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Oil and Gas Decommissioning
SUBSEA ENGINEERING OPPORTUNITY

International Market Insights Report Series
March 2018
Subsea Engineering Opportunity: International Market Insights March 2018
Contents
1. Introduction .................................................................................................................... 3
2. Subsector overview ........................................................................................................ 5
2.1. Decommissioning activities ..................................................................................... 5
2.2. Well plugging and abandonment ............................................................................. 7
2.3. International regulations .......................................................................................... 9
2.4. Financing O&G decommissioning ......................................................................... 10
3. Subsea engineering synergies ..................................................................................... 12
3.1. Operator project management .............................................................................. 12
3.2. Well plugging and abandonment ........................................................................... 13
3.3. Facilities / Pipelines making safe .......................................................................... 14
3.4. Sub-structure removal ........................................................................................... 14
3.5. Subsea infrastructure ............................................................................................ 15
3.6. Site remediation .................................................................................................... 15
3.7. Monitoring ............................................................................................................. 16
3.8. Areas for innovation .............................................................................................. 16
4. Global market with locations of interest ........................................................................ 17
4.1. Europe .................................................................................................................. 18
4.2. North and Central America.................................................................................... 22
4.3. South America ...................................................................................................... 24
4.4. Africa .................................................................................................................... 25
4.5. Asia and Pacific .................................................................................................... 26
Appendix: List of Acronyms ................................................................................................. 29
Oil & Gas Decommissioning 2

1. Introduction
This report is part of a series of ten reports considering the opportunities for the Scottish oil
and gas (O&G) subsea supply chain in other subsea and related markets. The report is a
desk review considering the international activity of each of the sectors including where there
is current activity and where there is the potential for activity based on published targets and
available resource and opportunity. The report also considers the particular synergies of the
given sector and the subsea oil and gas supply chain. These opportunities cover areas
where there is a direct cross over and also where there are opportunities for collaboration to
provide innovative solutions.
Decommissioning overall
The aim of O&G decommissioning is to seal off a well permanently from any possible
escapes of hydrocarbon or water, or cross-flows into other formations, and clearing the
seabed and water column from any O&G infrastructure. Decommissioning is a relatively new
sector, but is the final stage in the lifecycle of oil and gas (O&G) operations. The programme
of activity includes the removal, where applicable, of a fixed platform or floating vessel e.g.
FPSOs; any moorings, risers, umbilicals or conductors; subsea infrastructure; the plugging
and abandonment (P&A) of subsea wells and subsequent onshore dismantling and disposal.
Onshore wells are not being considered as part of this report. There is a significant
crossover between the O&G subsea supply chain and O&G decommissioning both in terms
of technology requirements, but also in terms of business practices and ‘language’.
Current good practice in the O&G sector is to have a decommissioning plan in place when a
well is being drilled. However, this has not always been the case and where no plans were
considered during drilling the resulting decommissioning programme is likely to be more
complex and include more investigatory activities within the schedule. Companies can often
view it as economically beneficial to put off decommissioning as estimating decommissioning
costs is difficult (every well is different) and there is no financial return on the expenditure.
However, as time passes the installation will degrade; the understanding of the well
decreases; and regulations may become more onerous all resulting in increased costs for
the decommissioning programme.
Subsea decommissioning
The visible part of decommissioning is the removal of infrastructure and their transport to
shore followed by dismantling and recycling, this accounts for approximately 1.2 percent of
the spend on decommissioning. However, there is a larger unseen portion that occurs in the
subsea environment. All activity that occurs below sea level will be covered in this report –
the preparation and removal of infrastructure, particularly in subsea fields, and the plugging
and abandonment of subsea wells.
Global activity
O&G decommissioning is a growing area as offshore infrastructure, particularly in the North
Sea and the Gulf of Mexico, ages and moves beyond its operational life and fields become
uneconomic. Decommissioning in the GOM has so far been predominately in shallow
waters, but decommissioning activity is now occurring in deep water as well.
Decommissioning of the infrastructure and permanent sealing of associated subsea wells is

the next stage in the O&G lifecycle. Table 1 below gives an overview of decommissioning
expenditure globally, highlighting where most of the activity will be in the next 10 years. In
the mid-term markets, for example West Africa and Asia Pacific, work is needed on the
development of appropriate and efficient regulation and guidelines for decommissioning.
These regions can learn from Scotland, particularly for the deeper water fields as well as
provide potential collaboration opportunities for deploying Scottish technologies and
expertise.
Table 1: O&G hubs with offshore decommissioning expenditure. Source: various

Oil & Gas Hub Expenditure to 2025 Total Expenditure
UKCS £17.1 bn Targeting £39bn total,
without cost reduction mid-
point estimate £59.7bn
Norwegian CS £400-800 million / year NOK 160 billion (£14.5
billion)
Dutch CS £650-800 million / year €3.7bn (£3.2bn)
United States > £6.3 bn $39.5 billion (£27.8bn)
Asia Pacific - £21 - £42.5 billion
Potentially as much as £70
billion without cost reduction

2. Subsector overview
Offshore oil and gas production first began in the 1940s in the Gulf of Mexico 1 and in the
1960s in the North Sea 2 with activity now happening globally and new fields still being
discovered and developed.
Oil and gas producing fields employ either fixed or floating structures (e.g. steel jackets,
semi-submersibles or spars, amongst others) connected to multiple wells. Subsea wells
(those with the wellhead and associated infrastructure on the seabed) were first used in the
early 1960s and tend to be used in deep water situations. Many subsea wells can be tied-
back to a single fixed or floating platform, or even exporting the oil and gas straight to shore.
For example, the Perdido oil field in the Gulf of Mexico has approximately 30 wells from
three fields tied-back to a single spar platform and the Orman Lange field in the Norwegian
Continental Shelf (NCS) has 50 subsea wells that are grouped at production stations and the
gas pumped directly to the shore. The Brent field in the UKCS had four platforms with 154
wells which are currently undergoing decommissioning.
Given the age of oil and gas development globally, particularly in the North Sea, Gulf of
Mexico and West Africa, with many fields exceeding 40 years of operation, combined with
tightening regulations on offshore structures, decommissioning is a rapidly growing sector.
Cessation of production (CoP) mostly occurs at a point where a field becomes uneconomic,
such that it costs more to extract the hydrocarbons than they can be sold for. A CoP decision
is therefore impacted by oil prices and trends as well as the available hydrocarbons
remaining in the reservoir. A CoP decision may also be made where there has been a
significant issue, e.g. with the reservoir or infrastructure, that would be uneconomic to rectify
based on the likely amount of hydrocarbon that could still be extracted.
The following sub-sections cover the activities associated with decommissioning in a subsea
context and the international regulations that cover this area.
2.1. Decommissioning activities

In the UKCS, a decommissioning programme involves a series of activities, based on the Oil
& Gas UK Work Breakdown Structure (WBS) which are listed below. The activities
highlighted (in bold italics) are those with a significant subsea element that will be
considered in this report. These activities are not necessarily linear and overlap across
activities is represented in Figure 1 below.
- Operator project management

- Facility running / owner costs
- Wells abandonment
- Facilities / Pipelines making safe
- Topsides preparation
- Topsides removal
- Sub-structure removal
1Offshore and Subsea Facilities, PetroWiki, accessed February 2018

2Oral History of Lives in the North Sea Oil and Gas Industry, The Project: Brief History of the UK
North Sea Oil and Gas Industry, University of Aberdeen, 2006

- Topside and sub-structure onshore recycling

- Subsea infrastructure (pipelines, umbilicals, mattresses, christmas trees, etc.)
- Site remediation
- Monitoring
The chart in Figure 1 shows the stages of work involved in a decommissioning programme
as well as key milestones such as CoP, when the asset is hydrocarbon free and when
materials are delivered to shore for recycling.
Figure 1: Chart showing the decommissioning stages. Source: Scottish Enterprise Oil and Gas
Decommissioning Action Plan.
These activities will be considered in greater detail in Section 3 where the synergies with the
subsea oil and gas supply chain will be analysed. As can be seen in Figure 2 well plugging
and abandonment (P&A) is the biggest cost in a decommissioning programme, at 49
percent, based on UK figures, and it will therefore be the main focus of this report. The other
subsea elements such as the planning and preparation as well as the cleaning,
disconnection and removal of subsea infrastructure will also be considered.
Breakdown of UKCS Decommissioning

