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SUPPLY CHAIN NEEDS IN DECOMMISSIONING – NOW AND IN THE FUTURE
Sam Long
Business Acquisition Manager,
Decommissioning, Petrofac
8 September 2016
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Agenda:
1. Introduction and HSE
2. Petrofac: an introduction
3. Supply Chain and decommissioning
now and in the short term
4. Future Supply Chain needs
5. Closing remarks
6. Q&A
Disclaimer: as a Contractor, Petrofac cannot comment in regards to supply chain needs to the
same degree as an Operator. Opinions expressed herein reflect Petrofac interpretation of market
requirements and do not necessarily reflect the expectations of our clients
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Petrofac– in general
Petrofac is a major oilfield contractor,
providing Engineering and
Construction (E&C), Operations
and Maintenance (O&M), Well
Engineering, training and other
specialist services to Operators
around the world
We employee 18,200 personnel,
with a turnover of $6.84BN (2015)
We have major operations
in the North Sea, Middle East
and Asia Pacific
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Petrofac– in decommissioning
Petrofac has the capability and the
experience to help existing and new
clients on their journey; whether
that’s at project start-up, through
ongoing and late life operations,
onto decommissioning
We are building a Centre of
Excellence for decommissioning
in the North Sea
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Decommissioning is the final phase of the asset lifecycle and involves the whole supply chain
NORMAL OPERATIONSLATE LIFE ASSET
MANAGEMENTDECOMMISSIONING
DISCRETE SERVICES
INTEGRATED PACKAGE
DUTY HOLDER (INSTALLATION OPERATOR)
SERVICE OPERATOR
DISCRETE SERVICES
INTEGRATED PACKAGE
DISCRETE SERVICES
INTEGRATED PACKAGE
SERVICE MODEL(S)
FOCUS AREAS
Uptime and production focus
FOCUS AREAS
Optimised O&M, reduced CAPEX,
decommissioning preparation
FOCUS AREAS
Cost management
and HSSE protection
COP
CUSTOMER
SUPPLY CHAIN
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Decommissioning activities can be packaged in multiple ways…
TOTAL PACKAGE
SOLUTIONS
Individual service
lines examples:
• Well Engineering
(P&A)
• Decommissioning
studies and
estimates
Joined up service
lines, common
customer interface
example:
• P&A and
cleaning/flushing
Integrated service
lines, with shared
Project Management,
Project Services and
single focal point
examples:
• Duty Holder in
Decommissioning
• EPCm of P&A and
decommissioning
projects
Total
decommissioning
solutions provided
by Petrofac and
selected partners
INTEGRATED
SERVICES
BUNDLED
SERVICES
DISCRETE
SERVICES
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Petrofac decommissioning services and projects
CURRENTLY PROVIDING:
• Well Plug and Abandon campaign,
Tullow Horne and Wren (UKCS)
• Duty Holder in Decommissioning,
BP Miller (UKCS)
• Asset management review,
Talisman Sinopec (UKCS)
• Duty Holder oversight, decommissioning,
Tullow Horne and Wren (UKCS)
• Late Life Asset Management (LLAM),
ENI Hewett (UKCS)
PREVIOUS PROJECTS:
• Hutton TLP topsides separation project,
Conoco (UKCS)
• AH001FPU strip down and rebuild,
Ithaca/Petrofac (UKCS)
• Bacton Gas Terminal decommissioning,
ENI (Onshore, UK)
• Decommissioning Cost Estimates,
multiple, confidential (Europe and Africa)
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OGUK WBS – a baseline
OGUK WBS is a
common baseline for
projects and planning
OPERATOR
PROJECT
MANAGEMENT
FACILITY RUNNING/
OWNER COSTS
WELLS
ABANDONMENT
FACILITIES/PIPELIN
E MAKING SAFE
TOPSIDES
PREPARATION
TOPSIDES
REMOVAL
SUBSTRUCTURE
REMOVAL
TOPSIDE AND
SUBSTRUCTURE
ONSHORE
RECYCLING
SUBSEA
INFRASTRUCTURE
SITE REMEDIATION
MONITORING
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Supply Chain and Decommissioning (short term)
