With a significant number and concentration of older oil and gas facilities, decommissioning is becoming a hot topic in the Middle East. In the final part of the series, our expert reveals how to ensure your project succeeds.
All decommissioning projects, regardless of scale, location and regulatory regime have four key issues related to the planning and execution of a decommissioning project that need to be considered.
1. Cost certainty and control
It is essential to define what infrastructure requires decommissioning, what its current condition is and what the forward plan is for decommissioning. Cost certainty and subsequent cost control are essential - it is a regrettable reality that there will probably be some form of scope and cost creep pressure. The challenge for the industry is how to control it. Unlike costs associated from traditional exploration and production activity, there is little chance for any of the decommissioning costs to be offset against future revenues and so money spent unnecessarily cannot be recovered.
2. Procedural integrity
Companies must know what needs to be done, know how much it will cost and then execute within such budget. A robust and dependable decision-making process that will deliver sensible, achievable objectives (considering all the stakeholders' interests) is needed. This process must:
- Clarify the objectives: it is important to establish very clearly the objectives of any program. The operational, safety, environmental and financial objectives of the plan must be unambiguous from the beginning.
- Share the objectives openly: all stakeholders need to understand and accept the objectives. These objectives will drive the priorities of the program and this will in turn affect the performance and the outcome.
- Establish what is routine and what is not: defining what is routine and what is critical or unusual is important in the preparation of plans. Choices will always have to be made about the allocation of resources and more time and effort dedicated to the critical or non-routine elements.
- Manage the change: having a clear set of objectives and using these as a reference helps the management of change. This will also prevent over emphasis on secondary objectives and avoid short term priority shifts.
Above all other objectives it is important to deliver decommissioning with a strong focus on safety and environmental responsibility. Without these elements enshrined in the plan, the risk of a significant incident is greatly increased. A well-executed plan costs less than all other alternatives, while a plan with repeatability allows economies of scale. Capturing lessons learned will provide incremental savings within a project which will aggregate over a larger work scope. Sharing experiences also allows others to learn from mistakes. Decommissioning, unlike some other parts of the exploration and production business, is not a competitive sport - good planning and execution will inspire confidence from all the stakeholders in the process.
3. Regulatory compliance
One of the challenges in the Middle East is the lack of certainty - without a clear understanding of the contractor's decommissioning liabilities and other obligations under applicable legislation, it is difficult to make accurate budgetary projections. Commercial solutions exist (such as insurance) but they may not be available in the region and they are rarely comprehensive.
4. Balancing costs and risks
Locating the appropriate intersection between cost and risk is key in generating robust decommissioning plans. Arriving at the solution and then implementing it will require experience, practical skills, pragmatism and careful forethought. The decommissioning challenge is not an abstract one and solving it will require the ability to blend a varied set of skills, knowledge, experience and technology.
Lastly, impartiality is important. There are many stakeholders with differences of opinion and competing agendas. It's therefore important that in planning and executing a decommissioning program the principle of "doing the right thing" is borne in mind.