Expenditure
Project management and
facilities running costs
Onshore disposal,
remediation and monitoring
Platform removals
Subsea and pipeline

decommissioning
Topside preparation
Well P&A
Figure 2: Breakdown of the expenditure on decommissioning by activity. Segments highlighted in

colour are subsea or have a subsea element, segments in grey are surface or onshore elements of
decommissioning. Source: Oil & Gas UK decommissioning insights 2017

2.2. Well plugging and abandonment
Well plugging and abandonment (P&A) includes, platform wells (those that are operated
from a fixed platform); subsea wells (those where the wellhead is on the seabed, and
hydrocarbons are removed to a floating vessel, or tied-back to platform infrastructure); and
suspended exploration and appraisal (E&A) wells.
The cost of P&A across the three types of well varies, as well as cost variations from water
depth, weather, reservoir type, age, condition and complexity of operations. 3 An overview of
P&A costs (in 2016 money) in the UK North Sea regions (Table 2) and in the Gulf of Mexico
(GOM), USA (Table 3) are below. The UK industry set itself a target to reduce the cost of
well P&A by 35% from 2015 levels, these targets are included in Table 2 below. 4
Table 2: Average and cost range of well P&A in the UKCS, including industry cost reduction target.
Source: Oil & Gas UK, Decommissioning Insights 2017; OGA.
Location Well P&A 2017 average 2017 range 35% cost
(per well) (per well) reduction from
2015.
Central and Platform wells £4.9 million £0.6 - £14.8 £2.6 million
Northern million
North Sea Subsea wells £10.1 million £2.9 – £24.9 £6.4 million
and West of million
Shetland Suspended E&A £6.9 million £0.6 - £36.8 £5.1 million
wells million
Southern Platform wells £2.8 million £1.3 – £7.6 £2.0 million
North Sea million
and Irish Subsea wells £7.8 million £3.3 – £11.4 £6.2 million
Sea million
Suspended E&A £3.4 million £0.2 – £14.4 £5.7 million
wells million
Table 3: Cost estimates for the decommissioning of different well types in the GOM, USA. Source:
Bureau of Safety and Environmental Enforcement (BSEE) 5
Type of well Water depth Cost estimate by BSEE
Platform well (fixed) ≤ 400 ft (≤122m) $450,000 (£318,000)
Platform well (fixed) where ≤ 400 ft (≤122m) $150,000 (£106,000)
well has been temporarily
abandoned
Platform well (fixed) >400 ft (>122m) $565,000 (£399,000) at 401 ft
(122m) to $770,000 (£544,000) at
1400 ft (426m)
Platform well (floating) All $2,056,000 (£1.5m)
Platform well (floating) All $1,325,000 (£936,000)
where well has been
temporarily abandoned
Subsea well ≤ 400 ft (≤122m) $2,500,000 (£1.8m)
Subsea well >400 ft (>122m) $13,250,000 (£9.4m)
3 Oil & Gas UK, Decommissioning Insights 2017

4 Oil & Gas Authority, Decommissioning, Wells, accessed February 2018
5 Bureau of Safety and Environmental Enforcement, Decommissioning Liability Assessment
Workshop, 2016

One of the largest impacts on cost of well P&A is the length of time the campaign takes, due
to the day-rates of the vessels and rigs required. An average well P&A in the North Sea will
take approximately 45 days, with examples ranging from 21 - 125 days. Understanding the
condition of the well, in addition to information on the design of the well, allows work to be
planned in advance, rather than time lost through having to tackle situations on an ad hoc
basis rather than as a programme, during the P&A process. 6 Examples of cost breakdowns
from other oil and gas basins, namely the Pacific Outer Continental Shelf (OCS) in the USA,
have much lower P&A costs, this can be in part attributed to a difference in classification of
tasks within a work breakdown structure, but also, and more significantly, the time taken to
perform P&A. Well P&A is calculated as being approximately 18 percent of the cost in the
Pacific OCS Region (POCSR), with P&A activities for a well taking 3-5 days, compared to
the 45 days seen in the North Sea. The difference in these figures are due to shallower
waters, less complex wells and more predictable metocean conditions. 7
Costs have been coming down in P&A due to learning and new techniques. Further cost
reduction can be achieved and Oil & Gas UK have identified the following areas of potential3:
- Using a campaign approach. This would involve multiple well P&A’s in an area being
combined into one campaign to allow the mobilisation costs to be spread across a
number of wells. This could also be combined with cross-operator collaboration to
increase the number of wells in a single campaign. Part of the campaign should be
ensuring that the activity schedule is optimised, e.g. minimising the distance the
drilling rig must travel between wells.
- Development of innovative solutions through investment in technology, particular
themes being explored through an OGTC call are new barriers including placement
and materials, verification of permanent barriers and optimising P&A scope.
- Where possible using rigless methods, or once the topside is removed using a
workover rig. Rigless technologies could enable savings of up to 50% on the overall
P&A costs. 8
- Early removal of subsea infrastructure to reduce congestion near the well head.
- Adopting a risk-based approach to allow the scope to be determined based on the
risk profile of the well. A risk-based approach can also be used to help encourage the
uptake of new technology.
- Assessment of the well condition can be done through using a light well intervention
vessel to log well conditions prior to the start of a campaign.
Wells are classified by their condition and therefore the level of intervention required for P&A
activities. In the UK, there are guidelines that have categories, with increasing levels of
intervention. These are summarized in Table 4 below:
6 Handel, C., Abandonment of obsolete wells and installations on the Norwegian Continental Shelf,
University of Stavanger, 2014.
7 BSEE, Presentation of the 2015 decommissioning cost estimate for the POCSR platforms, 2015.
8 BCG, Preparing for the Next Wave of Offshore Decommissioning, 2018

Table 4: Well intervention types. Source: Oil & Gas UK

TYPE 0 No work required, abandonment work has already been
completed
TYPE 1 The simplest, likely that these wells only require the removal of
the well head. The work is rigless and can be completed with
wireline, pumping, crane and jacks. For subsea wells, use of well
intervention vessel without a riser.
TYPE 2 Complex rigless abandonment. The activity requires the use of
coiled tubing or hydraulic workover unit, wireline, pumping,
crane, jacks. Subsea wells will use well intervention vessel with
risers.
TYPE 3 Simple rig-based abandonment. These operations require
retrieval of tubing and casing using a rig.
TYPE 4 Complex rig-based abandonment – could involve poor access,
poor cement that needs repairing, or an unknown suspension
status.
2.3. International regulations

Oil & gas offshore installations are subject to international legislation and guidelines, which
are often prescriptive about the removal of installations once they are no longer in use. The
international laws are in place in order to protect the rights of all sea users including (but not
limited to) exploration, extraction, transport and fishing as well as the environment, they
include:
- The Geneva Convention on the Continental Shelf (1958), article 5(5) states that ‘Any
installations which are abandoned or disused must be entirely removed’. This
however is seen to be superseded by UNCLOS 9
- The 1982 Convention on the Law of the Seas 10 (UNCLOS) states in Article 60(3) that
‘Any installations or structures which are abandoned or disused shall be removed to
ensure safety of navigation, taking into account any generally accepted international
standards established in this regard by the competent international organization’.
The difference between the Geneva Convention and UNCLOS is the lowering of
language from must to shall, along with reference to generally accepted international
standards, these are the IMO standards described below. 11
- The 1989 International Maritime Organisation (IMO) Guidelines and Standards for
the Removal of Offshore Installations and Structures on the Continental Shelf and in
the Exclusive Economic Zone ("IMO Guidelines") are based on the principle that all
disused installations should be removed, they consider the following points in relation
to this:
- the complete removal of all structures in water less than 100m deep (75m for
installations prior to 1998) and weighing less than 4,000 tonnes. However,
exemptions can be made for structures where decommissioning would be
technically impossible, environmentally damaging, excessively costly or would
render the structure inherently unsafe. Exceptions are not upheld where the
9 Offshore Platforms - Abandonment and Recommissioning: A Review of Current International Law,

