The maritime industry is gearing up for exciting times in an expanding sector
The next 30 to 40 years will see the full-scale removal of the North Sea oil and gas industry’s production infrastructure. To say that this will be a considerable task is very much an understatement.
For example, it is estimated that the North Sea contains more than 1,500 registered installations. And under the surface, the UK Continental Shelf alone is home to more than 200 subsea production systems and around 5,000 wells.
Looking at the decommissioning industry, it is safe to say that there is enough work to be done. This will translate into great potential for economic opportunity and job creation. The four North Sea oil and gas producers (UK, Norway, Denmark and the Netherlands), in addition to the wider international supply chain, are all going to be eyeing up their chances.
Despite the competition, the Dutch maritime industry is ready, says Sander Vergroesen, managing director IRO, the Association of Dutch Suppliers in the Oil and Gas Industry.
“The Dutch offshore industry has built up a lot of experience in the upstream oil and gas sector. Decommissioning activities tie in well with the core business models of IRO members. Furthermore, the Dutch supply chain contains all the necessary elements to serve this market – in terms of engineering, equipment supply and contracting.”
Even with this positive outlook, Vergroesen goes on to say that there is still a lot to learn; in particular from initiatives that are taking place in the UK. “We could learn a lot from in the UK; from their ‘learning curve’ and ‘best practices’.”
To achieve this, especially as the decommissioning market grows in momentum, the subject of cooperation takes a position high on the IRO’s agenda.
“Therefore we are looking towards more intensive cooperation with NOGEPA [Netherlands Oil and Gas Exploration and Production Association] and the EBN [the Dutch state body responsible for the income obtained from gas and oil extraction],” notes Vergroesen. “The aim of this cooperation will be to offer operators and suppliers a platform to solve decom-related problems relating to efficiency, effectiveness and economics.”
There is also a place for international cooperation in such an international market; a fact that the IRO also fully comprehends. The organisation has close ties with Decom North Sea (the independent members organisation of the decommissioning industry) and the East of England Energy Group (EEEGR). These two organisations cover a geographical area from the northern North Sea down to eastern and southern England.
“Such partnerships, also with the UK government, research institutes and industry, will help lift the subject to a higher level. For instance, Decom North Sea and the EEEGR have formed a Special Interest Group, in which IRO also participates, with a focus on shared knowledge and equipment. In this way, joint initiatives can be established.”
Flexibility is crucial
Getting to the practicalities of the decommissioning market: how will the work be carried out? What vessels are required? One of the biggest challenges facing the market is the sheer diversity of factors involved. Therefore, no two decommissioning projects are likely to be the same. Of course, water depth and weather conditions are highly variable parameters, as is the composition of the underlying bedrock. In terms of structures such as platforms, jackets and subsea production systems, the oil and gas industry has evolved considerably in its lifetime, meaning that designs – and thus removal techniques – will also have to be fine-tuned for each contract. Due to this variable nature of offshore infrastructure, decommissioning operators and their subcontractors will not be able to use a ‘one size fits all’ approach to their activities. Flexibility will be a key factor in a company’s success.
Contributing a significant part to the North Sea decommissioning supply chain will be the shipbuilding industry; a fact that has not gone unnoticed by Lucas Zaat, Manager Design & Proposal Offshore & Transport at Damen Shipyards.
“Market focus over the last couple of years has shifted towards, among others areas, decommissioning,” he says. “This has coincided with decreasing oil prices and the overcapacity of vessels in the offshore market. There are numerous structures which have to be removed due to regulations; this is non-negotiable. Therefore, this is obviously an important market for the future.”
Keeping an open mind
Looking at how Damen, in its role as shipbuilder, has expanded in new niche markets such as aquaculture and offshore wind operations and maintenance, it is a logical step to see the company show interest in the decommissioning market too.
“We have the expertise to be able to develop the right equipment for decommissioning operators,” Zaat notes. “This is because we don’t need to deliver a ‘ship’ – we need to deliver a ‘piece of equipment’ that our customers can do a good job with. In order to manufacture that equipment you need to know exactly the operations and the activities of the client are.”
Damen announced their plans for a Decommissioning Series of vessels earlier this year. Based on in-house research carried out by one of its undergraduate interns, Damen intends that the vessel will specialise in three core areas of the oil and gas decommissioning sector: topside decommissioning and maintenance, offshore platform removal, and subsea cleaning and removal.
“We are working towards serving a specific portion of this market by developing products that can perform various tasks,” continues Zaat. “We have all the skills to build ships but we are looking forward to equipment suppliers and potential operators in this market to come to us with their ideas. We are still in the concept stages. For example, if, eventually, the finished vessel looks completely different to our initial designs then this is fine. We are not going to stick with our own ideas just for the sake of it.”
The chameleon of ships
An important aspect of Damen’s concept design is the inclusion of modular add-ons: “The modular character of our design is very close to how we work. Modularity gives operators more flexibility – it reduces the risks of downtime for the asset. To perform the various phases of decommissioning, operators can add modular equipment whenever they need it. ROV spreads or a subsea crane, for example. Accommodation units are also a possibility because there are phases in the decommissioning process that require a lot a personnel. Topside removal is just one part of the process. Jacket removal and subsea cleaning are also going to be major jobs. The idea is a chameleon of a ship that can adjust to the various activities required.”
When talking about decommissioning vessels, the matter of lifting capacity is undoubtedly going to be raised. The broad scope of future decommissioning activities will require an equally broad fleet of vessels – setting the scene for interesting market conditions in the coming decades. The Damen Decommissioning Series is clearly not targeting the heaviest contracts.
“We made a conscious decision to develop a product that could lift up to 1,600 tonnes,” states Zaat. “This segment represents 85 per cent of the market.”
Spreading the lifts
At the other end of the scale, with a 48,000 tonnes lifting capacity, is Allseas’ Pioneering Spirit. This 382-metre long vessel recently proved her worth with her first heavy lift; removing the 13,500 tonnes Repsol Yme topside 100 kilometres offshore Norway. The vessel’s future is already planned: the Pioneering Spirit will remove the 23,500-tonne Shell Brent Delta platform in the summer of 2017. The year after, she has been contracted to install two topsides for Statoil’s Johan Sverdrup development and a third topside in 2019. In addition, it is also foreseen that the vessel will be engaged in heavy pipelay work. Allseas’ trend for large single-lift vessels is set to continue with the Amazing Grace. With 72,000-tonne lifting prowess, this new vessel is expected to enter this market by approximately 2023.
Another Dutch company currently expanding its assets in the heavy lift industry is OOS International, which finalised an engineering and construction contract for two semi-submersible crane vessels earlier this year. Estimated to be completed in 2019, these vessels, each with 4,400 tonnes lifting capacity, will be fully capable of (among other things) decommissioning activities.
These three different strategies in terms of lifting capacity show how the Dutch maritime sector is positioning itself for the future decommissioning market. And – don’t forget – the North Sea is just a part of the global industry. The lessons learned here can be transferred to worldwide projects.
We give the last word to IRO managing director Sander Vergroesen: “We have seen IRO members taking concrete steps to make a mark in the decom market; some of these have been truly ground-breaking,” he concludes. “It’s important to keep a close eye on market developments; and to quickly act on opportunities as they arise. The key aspect is to use innovations to realise cost-effective solutions, while maintaining optimal safety and care of the environment.”
This article was previously published in Maritime Holland edition #6– 2016.