• Macro environment makes decommissioning
challenging and costly
• Drawn from the bottom line
• Most projects are in early or late planning stages
and only a small number are currently in
execute mode
• For many services decommissioning will mean
Business As Usual until asset ready for removal:
– E.g. Duty Holder services that require
logistics, catering, helicopters,
– Even early decommissioning activity will call
upon existing skill sets, e.g. FM, scaffolding,
and (de)construction
• Service offering must be within a different culture
and different mind-set
• Bring service to a Project, not an Operation
– Multi-discipline approach
– Fit-For-Purpose
• This will also require innovation in T&Cs
and agility in deployment
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Decommissioning drivers are different
All parties need to recognise that the
drivers are different for Decommissioning
ECONOMICS DRIVEN BY ACHIEVING FIRST OIL OR GAS
PROJECTS MAY NOT PROCEED IF INVESTMENT CRITERIA ARE NOT MET
FUTURE MARKET SCALE UNCERTAIN, MATURE MARKET WHICH HAS EVOLVED SINCE 1960S
PROJECT SCOPE CAN VARY BASED ON TECHNICAL
OR COMMERCIAL DRIVERS
DRIVEN BY SAFETY AND ASSET INTEGRITY TO ENSURE PRODUCTION IS SUSTAINED UNINTERRUPTED
STAGE GATE QUESTION IS – “DO WE WISH TO CONTINUE WITH THIS INVESTMENT?”
ECONOMICS DRIVEN BY COST REDUCTION AND DEFERMENT OF EXPENDITURE
PROJECTS ARE LEGALLY OBLIGED TO PROCEED
FUTURE MARKET SCALE MUCH MORE CERTAIN, ALTHOUGH CLIENT AND SUPPLY CHAIN EXPERIENCE IS LIMITED
PROJECT SCOPE LARGELY FIXED (UNLESS QUALIFYING FOR DEROGATION)
DRIVEN BY HSE AND REPUTATION MANAGEMENT. INTEGRITY IS IMPORTANT DURING REMOVAL
STAGE GATE QUESTION IS – “ARE WE READY TO PROCEED WITH THIS EXPENDITURE?”
EXPLORATION AND PRODUCTION DECOMMISSIONING
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Supply Chain and Decommissioning (long term)
• Given the immaturity in decommissioning it is
hard to predict future needs
• Bespoke, over engineered solutions and resulting
excessive cost will delay activity in general and
should be avoided
– Think “Good is good enough”,
“Fit-For-Purpose…”
• Focus should be on cost effective,
repeat services
• Some technology may need to be bespoke and
specialist niches will emerge/develop
– e.g. jacket cutting, subsea mattress retrieval
– In particular innovation will always be welcomed
for P&A and lifting solutions
• Incremental efficiency gains are essential now
and in the future
• Solutions should be cost effective and relevant
to needs
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Supply and demand immaturity
• A substantial amount of activity beckons in the UKCS,
NCS and beyond
• Annual Insight report (OGUK) is the best marker of
anticipated activity and illustrates both volume and
complexity in upcoming workload
• There is much uncertainty as to when this activity will
materialise, however it is foreseeable that the current
immaturity will be replaced by a very different
market place in 5-10 years
EXAMPLES:
Consortia – be prepared
to collaborate or to work
for/with different partners
Aggregation of work
Emerging competition
and alternative services
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Closing Remarks
• Decommissioning will be a substantial market in coming
years and is an opportunity to build for the future
• Petrofac is committed to decommissioning, especially
within the NS
• However successful, sustainable and profitable
decommissioning will require a different culture
and a different mind-set
• Supply chain must enable cost effective decommissioning
in order to realise this opportunity
RECOMMENDATIONS
Decom North Sea
Decom Technology
Innovation Platform
15 September
Oil & Gas
Innovation Centre
DECC Pathfinder
https://itportal.decc.gov.uk
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QUESTIONS?
Sam long
Business Acquisition Manager, Decommissioning
+44 1224 247112