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NEwS Issue No. 2

October 2010

www.decomnorthsea.com

Offshore Oil & Gas Decommissioning – Contracting Strategies It is generally recognised that collaboration is going to play an increasingly important role in the decommissioning sector over the coming decades. It is therefore entirely appropriate that Decom North Sea should practice what it preaches!

Fig. 1

Decom North Sea is facilitating the industry discussion on the contracting strategies and models used to manage major, complex decommissioning projects. In support of this initiative we teamed up with The Robert Gordon University (RGU) and Accenture in a project designed to provide fresh, independent and unbiased research, analysis and thinking on this somewhat, sensitive issue.

Our partnership was set up as follows. Decom North Sea articulated the general industry situation relating to decommissioning contracting strategies, and with input from Chris Gray of ConocoPhillips we set the strategic ambition for the research. A team of eight oil & gas MBA students at RGU undertook research with a range of operators, major contractors and service specialists, followed by a thorough analysis of the data obtained. On Tuesday 7th September the team presented their findings to an audience of nearly 50 people, most of whom are Decom North Sea members. Accenture provided sponsorship for the whole project, supported the students by coaching throughout the course of the twelve week project, and kindly agreed to share the findings of the study with Decom North Sea members. A good example of a win-win-win.

Contents page 2 Director’s foreword Membership of Decom North Sea Decomnorthsea.com Future newsletters page 3 New Directors Elected at AGM page 4 Strong turn out for first members’ event page 5 Forthcoming DNS events and

Taking account of the strategic drivers (see Fig. 1) which influence which contracting strategy and model is most appropriate, the students analysed the various contracting strategies (In house, Tier 1, Heavy lift, Project management and collaboration) against operator and contractor value drivers. They then compared this with the traditional contracting models of Lump Sum and Cost Plus and suggested alternative contracting models which could meet both operator and contractor value drivers. The presentation by the students at the September workshop was excellent, and attracted very complimentary remarks from the industry professionals in attendance. The project has provided Decom North Sea with a valuable perspective that is recognised as being independently researched and analysed, and which makes some realistic recommendations on possible future development of industry models. These recommendations will now be discussed and debated at the October decommissioning conference in Dunblane, which in turn could possibly lead to the identification of a model that could be worked up by industry experts for adoption on future projects and programmes.

exhibitions pages 6 and 7 Members News: Proserv Offshore, CSL, People=Positive and DSL page 8 Member Listing


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Decom North Sea News

Director’s foreword

Membership of Decom North Sea

As you may be aware, in the last two months since the first Decom North Sea newsletter we have increased our membership to over 80 member companies and the events programme for 2010 is well underway. we held our first event for members at the Marcliffe hotel in Aberdeen where around 100 members attended to hear about BP’s North Sea decommissioning plans, our first annual general meeting saw the election of seven new directors and the first offshore decommissioning conference was held in Dunblane, Scotland. It is very encouraging to see growing interest in Decom North Sea from a wide range of oil and gas supply chain companies across the UK and Europe as we continue to build a complete picture of North Sea decommissioning activity through the supply chain matrix and with new contracting models. we are also looking to strengthen the link between operators and supply chain companies to provide our members with the information and knowledge that they need to capitalise on future business opportunities decommissioning presents and to be able to demonstrate to Government, regulators and taxpayers that we are doing all we can to build UK capability and meet decommissioning obligations in an efficient way. It is our priority to create a vibrant, competent and competitive North Sea decommissioning supply chain – with your ongoing support and commitment to Decom North Sea we are confident that together we will achieve this. My role as a director of Decom North Sea is to speak to members in order to ensure that we are offering the best possible support to all member companies and truly representing your interests and issues in the activities we undertake. This is a very important task as it is vital that we at Decom North Sea understand your needs and fulfil your membership aspirations. I am looking forward very much to meeting you all over the next few months. Alex West Wood Group

Future newsletters we welcome contributions from our members for future newsletters so please send your news and photos to SHillyear@decomnorthsea.com we hope by sharing your experiences and successes in the decommissioning sector with fellow members and the wider decommissioning industry, further useful connections will be made.

