Eniday Innovation Technology

Automation, an alternative to decommissioning

Jack-up rig under repair in Malta Grand Harbour
Jack-up rig under repair in Malta Grand Harbour

In many established oil and gas production areas, such as the Gulf of Mexico, the North Sea and elsewhere, an increasing number of fields are coming to the end of their planned operational lives. Therefore, global decommissioning costs are expected to rise…

In many established oil and gas production areas, such as the Gulf of Mexico, the North Sea and elsewhere, an increasing number of fields are coming to the end of their planned operational lives. Therefore, global decommissioning costs are expected to rise from approximately $2.4 billion in 2015 to $13 billion a year by 2040 according to a recent IHS Markit Offshore Decommissioning report. Today, with low oil prices, operators have a choice with aging installations to decommission them or invest in automation to extend their life span.


The acceleration in decommissioning spend reflects the trend towards deeper offshore developments, located in harsher environments, with larger and more complex installations. This increases the time it takes to dismantle installations and creates a rising risk of environmental and regulatory liabilities. While the Gulf of Mexico faces the largest number of decommissioning projects, spending on the North Sea’s plugging of wells and dismantling platforms and pipelines will account for around half of total global decommissioning expenditure.

According to industry group Oil and Gas UK, oil companies are expected to spend 53 billion pounds sterling after 2017 on dismantling installations in UK waters. However, if oil prices were to fall back to $50 a barrel this would make 35 percent of the UK’s North Sea production uneconomic with current prevailing technology and could accelerate the rise in decommissioning rates.

The cost of offshore decommissioning

Decommissioning costs depend on the size and complexity of the installation and its water depth. For example, a typical four-pile rig structure in 15 meters of water in the Gulf of Mexico costs around $2 million to decommission. By comparison, a typical gravity-based system with 22,500 ton topsides and 180,000 substructures in the North Sea will cost around $2 billion to decommission.

Shell paid around £1 billion to dismantle four rigs in its Brent North Sea field. Decommissioning of offshore oil and gas installations is not only expensive but often occurs despite leaving significant resources in the ground. For example, the UK’s mature North Sea oil fields still hold an estimated 10 billion to 20 billion barrels of oil, according to Oil and Gas UK. Could automation release these barrels at a profit and delay decommissioning? Read more https://www.eniday.com/en/technology_en/automation-alternative-decommissioning/

Leave a Comment

Your email address will not be published. Required fields are marked *

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.