CoP should be identified. An obsolescence strategy is then required for each relevant item, the appropriate approach depending on the consequences of equipment failure and the options for repair or replacement.  Another consideration when determining late life maintenance is the eventual fate of the equipment, whether it will be dismantled sold for scrap or preserved for resale. Additional maintenance may be justified to help maximise asset value.

Late life operation brings new maintenance challenges, due partly to changing operating conditions and partly due to equipment ageing. Typical examples of some of the these challenges include; accelerated corrosion damage to 30 year old equipment with low measured corrosion rates, due to changes in fluid compositions; deteriorating condition of small bore pipework and branches, giving  potential failures and a loss of containment; poor reliability of compression trains, due to reduced pressures, reduced flow rates and different molecular weight range; a lack of power generation capacity due to additional equipment having been installed; reductions in the reliability of utilities, e.g. cooling water systems, due to ageing. Identifying these new factors and ensuring they are considered as part of challenging the maintenance regime is critical as they can have detrimental impacts on the equipments’ likelihood of reaching the required retirement date.

Asset life extension has not been mentioned above, but there are many situations where it remains desirable to significantly extend the operating life of an asset. In these situations a comprehensive review of the asset’s equipment and maintenance approaches is required to identify the actions required to assure the continued safety and reliability of the production facility. Such a study would provide a forward view of the investments required to support the asset and would provide a robust starting point for the decommissioning plans.

Managing redundant equipment and preparing for decommissioning is a vital element that should be starting up to 10 years before CoP. During the maintenance challenge process described above equipment will be identified that can be retired early, or indeed is already redundant. Clearly continuing to maintain redundant equipment is a cost that should be avoided, but there are examples of this happening when redundant equipment is not fully isolated or maintenance records updated.

Removing redundant equipment not only reduces maintenance costs, but also reduces safety and environmental incidents caused by, for example, inappropriately isolated dead legs that are prone to leaks. Further advantages come from freeing up deck space, reducing topsides weight and providing a source of critical spare parts. The cost savings can be very significant, with examples of the maintenance savings equating to over two per cent of overall maintenance spend. This exercise brings benefits not only during late life, but reduces the overall decommissioning task.

Determining which items of equipment are required post CoP requires many of the key decisions about the decommissioning plans to be made. The length of time after CoP that dismantling will actually start, the choice of dismantling approach (single lift or piece small or piece large or a combination of all) and the systems that will continue to operate during NUI operation are three of the key decisions that will impact the retirement dates of equipment.

While there are financial benefits from delaying development work on decommissioning projects the overall risk of making poor decisions necessitates some planning and preparation work being done. This is consistent with the regulatory requirements to complete decommissioning plans and estimates prior to CoP.

There are many factors that will influence the optimum strategy for decommissioning. These range from the construction and condition of the asset, the efficiency of demolition techniques deployed, logistical issues such as the availability of lifting vessels and port facilities. The overall schedule for decommissioning, the various methodologies to be deployed for different stages, project estimates, project risks (including safety, environmental, reputational and commercial risks), the contracting strategy and the availability of key lifting and disposal facilities are some of the key project elements that should be developed during late life operation.

Late life is also a good time to ensure that the key information required for successful decommissioning is captured and secured in order to make it easily accessible during decommissioning. Uncertainties about the condition of equipment, the state of decontamination, structural integrity, the health of safety and emergency systems etc. will increase the risks during decommissioning and therefore the contingencies allowed for the project. Determining critical information will help to manage and reduce the project risks. Capturing this data during late life is easier as people with much of the unrecorded knowledge are available, the operating and maintenance systems are live and active.

Collaboration is the final element to be discussed here, but it is possibly the most important element in helping the UKCS operators to manage late life operation and decommissioning successfully. Collaboration is certainly a current hot topic in the industry, however Maximising Economic Recovery requires collaboration to actually happen in a meaningful way. Many of the topics discussed earlier in this article can be improved or made easier through collaboration.

There are a number of areas that will benefit from collaboration during decommissioning.

Developing standard procedures for decommissioning that everyone accepts will save time and costs compared to these being developed for each and every project. Standard forms of contract will simplify the contracting process. Commonly agreed ways of working and offshore operating procedures during the decommissioning phase will assist with contractor compliance and reduce costs. Collectively establishing estimating norms for piece small demolition will make project estimates more robust and faster to develop. These are just some examples.

The ‘wave’ of decommissioning activity will create bottlenecks in areas such as heavy lift vessels and port capacity. Coordinating the demand for scarce resources and using them efficiently will benefit all operators, but will require collaboration and some compromise.

During late life operation collaboration around sharing critical spares and making these available from redundant assets would help with some of problems created by obsolescence. One of the blockers to sharing spares is concern around the liabilities arising from use of used components in uncertain condition. Navigating this concern in a one off situation, possibly involving a breakdown, is not easy. Tackling the issue across the industry and developing an approach that all operators can accept would be a significant task, but if accepted could make the sharing of spares acceptable and bring significant benefits to all. This is the sort of issue that collaboration could address.

Conclusion

Finding the right balance during late life operations is not easy and whatever approaches are adopted must be flexible enough to adapt to constantly changing demands. Having an up to date understanding of the most likely retirement date for equipment and the interventions required to maintain equipment’s fitness for service will go a long way in helping to make the right decisions during late life and decommissioning. This understanding will help balance the conflicting pressures of safety, maximising production, reducing costs as much as possible and maintaining flexibility.

There are sustainable ways of responding to the current cost pressures without compromising safety, integrity, reliability or future decommissioning costs. However the industry will have to continue to change and adapt traditional ways of working by looking at new approaches, often well tried in tested in other sectors, and by truly collaborating.

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Author information:

Dai Richards is currently the Marketing Manager for ABB’s Consulting business. He has worked for 30 years in the oil & gas, chemicals and petrochemicals industries and his operational experience includes engineering maintenance, turnaround management, project management and consultancy.

Philip Lawson manages ABB’s Aberdeen Service & Consultancy.  He has over 15 years’ experience in the oil, gas and process industries working with key North Sea operators.  Most recently, he has been responsible for delivering a number of asset life extension studies for operations and developing economical solutions for managing redundant or obsolete equipment.


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