Baker Botts, 2001.
10 UN, United Nations Convention on the Law of the Sea
11 Martin, T., Decommissioning of International Petroleum Facilities Evolving Standards & Key Issues,
2004

structures are located on the approach to ports or for international shipping

navigation routes.
- structures from 01 January 1998 should be designed for complete removal;
- installations in deeper waters can be partially removed, as long as there is at
least 55m of water clearance above the structure.
- Any remaining installations should be marked on nautical charts and have
appropriate navigation aids maintained at the site.
- The marine environment is included in the IMO Guidelines and in particular
the risk of damage through decommissioning activities, e.g. in considering the
removal of drill cuttings the decision should reflect “the potential for pollution
or contamination of the site by residual products from, or deterioration of, the
offshore installation or structure.”11,12
- 1972 London Convention and the 1996 Protocol to the London Convention, the
‘London Dumping Convention’ surrounds the rules around dumping at sea. The
toppling or disposal of oil and gas structures at sea is covered by this convention.
Under the convention it is the relevant coastal state that decides as to whether the
‘dumping’ is allowed or not.11
- The Oslo-Paris Convention (OSPAR), covering the North-East Atlantic including the
North Sea. From 1998, OSPAR Decision 98/3 prohibits disused installations being
left in place. Derogations can be sought for specific structures such as the footings of
large steel structures and concrete gravity based (CGB) structures. 13
- Pipelines are not explicitly mentioned in the Geneva Convention or UNCLOS, but the
IMO guidelines say that the IMO should be made aware of anything that is left on the
seabed.
- In Asia, ten countries have come together to form the Asean Council on Petroleum
(ASCOPE), whose council is formed by the heads of the state oil companies from the
member countries. The Business Development Committee have developed the
‘ASCOPE Decommissioning Guideline for Oil and Gas Facilities (ADG)’ which are in
accordance with international law and national legislation of member countries. 14
- National guidelines are under development and testing in Africa, four countries so
far.12
Alongside International regulations on decommissioning many countries, namely the UK,

USA, Norway and Denmark have their own national guidelines on decommissioning. In other
countries, such as Australia and Canada, guidelines and regulations are state specific and
may vary between states/provinces.
2.4. Financing O&G decommissioning

Globally, there are different mechanisms for how decommissioning activities are financed,
differences come through how the O&G industry is set up in a particular country, e.g. is there
a National Oil Company (NOC) who wholly or partially owns the leases, as well as relevant
legislation. In countries with an NOC, investment risks vary depending on the stage of the
12 Campbell, D., and Twomey, B., Decommissioning of Large Offshore Installations Effect of L&R and
Major Risk Identification, Decommissioning & Abandonment Summit, 2017.
13 Offshore installations, OSPAR website, accessed April 2017, https://www.ospar.org/work-
areas/oic/installations
14 ASCOPE website, accessed April 2018, http://www.ascope.org/Projects/Detail/1061

project, for example during exploration they are with the operator; during production they are
shared through a Production Sharing Agreement; and often in the final stages, including
decommissioning, liabilities are returned to the NOC. 15
Decommissioning is often supported by the state through tax breaks for operators which
indirectly pays for the decommissioning. Depending on the country, this can be for example
in Europe, between 50 and 80 percent of the decommissioning cost. This level of support is
a push for ensuring value for money in decommissioning and reducing costs as far as
possible as the burden for the cost is largely placed upon the taxpayer. In some countries,
e.g. Denmark, the security that is provided as part of the licence conditions also includes
covering the decommissioning phase. 16,17
In the USA, there have been recent changes which are still in discussion, around the
provision of additional securities for Outer Continental Shelf (OCS) leases, pipeline rights of
way and rights of use and easement. Previously decommissioning was excluded from the
additional securities calculation where there was a sufficiently financially secure leasee or
co-leasee (whereby they could self-insure), however, the Bureau of Ocean Energy
Management (BOEM) now considers that the previous calculations are outdated and
insufficient. The new Notice to Leasees and Operators, published by BOEM in 2016, ‘NTL
No. 2016-N01’ now supersedes NTL No. 2008-N07. 18
15 World Bank, World Bank Multitaskholder Initiative, Towards Sustainable Decommissioning and
Closure of Oil Fields and Mines: A Toolkit to Assist Government Agencies, 2010.
16 BCG, The North Sea’s $100 Billion Decommissioning Challenge, 2017
17 Getting the Deal Through, Oil Regulation, Denmark, 2018
18 BOEM, Notice to lessees and operators of federal oil and gas, and sulfur leases, and holders of
pipeline right-of-way and right-of-use and easement grants in the outer continental shelf, 2016

3. Subsea engineering synergies

There are defined stages to the decommissioning process, although some of these will run
concurrently whilst others will have dependencies. Figure 1 shows an overview of these
stages. An outline of each of these stages, as well as the synergies with the subsea oil and
gas supply chain is provided in the following sub-sections.
3.1. Operator project management

This phase of decommissioning can start as early as 10-years prior to cessation of
production (CoP) with the start of planning for a decommissioning programme.
Internationally there will be different regulations as to who is responsible for the drafting,
approving and implementation of the plan. In the UK is it drafted by the operator, submitted
to the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) and
after public consultation is submitted for approval by the Secretary of State. In the USA, a
variety of permits are required from the Bureau of Safety and Environmental Enforcement
(BSEE), more details given in section 4. Activities in the subsea elements of the
decommissioning programme should be considered at least 2-4 years prior to the CoP. This
preparatory time is needed not only for the gathering of baseline data, but also for the lead-in
time for the heavy equipment and vessels required for decommissioning. The process of this
programme preparation will require data from the installation and operational phase of a field
such as structural drawings, installation records, process flow diagrams, pipeline maps, etc.
as well as any records held on well integrity. 19
The programme preparation will have to justify the decommissioning activities specified,
such as what will be removed, decontaminated, ‘reefed’ and/or repaired. It is therefore
important to know the condition of the wells and infrastructure during the programme
preparation period. Gathering of baseline data about the project, includes information such
as:
- Environmental surveys
- Technical engineering surveys
There are particular synergies with the oil and gas subsea supply chain in this stage of
decommissioning through:
- Project management
The O&G subsea supply chain has plentiful experience of managing complex subsea
operations. This is a skill set that will cross over directly with the project management
of decommissioning activities. Although a move to decommissioning projects is a
change in emphasis in the type of project, many areas such as health and safety
practices, offshore operations and personnel management are all common
considerations. Experience in O&G projects which will include work practices and
shared technical language is a benefit here. Decommissioning has an added push for
showing value for money throughout the programme.
- Environmental services
Environmental studies will be used to establish the baseline for the economic and
environmental impact assessments. These impact assessments will describe the
case for removal (including method) or leaving in-situ (including trenching or rock
dumping) of offshore pipelines. These studies have synergies with the early work in
O&G exploration where studies are completed to understand the benthic
environment.
19 ICF International, Decommissioning methodology and cost evaluation, prepared for BSEE.

These studies also include metocean studies to establish sea conditions for
operations, and geological studies to understand reservoir conditions in the wells to
be abandoned.
- Technical engineering studies
These studies are used to determine the structural integrity of the installations that
are to be decommissioned to allow a suitable method to be designed for their
removal. This will also allow plans to be made to tackle hard to reach parts of the
installation that may need cleaning, disconnecting or dismantling as well as making
areas safe to work.
These surveys are a part of all O&G work and therefore have a strong synergy.
3.2. Well plugging and abandonment

As shown in Figure 2 plugging and abandonment (P&A) is almost half (49%) of the
expenditure associated with decommissioning in the UKCS. The activities associated with
this include 20:
- Studies to support well P&A programmes

Well P&A can only go ahead when the condition and situation of the well are understood.
Wells to be abandoned can include E&A wells that have been temporarily abandoned
decades previously, or development wells that have been producing and are being shut
down. The wells can be decades old with information on the well development missing or
incomplete. Studies must therefore be carried out to establish information such as the quality
of the annular cement, where the theoretical top of cement is; and the condition of the well
casing, etc. these questions can be answered through data collected by wireline tools in the
hole coupled with historical data.
New technologies are being developed to improve data gathering including techniques such
as x-ray tools and electric lines for testing the integrity of annular cement.
Synergies with the O&G supply chain include companies with capabilities in drilling and
particularly around the recording of data associated with drilling new wells including well
information (single bore, or side tracks i.e. the completion design); casing placement and
annular cement evaluation.
- Well P&A
This covers the actual plugging and abandonment of the well. The activities include using a
rig, or rigless solutions depending on the complexity of the well, see Table 4; any repair work
to the annular cement, which could also include milling and the removal of casing and
tubing; the placement of barriers to plug the well; and finally, the verification of these barriers
to ensure they are creating a permanent seal.
Many technologies will be used in this, including those with similarities to the drilling process,
including those with cementing capabilities, as well as the skills to deal with casings. New
technologies are being developed in terms of new barriers, e.g. using resins instead of
cement or lasers to melt the casing and rock forming a permanent seal; and new techniques
e.g. thermal for cutting casings.
20 Oil & Gas UK, Guidelines on decommissioning cost estimation, Issue 3, 2013