Full membership of Decom North Sea is open to any commercial organisation involved with decommissioning. Associate membership is open to non-commercial organisations and individuals who wish to be kept informed of Decom North Sea activity and attend networking events and conferences. Benefits of joining Decom North Sea include, amongst others, : • • • •

Access to operators and major contractors to understand their future decommissioning plans and supply chain needs Opportunity to present and promote your company at Decom North Sea events Access to market intelligence reports and business opportunities Opportunity to participate in specialist working groups e.g. (a) to look at the various contracting strategies for decommissioning; (b) packaging of decommissioning projects Discounted rate for Decom North Sea events

More information on member benefits and how to apply to join Decom North Sea can be found at www.decomnorthsea.com


Decom North Sea News

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New Directors Elected at AGM Seven new directors from across all sectors of the decommissioning industry were elected onto the board of Decom North Sea at the first annual general meeting, held in Aberdeen on September 14. The meeting heard that Decom North Sea now has 82 members and has revised the target number by the end of the year from 70 members to 100. Chairman Murdo MacIver, director of Peterson SBS, opened the agm and thanked directors and members for their time and support and urged other companies to join the body to ensure the UK supply chain benefits from the £25-30billion worth of decommissioning work forecast for the North Sea over the coming decades. Brian Nixon, Decom North Sea’s chief executive, said in his report at the meeting: “We are delighted that the members cover all sizes of companies and represent the breadth of the supply chain. At the moment, membership is a bit skewed in favour of Scotland - which is really to be expected because of where clusters of companies are located - but we have had encouraging interest from England and the Continent. “We have been overwhelmed by the reception we have had from industry and believe we are well on track to reach 200 members by the end of 2011 and that will make us genuinely representative of the supply chain.’’ Mr Nixon also gave details of the supply chain matrix being created by Decom North Sea at present. The online facility allows operators and major contractors to access in-depth profiles of member companies providing specific decommissioning services, their skills, capabilities and track-records. “This will help suppliers to promote themselves to operators and major sub-contractors that might not be aware of them and might even help avoid the need for the pre-qualification stage,’’ he said. New directors are BP decommissioning vice-president Gunther Newcombe, Halliburton director and country manager for project management services Tom Leeson, Marine Subsea managing director Alasdair Cowie, AMEC’s head of decommissioning Roy Aspden, BIS Salamis (M&I) operations director Nigel Lees, Proserv Offshore vice-president group business development David Dent and Eddie Grant, managing director of Bluegrass Decommissioning Services They join existing directors Mr MacIver, Alex west, of wood Group, Bill Yuile, of PSN, Donald Michie, of Asco, Kare Kristing, of Design Alpha, Mark Stanley, of Veolia Environmental Services, and Simon Coles, of Babcock International Group.


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Decom North Sea News

Strong turn-out for first members’ event More than 100 senior industry figures gathered in Aberdeen to hear first hand about BP’s decommissioning activities at Decom North Sea’s first event for its members. Gunther Newcombe, BP vice-president of Decommissioning, addressed attendees at the member-only event which was held at the Marcliffe Hotel and Spa. BP has already successfully completed the removal of North west Hutton, the first of the large fixed steel jacket installations to be decommissioned in the North Sea and is currently progressing decommissioning for the Miller and Don Fields. Gunther shared with the audience BPs plans for these two decommissioning projects, their contracting strategies and how the supply chain can engage with BP in relation to decommissioning. DNS Chief Executive Brian Nixon said: “we were delighted so many of our members benefitted from an excellent opportunity to hear directly from BP about the work they are planning in the North Sea, as well as from the fantastic networking platform.’’ “Feedback from this event was excellent and Decom North Sea are currently developing a series of similar events”.


Decom North Sea News

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Forthcoming DNS events and exhibitions Pilot Share Fair 12, Aberdeen, 3rd November PILOT Share Fair 12 provides the chance to be among the first to hear about the latest UK oil and gas business development opportunities from the major oil and gas players, both from the operator and contractor communities, who will unveil their 18 month forward plans for projects in the UKCS at the event. Decom North Sea will be exhibiting at the Pilot Share Fair and would be pleased to discuss Decom North Sea in more detail with potential new members and catch up with current members. To find out more about the Pilot Share Fair and to register to attend go to http://www.oilandgasuk.co.uk/events/pilot_share_fair.cfm

Decom North Sea and NOF Energy Networking event, Durham, 11th November Decom North Sea and NOF Energy are holding a decommissioning themed networking lunch. This will include an update on Decom North Sea as well as a presentation from Jim Niven, Stakeholder Manager, Shell on Shell’s decommissioning plans and timescales; contracting strategies; supply chain engagement and any issues they are facing. This event is open to both members and non-members of Decom North Sea and NOF Energy. For more information and to register for this event, contact shillyear@decomnorthsea.com

DecomWorld 7th Annual North Sea Decommissioning Conference, Aberdeen, 16th & 17th November This conference is set to tackle the key issues which are at the heart of the North Sea Decommissioning Industry. Decom North Sea will be presenting on the ‘Strategy for Supply Chain Mobilisation’. For more information and to book your place visit http://www.eyeforenergy.com/nsd/index.shtml

Oil and Gas Supply chain Management Conference, London, 29th & 30th November SMi’s forthcoming Oil and Gas Supply Chain Management conference will address challenges, innovation, solutions and lessons learned, as influential players from the oil and gas landscape come together to understand how to generate value, create efficiency and improve productivity. Decom North Sea are presenting at the conference on ‘Decommissioning Supply Chain Development’. For more information and to book your place visit www.smi-online.co.uk/supplychain17.asp Decom North Sea members are eligible for a 25% discount off the delegate rate, please contact Andrew Gibbons on +44 (0) 20 7827 6156 to receive the discount.

