D&A: The Asia-Pacific Offshore Industry’s Next Big Challenge
The next big wave of decommissioning and abandonment (D&A) projects is set to occur in the Asia-Pacific (APAC) region, and APAC’s operators are now tasked with finding cost- and time-effective ways of unwinding their huge agglomeration of wells and facilities.
Research consultancy Wood Mackenzie in 2018 forecast that around 380 fields in the region—APAC is home to some 2,600 platforms and 35,000 wells—would cease production over the ensuing decade, with costs exceeding $100 billion.
The biggest challenges center on the relative newness of D&A in the region along with the diverse set of regulations that vary country by country. There is not a single regime covering one large area like in the North Sea or US Gulf of Mexico, the regions recognized as leaders in D&A. There is no single database of wells, platforms, subsea facilities, and pipelines for operators and regulators to access. And there is little benchmark data against which operators can measure their work.
The largest undertaking is off Thailand and Indonesia where more than 1,200 platforms reside, Steve Spease, principal at decommissioning consultancy TSB Offshore, said during a presentation at the recent Decommissioning & Abandonment Summit in Houston. The operators of many of these platforms include PTT Exploration and Production, Chevron, and Mubadala Petroleum in Thailand, and PT Pertamina, BP, Chevron, Shell, and ExxonMobil in Indonesia.
In terms of a regulatory structure that relies on previously devised regionwide guidelines, however, Thailand could serve as a model for countries in the region. “In my opinion, Thailand is the most sophisticated in regards to having a robust program that's fully in place for the regulators and the oil companies, and they are adhering to that very closely,” Spease said. “Reefing in place is one of the big things there, and it is still under a lot of discussion. I'm pretty sure it's going to move forward.”
Malaysia’s D&A Education
In Malaysia, state-run Petronas in 2017 reefed two platforms at the Dana and D30 fields in Block SK-305. The country has more than 300 platforms, according to Spease’s presentation, with Petronas, Shell Malaysia, ExxonMobil, and Hess serving as the major operators.
Petronas’ first D&A project came in 2003, but the company has since evolved, said Mohamad Ikhranizam Mohamad Ros, Petronas head of decommissioning, during an APAC-focused panel discussion at the event. Like others in APAC, the company is applying learnings from the US Gulf of Mexico and North Sea.
In addition to reefing, this includes batch decommissioning in which an operator or operators decommission several fields located near each other in a single campaign to save time and money. Ros said he expects to see more collaboration between operators as well as risk-sharing with service companies.
Shell Malaysia is applying learnings from other units of Shell in other parts of the world as well as from other companies, said Bartholomew Jukui, end of field life BOM and D&R owner for Shell Malaysia Upstream. There are “many, many players in Malaysia—they're the ones that are doing the most right now in planning for their future decommissioning,” Spease said.
But planning and execution can be a difficult given that, “Most of us engineers are designers,” Jukui said. “We design things to last, but we are never taught to destroy. So to migrate from a capital-project-type mindset to a demolish-it-type mindset was a struggle for us. Even now it’s a struggle even though we’ve done it. But you have to get more comfortable with it.”
Recent D&A work by Shell has involved four subsea gas fields in two clusters in around 100 m of water. Production from the clusters began in the late 1990s and early 2000s and recently went offline. Gas was sent to host facilities for processing. Collaboration with a nearby operator, service companies, and regulators has been instrumental in the effort.
Because of timing constraints dictated by the production-sharing contract, the company had to split the scope into two campaigns. The first campaign, which was completed last year, involved the full-field abandonment of a subsea facility.
The second campaign involves three fields that were tied to a third-party-owned host facility. Shell has collaborated with the host operator, whose subsea fields were of the same vintage and similar design. It also has worked with its contractors during the campaigns to modify a tree running tool to incorporate a flushing head to clean its pipelines.
In exploring the opportunity to reef, the team had to figure out, he said, how to cull all the information required “to convince the various [regulatory] groups to listen to our story.” Shell’s solution was to use hours upon hours of video from subsea surveillance during the field’s lifespan as evidence that its structures had become habitats for marine life.
“From the comparative assessment, what we're seeing is that reefing in situ is generally allowed if you can provide evidence and justification” to Malaysia’s regulatory agencies, Jukui said.
From Brunei to India to Australia
Shell is the biggest operator in neighboring Brunei, where more than 200 platforms reside—including wooden structures—in one of APAC’s oldest offshore areas. State-owned Brunei Petroleum also is venturing into deeper waters.
India’s offshore sector has grown to more than 100 platforms, most of which belong to ONGC, Cairn, and Shell. “It’s a big market and a lot of older platforms are being decommissioned,” Spease said. It too “has a fairly robust” regulatory system, he noted. “They're still working on it, but it is very much in writing—an oil company or contractor can see what is going to be required there.”
Around 65 platforms lie around Australia and New Zealand, where BHP Billiton, Woodside Energy, and ExxonMobil are the main operators. One of the big challenges for Australian operators is the lack of a robust regulatory system in which “everybody understands what’s required,” said Larry Johnson, BHP Billiton principal engineer of global decommissioning, during the panel discussion. “There are no gray areas.”
Operators need to know, for example, that reefing in place is allowed under certain conditions, what happens to topsides and jackets, and how to abandon pipelines, he said.
But the biggest issue for APAC, Johnson said, is D&A funding. Will operators be able to do it consistently in an economical manner, particularly given many of the constraints these companies—many of which are state run—work under? The industry will always be volatile and operators aren’t swimming in free cash flow, which certainly isn’t generated during D&A.
ExxonMobil Eyes Sale of Malaysian Offshore Assets
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Qatar Petroleum Takes Over Pair of Offshore Fields from Oxy
As Oxy looks to divest billions in assets and focus more on its prime US shale fields, it sheds itself of the ISND and ISSD fields off the eastern coast of Doha. In announcing the lease loss last year, Oxy said the fields need significant infrastructural investment.
Production Starts From Johan Sverdrup
Phase 1 of the North Sea megaproject—Norway’s largest offshore development since the 1980s—has come on stream. Johan Sverdrup is expected to produce 660,000 BOPD at its peak.
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