- Project management of P&A activities

There will be synergies between companies that offer project management expertise for
subsea projects and the projects for P&A activities. A focus on understanding the subsea
environment challenges, dealing with difficult metocean conditions, HSE considerations are
all part of subsea projects. The P&A activities have an added emphasis on ensuring that the
P&A activities provide a permanent seal to protect the environment as well as having a
consideration for value for money of the project.
- Specialist services, e.g. wireline

These services include those such as wireline tools which are required as part of the survey
and preparation stage as well as the P&A stage of the process. The wireline tools cross over
with the subsea supply chain through the capabilities of drilling companies and the wireline
tools used during the drilling process.
- Conductor recovery
Conductor recovery is an element of the P&A process that can be done with a rig, or in a
complex rigless operation. There may be a requirement for milling, cutting and/or lifting as
part of these activities.
3.3. Facilities / Pipelines making safe

The purpose of this stage of the decommissioning process is to remove hydrocarbons and
other waste from the facilities that are going to be removed. This includes subsea
architecture, including the wellbore, as well as pipelines. Such tasks can involve the draining
and flushing of the wellbore, lines and manifolds, the pigging of pipelines and the purging
and venting of equipment. This process removes e.g. residual hydrocarbons and drilling
fluid. This cleaning must be done to a level that any flushed fluids have a hydrocarbon
concentration of <30 ppm.
The handling of waste materials such as naturally occurring radioactive material (NORM),
contamination from mercury in hydrocarbons 21, and hydrocarbon contaminated waste must
be processed and handled appropriately.
These activities have a crossover with the operational life of a field, where pigging
programmes will be used to clean and inspect pipelines. Other synergies between these
activities and O&G activities could include the treatment of returned drilling fluids and drain
water during drilling where techniques such as settling tanks, centrifuges and chemical
methods are used.
3.4. Sub-structure removal

The sub-structures of platforms mostly come in the form of steel jackets which are classified
as small <10,000 (often significantly less) tonnes or large >10,000 tonnes. Sub-structures
can also include concrete gravity based foundations, although these are generally not
removed, subject to receiving a derogation, as they are too heavy to be lifted (although they
will need to have navigation buoys deployed with them to warn of their presence); and
tension-leg platforms, although there are only a few of these in use. Semi-submersible
platforms and spar platforms are floated away from their moorings, the remaining mooring
21 Radford, R., Mercury chemical decontamination in preparation for decommissioning, DecomWorld
GOM 2017

lines and anchors will need to be considered as part of the sub-structure removal.
Considering steel jackets, these may be removed or, in some cases, the footings or whole
structures left in place. In the case of the latter, sometimes known as ‘rigs to reefs’ the sub-
structure is toppled so as to ensure that there is no impedance to vessel movement, etc. the
regulations on toppling vary between countries. Where a sub-structure is to be removed the
structure may be removed in a single lift, or through dismantling into smaller pieces for
multiple lifts. The decision as to which route to take will depend on the weight of the sub-
structure to be removed, and the availability of the appropriate class of crane to carry out the
lift.
Where the sub-structure is being dismantled divers and/or ROVs will be used for inspection
and for carrying out the cutting operations. Preparation work including making the structure
safe to work on, including removing other subsea infrastructure to avoid having to operate in
congested areas could be carried out. These tasks all have similarities with inspection, repair
and maintenance (IRM) techniques where divers and/or ROVs are used for inspection and
cutting. Currently cutting tools include diamond wire cutting and high-pressure water jets.
Laser cutting is an area of development in subsea engineering. There are also synergies
with installation techniques, where companies have expertise in heavy lifting and the
associated equipment.
3.5. Subsea infrastructure

These activities involve the decommissioning and/or removal of well heads, pipelines,
umbilicals, mattresses, Christmas trees, manifolds, etc. once they have been cleaned and
isolated (as per section 3.3).
Flexible pipeline and risers which have previously been attached to floating structures are,
once flushed and cleaned, laid onto the seabed before being cut-up and removed. In-field
pipelines will also be cleaned, cut and removed. These tasks will involve ROVs and/or divers
for the cutting and lifting equipment for the removal. Both tasks have synergies with
operational or installation activities.
Subsea infrastructure such as manifolds, blowout preventers and Christmas trees, once
cleaned and isolated are cut and removed through lifting, often in a ‘reverse installation’
manner. A drive towards standardization for subsea infrastructure could see an increase in
reuse of this equipment rather than recycling. This could increase the emphasis on the
removal technique as any procedure would need to minimize damage to the equipment. The
disconnection and isolation of these systems would be completed with ROVs and/or divers.
Where items are not removed, such as export pipelines, they are either trenched or rock-
piled to bury them, to remove them as an obstruction on the seabed. Such activities involve
techniques that are used during pipeline installation.
3.6. Site remediation

Although in a number of cases not all infrastructure will be removed from a decommissioned
field, either substructures that have received derogations, pipelines that have been trenched
or cuttings piles where it is more environmentally beneficial to leave them in place than to
move the pile, the site should be cleared of all other infrastructure and debris. This includes
a 500m zone around previous installations, and a 200m corridor for pipelines.
Over-trawl surveys may need to be completed, depending on local regulations, to check that
there is nothing that will cause an obstruction to trawling left in place.

3.7. Monitoring
Decommissioned fields will have a monitoring programme for any facilities that remain on
the seabed. This will include monitoring for e.g. leaching of hydrocarbons from wells and
cutting piles. Surveys carried out at the completion of the decommissioning are compared
with the original environmental surveys and a monitoring programme is agreed based on the
findings. An example programme would be an initial requirement for two surveys, one within
five years of the completion of decommissioning and a second within ten years. The analysis
of these results will determine future monitoring requirements. Environmental surveys can be
carried out by companies that perform these surveys during the exploration, appraisal and
operational activities of oil fields.
Any navigational aides that are deployed to mark the location of installations that have not
been removed will need to be maintained. There is a crossover here with companies
involved in IRM as well as those providing navigational aids during installation and
operational activities.
3.8. Areas for innovation

As a relatively young sector decommissioning is still developing new methods and materials
to ensure effective practices as well as value for money. Guidelines are in place for the types
of activities that are needed and the quality of the work that is required by the industry. There
should however, be a level of risk-based permitting of activities to allow new technologies,
techniques and materials to prove themselves in a real-world situation.
Below are areas that the industry has identified as research and development (R&D)
challenges for P&A 22,23:
- Plugging and sealing – ensuring that it is cost effective, the use of novel barrier
materials, barrier verification and ensuring the longevity of metal-to-metal seals.
- Cost effective P&A, e.g. exploring rigless options for more complex P&A wells.
- Subsurface cutting, milling and removal – including removal of equipment, debris and
collapsed casings and/or screens; entire casing removal; and multiple casing milling
- Monitoring of abandoned wells for leakage/possible leak paths
- Remediation of poor P&A
22 OTM Consulting, Plugging and Abandonment Collaborative Environment (PACE), Decomworld

GOM 2017.
23 Caulfield, K., Stocking the decommissioning toolkit, A subsea decommissioning joint industry
project, Decomworld GOM 2017.

4. Global market with locations of interest

There are over 9,000 offshore platforms in service worldwide 24 from shallow coastal waters
at 3m to depths in excess of 3,000m (the current record is 3,400m off the Uruguayan
coast) 25 in addition to platforms there are over 72,000 wells in service worldwide 26, all of
which will require decommissioning at the end of their economic life. Oil and gas exploration
is still happening across the globe and as these assets and wells age they will provide a
pipeline of decommissioning opportunities.
Decommissioning in the North Sea alone is expected to cost $150 billion (£106bn); in the
Gulf of Mexico approximately $38 billion of decommissioning liabilities is expected (£26.7bn);
and in the Asia Pacific region costs are anticipated in the $30-60 billion (£21-42bn). IHS
Markit estimate a $13 billion (£9bn) per year spend on decommissioning by 2040, a more
than five-fold increase from 2015 levels of $2.4 billion (£1.7bn) meaning a predicted global
figure of $210 billion expenditure between 2010 and 2040.16,27,28
Table 5 below shows a summary of the decommissioning activity that is expected to occur in
the short and medium term, along with estimates of the decommissioning liabilities in the
country where available. The following sections provide more information on these
decommissioning markets. The report has aimed to include the largest and most near-term
markets, but information on all decommissioning markets globally was not available.
Table 5: Summary of decommissioning activity and expenditure estimates for important

decommissioning markets worldwide. Source: various
Country Decom activity Cost estimates
UK Period 2017-2025: £1.8-2 bn / year 2017-2022.
- 1624 wells to be P&A’d Overall target £39bn for all current
- 98 platforms to be removed. and future installations.
Norway Period 2017-2025: £400-800 mn/year in next five years

