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Future North Sea – Decommissioning the ‘unsung hero’ on the path to net zero

© Courtesy Rory Gillies/Shetland Fultra-deep-water port Shetland
Ninian Northern arrived in Lerwick for decommissioning in 2020

Viewers were told how decommissioning is the “unsung hero” of the energy transition during an Energy Voice event on Thursday morning.

Hundreds of people tuned in for the opening session of Future North Sea (FNS) 2022 to hear about net zero decom from some of the oil and gas industry’s biggest players.

The event was kicked off by an address from Mikki Corcoran, managing director for Europe at oilfield services giant and FNS partner Schlumberger (NYSE: SLB).

She said: “Over the past 50 years, the North Sea has continued to occupy a central place in our economy. The impact it has had is undeniable, and the basin continues to be the driver for prosperity and growth in the UK.

“This is a success that has only been made possible thanks to an entire generation of oil and gas workers, whose innovation and creativity has unlocked this resource for us and future generations.”

Collaboration needed ‘now’

Ms Corcoran, who is also co-chairwoman of the Technology Leadership Board, added: “Between us – the operators, supply chain, government and independent bodies – we all unanimously agree that without a significant level of collaboration and technology investment, we will never be able to reach our ambitious goals.

“We have an opportunity and a responsibility to help decarbonise oil and gas, and I think we’re on that task.”

Her sentiments were echoed by global strategic sales lead at Bureau Veritas (EPA: BVI) Neil Pickering who called for collaboration and cooperation “now” and “in spades”.

He said: “The goal is not to become compliant overnight, carbon neutral plans need to be set, particularly by companies with no greenhouse gas emissions reduction strategies in place. This can be a formidable challenge for small companies and can be confusing if they do not have the in house abilities to achieve compliance.

“The greenhouse gas protocol applies across industry, and decommissioning is no exception. As the decommissioning sector, we have an increasing climate change regulatory regime, a growing market that is already constrained through capability capacity and investment, a major image problem and a chronic skills shortage with no apparent plan to address it.”

The ‘unsung hero’

Attendees also heard from Pauline Innes, head of decommissioning at industry regulator the Oil & Gas Authority, who held decommissioning up as the industry’s “unsung hero”.

OGA wells decommissioning © Supplied by Mhairi Edwards/DCT
OGA head of decommissioning, Pauline Innes

She said: “I say that because it’s a part of the oil and gas industry that not only offers significant economic opportunity for the supply chain, but with operators commitments in the North Sea Transition Deal to target investment in the UK, it will also benefit domestic companies.

“While I appreciate decommissioning doesn’t generate a direct economic return for operators, action to remove foreign bodies from the marine environment is an environmental success story. That’s of value to an operator in terms of maintaining a social licence to operate.

“And with investors having increased focus on environmental, social and governance, it’s fundamental to future investment.”

Sourcing cash a challenge

The issue of securing cash was raised later on in the session by Alan Fairweather, chief executive of energy services firm Ardyne, of Aberdeen.

© Supplied by Fifth Ring
Alan Fairweather, Ardyne CEO

He said: “Right now, anybody involved in decommissioning or well services is still earmarked within oil and gas. As a result, access to capital is challenged – there’s a need to confront this mindset.”

Donald Mackay, business development manager at Schlumberger, says that focus on net zero is potentially “pulling from” decommissioning, but that it doesn’t have to be that way.

He said: “There is an opportunity here for them to be more intrinsically linked. It’s a relatively small group looking at decommissioning when you compare it to the whole oil and gas sector.

“Everybody has to look at the decarbonisation side so when you link the two together and talk about the transition, there’s a big chance to merge the two together and attract more investment.”

Net zero changed what it means to be ‘excellent’

It is a challenge that is here to stay too and Martha Vasquez, partner and associate director at Boston Consulting Group, explained that net zero has “changed the game” for decommissioning.

She said: “The pressure to decarbonise oil and gas operations is now unprecedented. At least 20 companies have announced emissions reduction targets – of those 15 have announced net zero targets.

“The UK alone aims to reduce emissions from exploration and production by 50% by 2030. Pressure is coming from stakeholders, from society, from our own employees demanding a just transition, from our shareholders, from regulators and from investors.”

She added: “I would argue that the net zero agenda in the North Sea is pushing us to redefine what it means to be excellent in decommissioning for an operator. It is no longer about cost, operations and safety – it is also about carbon intensity.”

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