Decom North Sea and The EIC Networking Event, London, 24th January Decom North Sea and The EIC are holding a decommissioning themed networking event. This will include an update on Decom North Sea as well as a presentation from Jim Niven, Stakeholder Manager, Shell on Shell’s decommissioning plans and timescales; contracting strategies; supply chain engagement and any issues they are facing. This event is open to both members and non-members of Decom North Sea and The EIC. For more information and to register for this event, contact shillyear@decomnorthsea.com

Future Decom North Sea member’s only events Decom North Sea is currently in discussions with a couple of operators regarding presenting their decommissioning plans, strategies and issues and is looking at setting dates for these in early 2011 – information regarding these events will be circulated to members of Decom North Sea over the next few months. Decom North Sea is also keen to hear from other operators and major contractors who are willing to share their decommissioning plans, strategies and issues and would be interested in hosting an event for Decom North Sea members. To discuss this opportunity in more detail please contact Sarah Hillyear on 01224 224131 or shillyear@decomnorthsea.com


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Decom North Sea News

Members News Proserv Offshore completes significant decommissioning contracts The past 12 months have been a busy and prosperous period for Proserv Offshore with the completion of several significant decommissioning projects worldwide. In the Asia Pacific region, the company has completed a major subsea cutting contract for the decommissioning of a platform jacket. weighing almost 16,000 metric tons, Proserv Offshore provided all the cutting equipment and services including specialised ROV operated water abrasive cutting tools designed to cut up to 80”. In the UK, Proserv Offshore recently carried out the removal of subsea manifold protection structure for a client in the North Sea. To fulfill this project, Proserv Offshore were contracted to provide water abrasive cutting services, dredging equipment and personnel for the severance and removal of the manifold protection structure in four sections. By being able to provide all the cutting and dredging services without the assistance of another sub-contractor, this reduced the number of personnel required and overall project management costs. Further afield, Proserv Offshore completed the abandonment and removal of St. Mary Land & Exploration’s Gulf of Mexico Vermillion area platform, pipelines and wells destroyed during Hurricane Ike. The project was awarded based on Proserv Offshore’s ability to assume asset ownership and provide a complete turnkey project managed service including all subsea tooling, contracting and third party management. with over 30 year’s experience, Proserv Offshore has abandoned and decommissioned over 600 structures worldwide. Based on this impressive track record, the company aims to further increase awareness of its products and services and group wide capabilities into current and developing markets.

Retrieval work after Hurricane Ike


Decom North Sea News

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CSL Launches Decommissioning Introduction Course

DSL Announce Decommissioning Work for Talisman

with more than 800 facilities in the North Sea alone that will eventually require decommissioning, demand for knowledge in this area is on the increase.

New Decom North Sea member Derrick Services (UK) Ltd (DSL) is currently working on the Talisman Auk decommissioning project.

To meet this demand, CSL has developed a one-day Decommissioning Introduction course designed to provide managers, engineers and non-technical personnel with an overview of the process involved in decommissioning offshore oil and gas installations, with a focus on the environmental, safety and financial issues.

The contract involves removing the drilling derrick and substructure and, using approximately a dozen multidisciplined and OPITO qualified staff, DSL is currently halfway through the six-month contract.

“These issues are of critical importance to CSL when undertaking decommissioning projects and it’s important that people have access to the relevant knowledge and information”, says Neil Knowles, CSL Managing Director. “By demonstrating the challenges and lessons learned from past decommissioning experiences, it provides delegates with an understanding of the decommissioning process from a real-life perspective, which I believe is invaluable.” The course provides delegates with an understanding of the decision-making, planning, and implementation processes associated with decommissioning offshore oil and gas installations. For course dates, locations and booking: email csltraining@csl-engineering.com or tel +44(0) 1224 285566

Flawless Exit

Mike Smith, Managing Director at DSL, said: “The Talisman Auk project is the latest in a successful track record of drilling package decommissioning on platforms both in the North Sea and overseas by DSL. It further confirms our ability to support the decommissioning of oil and gas facilities.” DSL is one of only a few companies that offer the provision of derrick decommissioning work with a floating ginpole and this has been utilised for the Talisman Auk project. The floating ginpole is a specialist piece of equipment that is ideal for derrick erection, decommissioning or modification. It is a very cost-effective alternative when the use of barge cranes is not possible or is too expensive, allowing dismantling of the derrick piece by piece on site. Overseas, DSL has most recently worked on the decommissioning of CTF Rig 05 offshore Tunisia, followed by the upgrade and modification of this rig to be installed onto another installation, which DSL then project managed and provided onsite expertise for.