- 14 platforms and 2 floating
structures to be removed, 9 in Total cost of NOK 160 billion (£14.5
a multi-platform campaign. billion).
- 300 wells to be P&A
Netherlands Period 2017-2025: £650 – 800 mn/year in next five
- 410 wells to be P&A’d years.
- 17 platforms
€3.7bn (£3.2bn) for offshore
decommissioning
Denmark Period 2017-2025: Estimate total cost is £2.8 billion.
- 113 wells to be P&A’d
- 17 platforms to be removed
Italy By 2038: Not available
- 395 wells to be P&A’d
USA Upcoming projects include: $39.5 billion (GOM and POCSR)
- 2,000 structures to be removed
- 9,000 wells to be P&A’d
24 Petrowiki, accessed 12 April 2018, http://petrowiki.org/Offshore_and_subsea_facilities

25 gCaptain, Maersk Drillship Spuds World’s Deepest Well, 2016
26 This overall wells figure is based on an estimate of approximately 8 wells per platform (calculated
from published figures from 7 countries) assumed to be an underestimate as will not include e.g.
subsea fields that are exported straight to shore, or E&A wells that have been temporarily suspended.
27 World Oil, Over 600 offshore projects to be decommissioned over the next five years, 2016.
28 SE O&G diversification toolkit, 2017

Brazil Upcoming activity: Rough estimate of US$4.4 billion

- 60 structures to be removed (£3.2bn) for the imminent
- 165 wells to be P&A’s decommissioning projects.
Mexico 10 structures to be removed in the Not available
period 2013- 2020
Angola Decommissioning yet to start. Not available
1093 offshore wells, the oldest of
which are in shallow waters.
Nigeria Decommissioning yet to start. Not available
Approximately 170 structures in the
Niger Delta
Egypt Egypt has approximately 150 to 200 Not available
structures and 700 to 1,000 wells
that are expected to become
uneconomical in the next 20 years8
UAE The Arabian Gulf stands out as a Not available
future hot spot. By 2038, more than
1,000 structures and 3,000 wells in
the Gulf will be more than 30 years
old.8
Indonesia No decommissioning activity yet, Not available
500 platforms and a share of
15,000 wells are over 30 years old.
China 200 structures and 2,000 wells in - Not available
China, are expected to become
uneconomical by 20388
Australia Approximately 50 structures and US$21 billion (£15 bn) over the next
700 wells in Australia, are expected 50 years.
to become uneconomical by 2038.8
India India has approximately 150 to 200 Not available
structures and 700 to 1,000 wells
that are expected to become
uneconomical in the next 20 years8
4.1. Europe
The North Sea includes the continental shelves of the UK, Norway, the Netherlands and
Denmark. Collectively the North Sea accounts for a significant proportion of global
decommissioning spend due to the age of infrastructure, the water depth, weather conditions
and types of assets deployed. In the period from 2017 to 2025 it is forecast that over 200
platforms will be partially or completely removed, almost 2,500 wells will be P&A’d and
nearly 7,800 km of pipeline will be decommissioned.3 This represents approximately a
quarter of the infrastructure that will need to be removed and wells permanently sealed
based on current installation figures (500 fixed platforms, 500 susbea production systems
and 10,000 wells).16
The combined spend on decommissioning in the North Sea is anticipated to be at least $100
billion (£69.8bn), where although the area does not have the biggest concentration of
platforms and wells, the complexity of the operations, metocean conditions and water depth

means that this is almost half the global spend on decommissioning. 29
In the UK, the Oil and Gas Authority (OGA) has estimated the mid-point for the total cost of
decommissioning in the UKCS to be £59.7 billion. The estimate ranges from a low (P10)
point of £44.5 billion, to a high point (P90) of £82.7 billion. In addition to the figures, based
on current (2016) decommissioning cost from 34 operators, the industry has committed to a
cost reduction target of 35 percent from the mid-point figure. This means that the industry is
aiming for a total decommissioning cost for the UKCS of £39 billion. Achieving this cost
reduction will require the adoption of new techniques and technology; industry collaboration,
including for example multi-operator P&A campaigns; and new strategies, e.g. contracting
strategies. 30 These figures relate to an expected annual expenditure on decommissioning of
£1.8-2 billion over the next five years.3
Figure 3 below, shows the anticipated breakdown of spend between the UKCS regions.
Almost half (£7.9 billion, 46%) of the total figure of £17.1 billion is expected to be spent in the
central North Sea where deeper water (ranges from 45 to 143 m) and more complex
installations will add to the decommissioning expense. In the southern North Sea, although
there are a greater number of installations, the shallower water (18 – 73 m deep) and
simpler projects will only account for 19 percent (£3.2 billion) of the spend.3
Over the period from 2017-2025, 1624 wells and 98 platforms are expected to be
decommissioned with activity starting at approximately 50 wells per year and ramping up
towards the end of the period with a planned 153 wells to be P&A’d in 2023.3
UKCS Breakdown of decommissioing spend by region
Central North Sea
Northern North Sea and West of

Shetland
Southern North Sea and Irish
Sea
Figure 3: Breakdown of anticipated decommissioning expenditure in the regions of the UKCS

between 2017 and 2025. Source: Oil and Gas UK
29 Worldwide Oil and Gas, Over 600 offshore projects to be decommissioned over the next five years,
2016
30 Oil and Gas Authority, UKCS Decommissioning Estimate - 2017

Decommissioning in the UK is regulated by the department for Business, Energy and

Industrial Strategy (BEIS) and the OGA. Under the Petroleum Act (1998) BEIS is responsible
for approving decommissioning programmes, through the Offshore Petroleum Regulator for
the Environment and Decommissioning (OPRED). The UK has a strategy for maximising
economic recovery (MER UK) from its offshore oil and gas infrastructure on the continental
shelf. As part of MER UK, the OGA must be satisfied that a field or project has achieved
maximum economic recovery before it is shut down, and the approval is granted for the CoP.
The OGA have also published new draft guidelines for the decommissioning of offshore oil
and gas installations and pipelines, which after consultation are due to come into use from
April 2018. 31
In NORWAY the decommissioning sector is at an earlier stage than that in the UK, although
there will eventually be significant activity on the Norwegian Continental Shelf (NCS). There
is therefore a potential for learning, expertise and technology to be exported from the
Scottish supply chain to the NCS, with the benefit of extensive North Sea knowledge from
the UKCS. The Norwegian Petroleum Directorate’s estimate for decommissioning on the
NCS is around NOK160 billion ($19 billion).16 The Norwegian decommissioning market is
predicted to be between £400-800 million per year over the next five years.3
The NCS includes the Norwegian North Sea, the Norwegian Sea and the Barents Sea, with
oil and gas activity happening in all areas, although the Barents Sea is less well explored at
present. The NCS has had 5306 wells drilled, of which 1469 are exploration wells. Of the
remaining 3837 wells, approximately 800 have already been P&A’d. leaving a pipeline of
approximately 3000 wells for future P&A campaigns, as well as a pipeline of future wells
which could, through some estimates, more than double the number of wells that will require
decommissioning to 7000. 32 In the next five years there are plans for the P&A of
approximately 300 wells, as well as the removal of 14 platforms, 2 floating structures, 2,555
tonnes of subsea infrastructure and 222 km of pipeline this activity is almost exclusively in
the Norwegian North Sea.3,33
In Norway cessation plans and decommissioning programmes must be submitted to the

Norwegian Petroleum Directorate, part of the Ministry of Petroleum and Energy, for
evaluation, two to five years before the expiry of the lease. 34 Well P&A is conducted in line
with the regulations NORSOK D-010 which have specific guidelines for well abandonment. 35
Financing of decommissioning on the NCS is indirectly partially covered by the state through
tax deductions, 78 percent of the cost associated with termination and the disposal of
facilities are accounted in this way. Where the Norwegian state directly owns a field an even
31 BEIS, Guidance Notes (Draft), Decommissioning of Offshore Oil and Gas Installations and
Pipelines, 2017
32 Handel, C., Abandonment of obsolete wells and installations on the Norwegian Continental Shelf,
University of Stavanger, 2014.

