Having spent last month in South East Asia with Technical Waste Services discussing decommissioning with both Stakeholders and the supply chain but also attending Offshore Europe in Aberdeen, one thing that came to my mind many times was the lack of future clarity.
What do I mean by this? I fully understand the Environmental studies taking place about leaving in Situ and or Reefing. I fully understand the position of remove and leave as you found it. But while we argue back and forth about what the “best practice” is, the supply chain cannot make investment decisions on creating future capacity, recruitment and training.
Any robust business plan would need to include what is the need and what is the market for that need.
How many potential assets will be removed in the next 5 years? How many will the decision be pushed back while research and lobbying take place? How many will be put to reuse, how many will be reefed?
In South East Asia there is a lack of port areas with the ability to take Topsides back for Decontamination, Demolition and Recycling, No Waste Transfer Stations or experience. But with an uncertain potential market who will take the chance? It’s also obvious to point out that these things take time to set up once the decisions are made. What is the availability for Lifting vessels, how long does it take to build one and what work will it have?
Jon Clark, oil and gas transactions leader for Europe, Middle East, India and Africa at EY speaking at the Offshore Europe event was talking about a new brand for decommissioning to attract new talent to market but also in the same seminar spoke about the potential need for the supply chain to shrink to reduce drag. He believed a few large decommissioning players would be best for the market. I respect Jon’s opinion but would argue that innovation and disruption are predominantly introduced by SME’s and that this competition is healthy in the long run.
The other big topic was the taxpayer and the liability we all have for decom. The 35% reduction in cost estimates a key driver. Apparently great strides are being made towards this goal with a 17% reduction already achieved on last years expected spend. My question on this is, is this from actual improvements in contracting terms, innovation, procedures and/or experience? Or was it from over estimations to account for unknown risks on the front end? Or was it from massive downward pleasure on the Supply Chain to cut costs?
I don’t know.
Again, only my opinion but what has not been spoken about from Decommissioning is the potential UK job creation. The potential spend on new projects, businesses and people. All these would pay taxes, spend money in the local area, buy houses and invest. There would be a multiplier effect on the economy from this which the UK public would benefit.
Whats the solution to these issues? It’s not an easy one but we need to consider future liabilities, future capability and future generations. Is a 30 plus year old asset suitable for reuse for another 30 years, what would be the economics of keeping it to safe operations?
Are artificial reefs just moving fish and life from one area to another?
Are we doing more damage by removing?
While we dont have the answers to all the above the future will remain to be unclear for those looking to invest, train and work in the Decommissioning Market.
Gavin Ethan Lish is a Senior Commercial Manager for Technical Waste Services, Currently Studying for his Masters from Aberdeen in Decommissioning, with over ten years experience in Environmental and Oil & Gas works.