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Plunging oil prices highlight need to rationalise decommissioning

06 January 2015

With Brent crude falling to its lowest price in five years this week, operators are under immense pressure to streamline costs and offshore decommissioning and abandonment is one of the biggest areas in need of improvement, analysts said ahead of a major summit in Houston.

Brent fell to $52.27 per barrel on January 6, its lowest level since May 2009. With US crude stockpiles increasing and OPEC member countries resisting calls to curb output, hydrocarbon supply looks set to stay one step ahead of global demand for the foreseeable future.

“These prices create a very tough situation for operators working in higher-cost and higher-risk scenarios, such as deepwater, and they’re under immense pressure to look at all aspects of operational costs,” said DecomWorld analyst, Philip Chadney.

“Traditionally, asset retirement has been seen as an afterthought, the unpleasant chore to be done when the party’s over,” he said. “But our work shows that there are big gains to be had in cost savings and efficiencies when operators plan now for decommissioning later.

“Smart operators are now setting their plugging and abandonment campaigns in the context of the whole asset lifecycle. This lets them capitalize and absorb advances in technique and process improvements so they can maintain tighter control on cost and predictability of outcome.”

DecomWorld’s 7th Annual Decommissioning & Abandonment Summit, to be held in Houston in March, explores the latest approaches to decommissioning TLPs, SPARs, FPSOs and fixed structures in deepwater.

Regulators and operators from the Gulf of Mexico, North Sea, Asia-Pacific, South America and Alaska will provide a unique global perspective on decommissioning and abandonment challenges and approaches.

Expanded track sessions will showcase specialists in well P&A, emerging environmental options, subsea infrastructure, pipelines, and cost estimation.

Attendees will be able to assess the state of decommissioning and abandonment around the world, and get cutting-edge approaches to the complexities presented by both shallow and deep water.

Workshops will examine how to develop reliable cost estimates for operators’ offshore portfolios that reflect the true cost of decommissioning by implementing robust cost estimation methodologies and techniques.

The latest technology for maximizing well P&A efficiency and ensuring regulatory compliance will be showcased.

More than 700 attendees will get have their say in the biggest live polling event in the decommissioning calendar, and get expert panel commentary on the findings to the most controversial decommissioning topics.

“The summit is the world’s biggest D&A networking and business development experience,” said Chadney. “Since deepwater represents the next major frontier for the industry, the insights on offer will be invaluable in setting a course for 2015 and beyond.”

Chadney said a key theme of this year’s event was getting beyond the view of decommissioning and abandonment as isolated activities. “We need to connect them with the entire asset lifecycle, from design to operations, to eradicate the legacy issues and maximize cost efficiencies,” he said.

He added: “It is widely known across the industry that the cost of decommissioning and abandonment is a major issue. Costs are difficult to estimate and can easily escalate beyond initial budgets. With oil prices so low, operators recognize that they need to examine every aspect of the operational mix, and decommissioning and abandonment is rising fast up the priority scale.”

More information about the sectors longest-running business intelligence event, taking place 17-19 March, can be found here: http://bit.ly/decommissioning2015


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