33 Oil and Gas UK, Norwegian Continental Shelf Decommissioning Report 2016.
34 Norwegian Petroleum Directorate website, accessed April 2018.
http://www.npd.no/en/news/news/2003/the-npds-responsibilities-and-tasks-after-separation-of-the-
petroleum-safety-authority-norway--/
35 NORSOK D-010 Well integrity in drilling and well operations, Rev 4, 2013.

higher percentage of the costs is covered by the state. 36
According to the Netherlands’ Energie Beheer Nederland (EBN), the state energy company,
the current estimate for decommissioning onshore and offshore infrastructure in the country
is €6.7 billion (£5.8 bn), of which 55 percent (€3.7 billion, £3.2 bn) is related to offshore
infrastructure. The Dutch state contributes approximately 75 percent of the cost of
decommissioning both directly and through EBN.16,37
The Netherlands has approximately 3,800 wells, of which 1,400 are offshore, in an industry
which began in 1959. It is expected that much of the Dutch oil and gas infrastructure will be
uneconomic and therefore ready for decommissioning in the next two decades. So far,
2,000, both onshore and offshore, wells have been P&A’d in the Netherlands. Roughly 150
platforms and 3,500 km of pipeline remain in the Dutch North Sea to be removed.37 In the
period 2017 to 2025 it is anticipated that 410 wells will require P&A, 17 platforms, 1,385
tonnes of subsea infrastructure and 1,827 km of pipeline to be decommissioned, with an
annual spend of £650-800 million.3
In 2017 EBN published a decommissioning masterplan for the Netherlands which has ten-
point plan encompassing near and mid-term objectives. The ten-point plan includes short-
term aims around developing effective and efficient regulation; establish a national
decommissioning database; ensure learning from projects is captured and establishing a
National Platform for decommissioning. The longer-term objectives cover collaboration;
standardisation; innovation in technology and approaches; international learning and
communication.37 This presents opportunities for the Scottish O&G supply chain through the
sharing of learning, international collaboration and innovative technology and approach
solutions.
Decommissioning has yet to commence in DENMARK however it is anticipated that there

will be 113 wells to P&A in the period 2017-25 along with the removal of 17 platforms, 590
tonnes of subsea infrastructure and 217 km of pipeline.3 In total Denmark’s
decommissioning, based on unit costs similar to the UK could be in the region of $4 billion
(£2.8bn).16
Regulation of decommissioning is covered by the Subsoil Act and Offshore Safety Act as
well as the Environmental Protection Act for the Sea (Havmiljøloven) which has prohibited
dumping at sea since 1993. 38 Licensees must agree terms of abandonment with the Danish
Energy Authority (DEA) prior to submitting the decommissioning programme, such terms
include the securities that each party provides for the decommissioning. Licence holders are
then responsible for carrying out decommissioning in accordance with the DEA approved
decommissioning programme.17
In addition to the North Sea, Europe also has other oil reserves including the Italian sector in
36 Norwegian Petroleum Directorate, Responsible removal of old facilities. Accessed April 2018.
http://www.npd.no/en/Topics/Shutdown-and-removal/Temaartikler/Responsible-removal-of-old-
facilities/
37 EBN, Netherlands masterplan for decommissioning and re-use, 2016
38 Danish Environmental Protection Agency, Offshore Decommissioning.

the Adriatic Sea. ITALY is seen as a future decommissioning area of interest with 395
producing offshore wells (1100 including onshore wells) which will start to become
uneconomic in the next 20 years.8,39 The regulatory authority is the General Directorate for
Mineral Resources and Energy and is part of the Ministry of Economic Development (DSG-
UNMIG). All technical issues on hydrocarbons require the opinion of the Technical
Commission for Hydrocarbons. 40
The licence holder is responsible for decommissioning of any disused installations, including
the removal of equipment, such as well infrastructure and pipelines, and the remediation of
the area within two years. A decommissioning programme must be prepared by the licensee
which sets out the detail of the work to be performed. During the licence application process
the applicant must be able to provide a guarantee that the estimated decommissioning cost
can be covered, except where the net worth of the company, or a formal guarantee is given
by a group of companies having a net worth of over €10 million. 41
The Scottish supply chain is already active in this sector with Aberdeen-based Zenith Energy
completing a P&A job on the Italian Ombrina Mare development well in 2016. 42
4.2. North and Central America

In the USA, there are over 900,000 active oil and gas wells onshore and offshore. 43
Considering only offshore, there are three main regions for oil and gas production, the Gulf
of Mexico (GOM); off the southern Californian coast; and in the Beaufort and Chukchi Seas
North of Alaska. The waters include those under state jurisdiction and the Outer Continental
Figure 4: Map of the active oil and gas platforms in the US

Federal Waters in the Gulf of Mexico
39 UNMIG, Frequently Asked Questions - Hydrocarbons exploration and exploitation, accessd

February 2018, http://unmig.mise.gov.it/unmig/faq/faq.asp?cat=1
40 Getting the deal through, Oil regulation: Italy, 2017
41 The Oil and Gas Law Review Edition 4, Italy, The Law Review, 2016.
42 Zenith Energy passes first offshore P&A project with flying colors, Offshore Energy Today, 2016.
43 Meko, T. and Karklis, L., The United States of oil and gas, Washington Post, 2017.

Shelf (OCS).
There are approximately 3,700 active platforms in the OCS, and over 40 percent of these
are more than 25 years old. Decommissioning is ongoing in the US and there was an
average of 130 platforms removed annually in the last ten years. 44
Considering specifically the GOM, this is where offshore oil and gas production started and
there are now in excess of 5,000 oil and gas installations, many of which are now required to
be decommissioned. It is also the biggest decommissioning market in the world, based on
number of projects, with over 4,000 platforms decommissioned since the 1980s. The activity
that has happened so far has tended to be in shallower waters (<100m) and with smaller
steel structures (approx. 600 tonnes). However, future activity will start to happen in deeper
waters.29,45
Regulations in the USA allow for the disposal of platforms at sea in the Rigs to Reef
programme. In 2015 there were 470 platforms that had been converted into artificial reefs.
The relevant coastal state and BSEE are responsible for approving a platform to become an
artificial reef and conditions about the suitability of the structure for a reef will be taken into
consideration as well as local environmental impacts. 46 Even if a platform is to be left in
place, any wells associated with the platform must be plugged and abandoned. The
regulatory framework for decommissioning is robust with technical standards and financial
security requirements. There are ongoing changes to the requirements for security for
decommissioning, NTL No 2016-N01, see also section 2.4 for more information.
Decommissioning regulation is the responsibility of the US Bureau of Safety and
Environmental Enforcement (BSEE). BSEE have the final approval of decommissioning
programmes and are responsible for enforcing safety and environmental regulations. This
authority is given through the Outer Continental Shelf Lands Act, amongst others.45,47
NTL No. 2010-G05, issued by BOEM in 2010, states that all disused wells and platforms,
those that have been out of use for five years, including E&A and development wells, must,
within three years, be permanently or temporarily plugged and abandoned (in compliance
with existing guidance) or zonally isolated. In the last case, within two years the well must be
permanently or temporarily P&A’d. For platforms, they must be removed within five years.
This notice was issued to minimise the number of idle infrastructure that could cause a
safety or environmental concern as well as reducing decommissioning liabilities by
decommissioning infrastructure whilst it is still in reasonable condition. 48
The US Government Accountability Office estimates the decommissioning liabilities in the

Gulf at an additional $38 billion (£26.8 bn). Decommissioning activity in the GOM has so far
involved more than 1,000 installations being decommissioned between 2010 and 2014 at a
44 BSEE, Decommissioning, accessed January 2018 https://www.bsee.gov/what-we-do/research/tap-

categories/decommissioning
45 BCG, Decommissioning Hotspots, Successes and challenges in the Gulf of Mexico, 2018.
46 BSEE, Rigs to Reef, https://www.bsee.gov/what-we-do/environmental-focuses/rigs-to-reefs#2
accessed April 2018.

