OTC: Well Abandonment: A Procrastination Case Study

At its heart, decommissioning is a procrastination problem.

Many factors lead to delays in prioritizing decommissioning activities in the offshore industry, but getting a head start on late-life planning minimizes risk and expenditure.

The stakes — meaning the cost — have never been higher. Global decommissioning spend is forecast to reach almost $100 billion between 2021 and 2030, and more and more assets are boomeranging back to previous owners, speakers said during the Commercial Alternatives for Offshore Decommissioning keynote session at the Offshore Technology Conference on May 1.

Promethean Decommissioning Company CEO Steve Louis said engineering, HSE, cultural and financial considerations all contribute to delaying decommissioning activities.

In the Gulf of Mexico (GoM), for example, about one-third of platforms are no longer in production, and so maintenance spend may be the bare minimum for those facilities, he said.

Louis once heard an expert say that when an incident happens to one company in the industry, it happens to all the companies in the industry.

“That means in the last 10 years in the Gulf of Mexico, there have been over 6,000 incidents that happened to all of us. Why? Why? Why is it happening? Is it us? Is the lack of experience or is it these deteriorating assets and the environment that we're putting our people in?” Louis asked.

The industry’s culture can be a factor, he added.

“There seems to be a reluctance up until recently to share experience, to ask for help, to spend money, to speak with regulators or even invest in innovation,” he said.

While all of those factors contribute to delays, Louis points at procrastination as the larger problem to overcome.

One of the reasons procrastination is so embedded in business is that “executives are focused not on the next quarter century, but the next quarter,” he said.

Louis urged operators to follow the advice of The 7 Habits of Highly Effective People author Steven Covey’s advice: begin with the end in mind.

“Start with building a plan,” he said. By prioritizing planning from the outset, it’s possible to develop “a very flexible approach to prioritize huge risk of activities, which enable us to systematically identify the optimal sequence for decommissioning and those reduced costs and reduced risk.”

Ryan Lamothe, director of decommissioning at Hess Corp., said working early on decommissioning plans can make a big difference, but so can working with partners.

“Decommissioning should not necessarily be a competitive environment, at least not from an operator's perspective,” Lamothe said. “There's no intellectual property here that we should be safeguarding against, right? There's no reserves at stake here. And I will argue that there are potentially some technologies that the service companies want to keep for themselves, but the operators ought to be working together to figure out how we can abandon these properties and decommission these as efficiently as possible as an industry.”

One of the big decisions operators need to make with decommissioning is whether the company will lead the process in-house or use an agent, he said. Things the operator should consider, he said, includes whether the engineering expertise is available in-house.

GoM abandonment

For instance, Hess, with its deepwater focus, no longer has staff familiar with GoM shelf assets, such as West Delta Block 79, which boomeranged back to Hess after Fieldwood Energy declared bankruptcy in 2021. Decommissioning the assets became a major priority, but without in-house shelf expertise, a decommissioning agent was a logical choice, he said.

“Hess has had no involvement with this field for over 20 years, having sold the properties in 2004,” Lamothe said. “Ongoing activities include decommissioning and abandonment of 115 wells, 13 pipelines, seven facilities. Since receiving these properties less than 12 months ago, we've made all seven facilities safe, which is no small undertaking given the condition that they were in.”

Hess has flushed hydrocarbons from all seven facilities in all 13 pipelines and has permanently abandoned 25 wells. In addition to running plug and abandonment (P&A) spreads, a hydraulic workover unit is mobilizing to P&A a couple of the “more technically challenging wells.” Two more platforms should be ready for removal and reefing later this year, he said.

Part of the problem with the surprise boomerang of West Delta Block 79, he said, is the complete lack of information about all the facilities.

“We discovered that the wells and facilities were in much worse shape than what was originally portrayed to us and that when we actually gained access to facilities in the wells, we found just innumerable numbers of non-compliance,” he said, adding that these issues with the wells and facilities had not developed in a short period of time.

For newer wells that Hess is delivering, the operator uses a well delivery process that features a decommissioning review.

“When we do a deepwater well designed now in the Gulf of Mexico, it has to go through an abandonment review as part of that well designed process,” he said.

Hess is finding that abandoning some of its older wells could “be a little bit tricky,” he said. “Had we thought about where we were replacing packers and where we were placing the completion, we at that point in time, we might have left ourselves a little bit easier… and cheaper path” for abandonment in the future.

P&A innovation on the way?

Given the huge amount of P&A work expected through 2030, Lamothe expects to see innovation in decommissioning-related technologies. Drones and autonomous vehicles can visually inspect assets, he said, while cutting and plug technologies are also ripe for innovation.

“Companies are seeing opportunities and are developing those technologies themselves and then looking for an operator that will help trial those in actual operations,” he said.

And as assets age, operators must think about risk management versus risk transfer, Louis said.

“For those of us who are parents, you're holding your baby, but with a full diaper,” he said. “Changing the baby's diaper before they have a blowout, that's risk reduction.

“Handing the baby to your spouse, that's risk transfer.”

A blown out diaper is one thing. In the oil industry, Louis said, “the risk we're referring to here, however, is about safety. Cost uncertainty in both opex and capex, the reputational risk we all face. It's the risk of future commitments for those divestments made years ago.”