For over 20 years people=positive™ has been supporting development projects on and offshore in the Oil & Gas sector. In the early 90’s we worked with teams on the Gannet field development, on Curlew with the first ESP technology in the North Sea, on major re-development projects in the Brent field, Buzzard and Clair. Our global experience has included involvement in Sakhalin Island with Exxonmobil and with LNG projects for Qatargas. Currently we are supporting several mega-construction projects in Papua New Guinea and offshore Abu Dhabi in the Upper-Zakum field.

DSL is an industry leader supporting drilling contractors and operators worldwide and is the UK’s only API 4F licensed company for the design and manufacturing of drilling structures.

In all of these smart-track© projects, the same principles applied in achieving Flawless Start-Up are easily transferred to the decommissioning arena where ‘Flawless Exit’ becomes the goal. Focus will still be around putting effort into bringing key stakeholders together from the outset of the project to build strong collaborative relationships and to facilitate integrated working at all levels. The themes will still be about working in a way that delivers ‘No Surprises’ - avoiding problems down the line where safety may be compromised and where change becomes costly, time-consuming.

The company employs over 100 staff and has UK offices in Aberdeen and Great Yarmouth, as well as worldwide in UAE, Singapore and Brazil, and reported a turnover of £15million in 2009.

In North Sea decommissioning we are already involved with a number of projects where the goal is now ‘Flawless Exit’. we work with project leaders to design interventions at staged intervals throughout the project life-cycle and provide performance coaching support to individuals and teams involved across the project. For more information contact: Barney Mackie - Director of Knowledge and Innovation bm@peoplepositive.com Visit our website: www.peoplepositive.com

DSL is committed to providing a diverse range of services and innovative solutions to the oil and gas industry. These include derrick inspection, drilling package decommissioning, derrick assembly and outfitting, rope access trades personnel, in-house engineering, design, fabrication and procurement.


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Decom North Sea News

Full membership of Decom North Sea is open to any commercial organisation involved with decommissioning. Associate membership is open to non-commercial organisations and individuals who wish to be kept informed of Decom North Sea activity and attend networking events and conferences. For further information, visit www.decomnorthsea.com

Member Listing Members of Decom North Sea – as at 17th September 2010 60 North Recycling Ltd Aberdeenshire Council AF Decom Offshore AS AGR Subsea Ltd AKD Engineering Ltd Aker Solutions AMEC APEX Speciality Solutions Ltd Arnlea Systems Limited ASCO UK Ltd Asset Development & Improvement Ltd (ADIL) Avanteq Ltd Babcock Marine Rosyth Balance Point Control B.V BIS Salamis (M&I) Ltd BJ Process & Pipeline Services BOND - Bluegrass Offshore & Nuclear Decommissioning Services Ltd BP Caithness Chamber of Commerce Cape Industrial Services Ltd Carbon Energy Club CNR International (UK) Ltd Codaoctopus Products Ltd CSL Cutting Underwater Technologies Ltd Danish Marine and Offshore Group Derrick Services (UK) Ltd E.M.w Consultancy Ltd East of England Energy Group (EEEGR) Ethan Consultancy Ltd Expro North Sea Ltd Falck Nutec Geoprober Drilling Halliburton Hawk Enviro Ltd Heavy Decom International Hess Ltd Hilti IRO JEE Ltd Keltbray Group Holdings Ltd Kishorn Port Limited

Ledingham Chalmers Lloyd’s Register EMEA Maclay Murray & Spens Marathon Oil UK Ltd Marine Subsea (UK) Ltd Mwaves Ltd NOF Energy Norse Cutting & Abandonment Ltd NSIG Oceaneering International Oilmac.com Oil States MCS Ltd Pegasus International (UK) Ltd people = positive Peterson SBS Petrofac Port Services Group Production Services Network (PSN) Project Development International (Pdi) Ltd Proserv Offshore RBG Ltd Red Stone Drilling Ltd Rotech Subsea Scanmet A.S Scottish Renewables Seajacks UK Ltd Seal-Tite UK LLC Shepherd & wedderburn Silverdot Ltd SMD Robotics Ltd Spartan Solutions Ltd SPEX Services Ltd Superior - wild well Energy Services Ltd Sureclean Ltd Talisman Energy UK Ltd Technical Lifting Solutions TETRA Technologies Ltd Thinktank Maths Ltd Tracerco Ltd URS Corporation Veolia Environmental Services wood Group

Contact Decom North Sea, Riverside House, Riverside Drive, Aberdeen AB11 7LH Tel: +44 1224 224129 Fax +44 1224 224301 email: shillyear@decomnorthsea.com www.decomnorthsea.com

Decom North Sea News 002  

Offshore Oil & Gas Decommissioning - Contracting Strategies

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