47 BSEE, Presentation of the 2015 decommissioning cost estimate for the POCSR platforms, 2015.
48 BOEM, Notice to lessees and operators of federal oil and gas leases and pipeline right-of-way
holders in the outer continental shelf, Gulf of Mexico OCS region, 2010.

cost of $9 billion (£6.3bn).16 Future decommissioning is expected to include the removal of

2,000 structures and P&A of 9,000 wells. These projects are likely to be in deeper waters (at
least 2,000 of these wells in waters >100m) as well as heavier structures (e.g. 11,000
tonnes). These projects will therefore be more complex, and although the GOM is
experienced in decommissioning, lessons can be learnt from deep water experience in the
North Sea and also the development of new technology. 45
In addition to the GOM, the Pacific OCS Region (POCSR) has decommissioning liabilities
which are estimated to be $1.46 billion (£1bn). There are a significantly smaller number of
installations in the POCSR, than in the GOM, with only 11 fields in the POCSR. The
platforms were all installed between the 1960s and 1980s, meaning that they will be
approaching the decommissioning phase. The platforms are in water depths between 95 ft
(30 m) and 1,198 ft (365 m) although mostly in shallow waters. This explains the lower cost
estimate than in the GOM region, although the BSEE estimates have increased by over 16
percent from 2010 to 2014 based on assumptions about the decommissioning process.47
In MEXICO there are 30,000 wells in the National Hydrocarbons Commission (CNH)
database, these include onshore and offshore wells, as well as E&A wells. 49
Decommissioning is not yet a significant part of the Mexican oil and gas industry, as many of
its 50+ fields are not going to be depleted until after 2022, and there are new fields still being
developed. Some decommissioning activity is taking place, with 10 platforms expected to be
removed by 2020. 50 Until 2013 all O&G activity in Mexico was through the NOC, PEMEX,
but licences can now be awarded to private operators. The relevant authorities for
decommissioning in Mexico are CNH, the Energy Ministry (SENER) and ASEA, the
regulatory authority of the Environmental Ministry. Financially, a decommissioning trust is set
up and managed by the government and the contractor, to provide a guarantee that the
decommissioning activities will be carried out by the contractor. 51
4.3. South America

BRAZIL is seen as the biggest market in South America for decommissioning, with over 50
percent of its installed infrastructure over 25 years old.29,52 Decommissioning is not
progressing as quickly as it could in Brazil as regulation is not efficient, however this is being
addressed with the new regulations covering the decommissioning process including fiscal
and risk regulations and technical requirements.8 Early decommissioning projects have
largely been in shallow water and simple projects, an example is the Agulha oilfield with 3
platforms that is estimated to have a decommissioning cost of US$220 million (£155
million). 53 Approximately one quarter of Brazil’s infrastructure is in deep water, which will
increase the cost and complexity of decommissioning projects, there is therefore an export
opportunity for learning and expertise from the North Sea in this area. 54
Studies suggest that 60 structures and 165 wells need to be decommissioned in the coming
49 https://www.gob.mx/cnh/articulos/centro-nacional-de-informacion-de-hidrocarburos-cnih-64831
50 Scottish Enterprise, Spends and Trends report 2008-2017, South America
51 Getting the deal through, Oil regulation: Mexico, 2017
52 SubseaUK, Decommissioning opportunities in Brazil, 2018
53 Export.gov, Decommissioning Opportunities in Brazil’s Oil and Gas Horizon, 2016
54 Petrus, Brazil faces decommissioning challenge, 2017

years, with at least 20 of the structures (and their associated subsea infrastructure) being
decommissioned by 2020.53
Decommissioning in Brazil is regulated by two organisations: the National Agency of

Petroleum, Natural Gas and Biofuels (ANP) and the Brazilian Institute of Environment and
Renewable Natural Resources.
4.4. Africa
There has yet to be significant decommissioning activity in Africa, and as such regulation
and guidance on decommissioning requirements has yet to be fully developed. Regulations
so far rely on international legislation (such as that described in section 2.3), national oil and
gas laws and Production Sharing Agreements (PSAs). Lessons can therefore be learned
from international partners who have a stronger experience in decommissioning.8 There are
over 200 wells in sub-Saharan Africa that were drilled pre-1980, which shows that there will
be an imminent focus on decommissioning here.55 Decommissioning spend in Africa,
although it is too early to predict estimated costs, is expected to be driven by Angola and
Nigeria.29
There has been no significant offshore decommissioning in NIGERIA, Africa’s biggest oil
producer, and also limited regulation developed for decommissioning. 56 The Environmental
Guidelines and Standards for the Petroleum Industry in Nigeria (EGASPIN), say that all
abandoned installations in less than 100 m of water and with a weight less than 400 tonnes
(without the topside) must be entirely removed. EGASPIN, also states that any installation
placed on the Nigerian seabed must be designed for total removal at the end of its life. 57 For
all oil and gas activity the Department of Petroleum Resources (DPR) is the official regulator.
For decommissioning a decommissioning programme must be submitted to the DPR, there
are no requirements for decommissioning funds in the legislation, although this can be
included in the submitted decommissioning programme. 58
Nigeria has an NOC, the Nigerian National Petroleum Company (NNPC), who have
approximately a 60 percent participating interest in PSAs with international oil companies
(IOCs), other NOCs and indigenous oil companies.58 There are 170 structures56 in Nigerian
waters almost exclusively in the Niger Delta area, although exploration has turned up
reserves elsewhere as well. Nigeria has shallow, approximately two-thirds of current
production, and deep water, first discovered in the mid-1990s and with some fields in a
depth in excess of 2,000 m and an increasing amount of the capex expenditure, with
exploration and drilling happening in both. The industry started in the country early in the last
century, with significant discoveries being made since the 1960s. 59
55 Scottish Enterprise, Spends and Trends Report, Africa 2008-2017.

56 Financial Nigeria, Prospects of decommissioning oil & gas installations in Nigeria 2018
57 Stakeholder Democracy Network, White paper on sustainable closure and decommissioning of oil
and gas assets in Nigeria, 2015.

58 Getting the deal through, Oil regulation: Nigeria, 2017
59 NNPC, Development of Nigeria’s Oil Industry

ANGOLA is the second largest oil producer in Africa. There are 1770 wells in Angola of
which 1093 are offshore. The wells range in drilling date from 1974 to the present day,
although the largest amount of activity has been since the 1990s. 60 Angola is known for it’s
deep water with fields often in 300 m to 1,200 m and beyond. The oldest wells are in the
continental shelf in comparably shallower water, but the overall decommissioning challenge
will include these deepwater, subsea wells. No significant decommissioning activity has
occurred yet in Angola, there is therefore an opportunity of export of Scottish subsea
expertise to help develop this sector. Sonangol, is the Angolan NOC, and partners in all oil
and gas projects in the country.
Decommissioning is overseen by the Petroleum Activities Law and Regulations. There is a

requirement for the National Concessionaire to provide the Ministry of Petroleum with a
decommissioning programme at least one year prior to CoP. Funding of decommissioning
comes from a decommissioning fund set up throughout the length of the lease, with fund
contributions, which may be tax deductible, allocated based on the rules established in the
PSA. 61
4.5. Asia and Pacific

The Asia Pacific region is a newer region in terms of oil and gas, which means it will be
slightly further afield as an opportunity area, however, the long-term forecast suggests a
market worth between $30 billion and $60 billion (£21-42 bn). 62 The decommissioning
opportunity is approximately 2,600 platforms and 35,000 wells, with up to 600 fields ceasing
production in the next decade. 63,64
The biggest decommissioning challenge facing the region at the moment is a lack of
regulation and guidance around the decommissioning process, with limited experience and
technical guidance the cost of decommissioning is likely to be much higher than it could be
due to inefficiencies. Indonesia, Malaysia and China are the closest to decommissioning,
and therefore are the markets most in need of developing appropriate regulations.63,65
Acknowledging this provides an opportunity for countries further ahead to share their
learning and for Asia Pacific to benefit from it as well as providing an international market for
technology export. Work has begun with the Asean Council on Petroluem (ASCOPE)
publishing their Decommissioning Guidelines. These regional decommissioning guidelines
are tailored to the ASCOPE countries whilst abiding by international and national legislation,
and have been discussed and approved by the relevant NOCs. 66 ‘Rigs to Reef’ style
60 Sonangol, List of wells for consultation or acquisition, 2016.

http://www.sonangol.co.ao/Style%20Library/pt-
pt/Pdf/dataPackages/Lista_Po%C3%A7os_Aquisi%C3%A7%C3%A3o_Actual06.pdf
61 Getting the deal through, Oil regulation: Angola, 2017
62 Scottish Enterprise, Decommissioning report, 2014
63 Without cost reduction Asia Pacific decommissioning bill could hit US$100Bn, Offshore Support
Journal, 2018.
64 Wood Mackenzie, Decommissioning Asia-Pacific: 600 fields on the front-line, 2016.
65 Pinsent Masons, Decommissioning in Southeast Asia, 2017
66 ASCOPE Decommissioning Guideline for Oil and Gas Facilities, 2015

disposal is permitted in Asia, with Malaysia’s first structure ‘reefed’ in 2004. The Baram-8, a
three-legged steel jacket that had been storm damaged in 1975 was cut into two sections
and transported to it’s reefing site 8 nautical miles from its original location and placed on the
seabed, along with the conductor, Christmas tree and braces in 2004. 67
The biggest markets are potentially Malaysia and Indonesia, with spend being driven by
shallow-water Australia29,62
Figure 5: Chart showing situation for countries comparing number of fields that have ceased
production versus the development to decommissioning regulation. Source: Wood Mackenzie
AUSTRALIA has different rules for state and territorial waters, those within 3 nautical miles
of the coast and the commonwealth waters, beyond this limit. State and territory waters are
governed by state regulations and these can differ by state. The Western Australia
government issued guidance on decommissioning which applies within its borders. The
national government, in 2018, released guidance for commonwealth waters. This guidance
promotes the early planning of decommissioning; states that decommissioning is the
responsibility of the title holder; works on the baseline of total removal of infrastructure and
states that decommissioning must be completed before the title ends. 68,69
Decommissioning in Australia is estimated to cost US$21 billion (£15 bn) over the next 50
years, due to a lack of decommissioning experience estimated costs are higher than
average, and the National Energy Resources Australia benchmarking report put Australia at
below the worldwide median when in its analysis of decommissioning. Alongside better
regulation and guidance, and the development of new technology the conclusions included
learning from other countries that have more experience in decommissioning, such as the
67 Daud Awang, Oil Rig as Artificial Reef: Example of Baram 8, 2013.

68 HFW, Developments in Australian offshore decommissioning, 2018
69 Australian Government, Offshore Petroleum Decommissioning Guideline, 2018

UK. 70,71
THAILAND is at the start of its decommissioning phase, with some of its infrastructure
reaching 40 years of operation. In the Gulf of Thailand, the main oil and gas producing area,
80 of the 450 platforms are at least 20 years old. There are also a number of licences that
are due to expire in the period 2021-23. 72 Platforms operated by PTT Exploration and
Production Public Co. Ltd. (PTTEP), Thailand’s NOC, which account for approximately 60
percent of the infrastructure, have between six and 16 wells associated with each platform,
suggesting a total well count of between 2700 and 7200. 73,74
Regulation for decommissioning in Thailand is based on the national Petroleum Act which
highlights that responsibility for decommissioning is on the ‘concessionaire(s)’ as well as the
provision of a security deposit to cover decommissioning. The government is reviewing
decommissioning guidance through an initiative known as ‘Decommissioning 2.0’ which aims
to provide a one-stop-shop for licences, etc, where approval would be entirely through the
Ministry of Energy’s Department of Mineral Fuels (DMF).8,75 Decommissioning in Thailand is
estimated to cost approximately $3 - $5 billion (£2.2 - £3.6 bn). 76 Currently decommissioning
should occur when one of the following criteria are met, although exemptions can be made
based on other development within the relevant concession block. The criteria include:
installations that have not been in use for more than a year; petroleum reserves falling to
less than 40 percent; remaining production period will be less than 5 years and
concessionaires seeking to decommission their installations.76
INDONESIA has over 450 offshore platforms, three-quarters of which are now over 20 years
old, and 65 percent are over 30 years old highlighting the potential start of the
decommissioning phase of the industry. Infrastructure older than 30 years, includes: 500
platforms, 100,000 km of pipelines and 15,000 onshore and offshore wells. Hindering the
development of the decommissioning sector is a lack of clarity about who is responsible for
decommissioning activities and liabilities, as until 2008 it was not part of PSAs. Since 2008,
the PSA template has included ‘abandonment and site restoration’ costs, which are held in a
fund by SKK Migas. Offshore infrastructure however, is the responsibility of the NOC,
Pertamina Energy, and it is therefore likely that decommissioning will fall to them.8,75,77,78
MALAYSIA has 349 Platforms, 20 Floating structures, 4,154 wells and 10,105 km of pipeline
offshore. Decommissioning however is yet to begin and there are no national guidelines for
decommissioning currently. The NOC, Petronas, as the owner of offshore assets is
responsible for decommissioning. 79
70 Deloitte, Decommissioning has potential to be Australia’s next oil and gas boom, 2017
71 National Energy Resources Australia, Oil & Gas Industry Competitiveness Assessment Report on
the Framework, Baseline Score, Insights and Opportunities, 2016
72 Barron, M., Reversal of Fortune: Thailand’s Oil and Gas Sector, Natural Resource Guidance
Council, 2016.
73 Rigzone, Thailand Looks Ahead: Gears Up for Oil, Gas Decommissioning Work, 2016
74 Saadawi, H., Offshore Production in the Gulf of Thailand, Society of Petroleum Engineers, 2017
75 Pinsent Masons, Decommissioning in Southeast Asia, 2017
76 Rigzone, Thailand Looks Ahead: Gears Up for Oil, Gas Decommissioning Work, 2016
77 Offshore Technology, Decommissioning Indonesia’s oil rigs: a vast but challenging market, 2015.
78 Gulf Oil and Gas, Indonesia Decommissioning in Oil & Gas Conference 2015, 2015.
79 Hashim, A., Upstream Decommissioning in Malaysia, LinkedIn, 2016

Appendix: List of Acronyms
BOEM Bureau of Ocean Energy Management (USA)

CoP Cessation of Production
E&A Exploration and Appraisal
EBN Energie Beheer Nederland (Dutch Energy Authority)
DEA Danish Energy Agency
FPSO Floating production, storage and offloading
GOM Gulf of Mexico
IMO International Maritime Organisation
IRM Inspection, repair and maintenance
NCS Norwegian Continental Shelf
NOC National Oil Company
O&G Oil and Gas
OCS Outer Continental Shelf (USA)
OGA Oil and Gas Authority (UK)
OPRED Offshore Petroleum Regulator for the Environment and Decommissioning
(UK)
P&A Plugging and Abandonment
PSA Production Sharing Agreements also known as Production Sharing Contracts
(PSCs)
ROVs Remotely operated vehicles
UKCS UK Continental Shelf
UNCLOS UN Convention on the law of the seas

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Oil and Gas Decommissioning

SUBSEA ENGINEERING OPPORTUNITY

Oil & Gas Decommissioning 2

Oil & Gas Decommissioning 3

Table 1: O&G hubs with offshore decommissioning expenditure. Source: various

Oil & Gas Decommissioning 4

2.1. Decommissioning activities

- Operator project management

1Offshore and Subsea Facilities, PetroWiki, accessed February 2018

Oil & Gas Decommissioning 5

- Topside and sub-structure onshore recycling

Breakdown of UKCS Decommissioning

Subsea and pipeline

Figure 2: Breakdown of the expenditure on decommissioning by activity. Segments highlighted in

Oil & Gas Decommissioning 6

2.2. Well plugging and abandonment

3 Oil & Gas UK, Decommissioning Insights 2017

Oil & Gas Decommissioning 7

Oil & Gas Decommissioning 8

Table 4: Well intervention types. Source: Oil & Gas UK

2.3. International regulations

9 Offshore Platforms - Abandonment and Recommissioning: A Review of Current International Law,

Oil & Gas Decommissioning 9

structures are located on the approach to ports or for international shipping

Alongside International regulations on decommissioning many countries, namely the UK,

2.4. Financing O&G decommissioning

Oil & Gas Decommissioning 10

Oil & Gas Decommissioning 11

3. Subsea engineering synergies

3.1. Operator project management

Oil & Gas Decommissioning 12

3.2. Well plugging and abandonment

- Studies to support well P&A programmes

Oil & Gas Decommissioning 13

- Project management of P&A activities

- Specialist services, e.g. wireline

3.3. Facilities / Pipelines making safe

3.4. Sub-structure removal

21 Radford, R., Mercury chemical decontamination in preparation for decommissioning, DecomWorld

Oil & Gas Decommissioning 14

3.5. Subsea infrastructure

3.6. Site remediation

Oil & Gas Decommissioning 15

3.8. Areas for innovation

22 OTM Consulting, Plugging and Abandonment Collaborative Environment (PACE), Decomworld

project, Decomworld GOM 2017.

Oil & Gas Decommissioning 16

4. Global market with locations of interest

Table 5: Summary of decommissioning activity and expenditure estimates for important

Norway Period 2017-2025: £400-800 mn/year in next five years

24 Petrowiki, accessed 12 April 2018, http://petrowiki.org/Offshore_and_subsea_facilities

Oil & Gas Decommissioning 17

Brazil Upcoming activity: Rough estimate of US$4.4 billion

Oil & Gas Decommissioning 18

means that this is almost half the global spend on decommissioning. 29

UKCS Breakdown of decommissioing spend by region

Central North Sea

Northern North Sea and West of

Figure 3: Breakdown of anticipated decommissioning expenditure in the regions of the UKCS