Paul Dymond

Oil & Gas UK is working to ensure decommissioning of the UK’s oil and gas infrastructure is carried out in the safest, most efficient and cost effective manner possible. Paul Dymond, the association’s Operations Director, explains how this is being done through a ‘meeting of minds’ in October 2010.

Gearing up to decommission UK oil and gas infrastructure

Over the next two decades, the industry will begin large-scale decommissioning of some of the 470 installations which have been producing oil and gas during the past 30-40 years. These range from very large concrete sub-structures, large and small steel platforms through to subsea and floating equipment, the majority of which will be totally removed and taken to the shore for dismantling and disposal.

Each decommissioning project is a complex process with considerable technical, economic, environmental, health and safety issues which the industry has to address and manage properly; indeed it is apparent that timescales and the complexity of decommissioning are substantially greater than previously anticipated. Together, the projects are expected to cost £21billion by 2030 and £26billion by 2040, which underlines the value at stake in this business.

Meeting of minds has already begun….

In pursuit of efficient decommissioning, alongside an appropriate tax and regulatory regime the emergence and development of companies with the capability to deliver the full range of technologies and services is in everyone’s interest. This will require the sharing of insights of the market potential within the industry.

We at Oil & Gas UK are committed to developing and sharing such insights as expertise grows in this area of the business; indeed we have already run a series of events in this pursuit. In 2008, the association teamed up with the Industry Technology Facilitator (ITF) to organise sessions in Aberdeen at which the decommissioning technologies required were identified.

In order to ensure lessons are leant from other countries’ experience of decommissioning, Oil & Gas UK then held a conference in Newcastle in 2009 to bring together the experiences gained around the world and discuss their application to decommissioning in the Southern North Sea. In the Gulf of Mexico, for example, a steady stream of projects over the last two decades, and many more recently following Hurricane Katrina, have resulted in a well-developed decommissioning market. Specialist companies, either providing niche expertise or offering a complete one-stop-shop approach, have emerged. Careful project management to meet customer needs and tailored contracts which provide integrated services have delivered success. Importantly, there is now more certainty around cost, enabling asset owners to contract with confidence.

Meeting of minds in the future…

Oil & Gas UK’s facilitation of collaboration on decommissioning is set to continue. In 2010, we are teaming up with newly created Decom North Sea (also featured in this issue) to continue to promote the development of supply chain capability in the UK.

The conference, to be held in Dunblane, Scotland, on 5-7 October, will focus on ‘Integrating and expanding regional capabilities for decommissioning in the North Sea’. It aims to improve companies’ awareness of the opportunities and challenges presented by decommissioning, allowing them to ensure their place in this expanding sector. The event will be chaired jointly by Brian Nixon of Decom North Sea and myself and a line-up of authoritative speakers has already been confirmed.

The first session will highlight the lessons learned from past decommissioning with insights from operators, contractors and their suppliers. The interactive second session will begin with the findings of work conducted by MBA students from the Robert Gordon University and Accenture on the range of contracting strategies utilised in the oil and gas industry in relation to decommissioning activities. Delegates will then engage in a facilitated discussion to explore the strengths and weaknesses of each approach, before feeding back their findings to a panel of industry experts.

The second day of the conference will begin with Brian Nixon’s presentation of Decom North Sea’s decommissioning supply chain mapping exercise, with delegates participating in follow-up discussions on the specific areas of platforms, wells, subsea and onshore disposal. Finally, attendees will hear from the Society for Underwater Technology (SUT) on salvage operations, about the progress made by ITF on collaborative technology projects, receive an introduction to the international decommissioning agenda from the International Association of Oil & Gas Producers (OGP), and also hear some of the experiences and strategies from the nuclear decommissioning sector.

The conference will provide an enlightening and interactive opportunity to develop knowledge and learn from industry peers.

www.oilandgasuk.co.uk/decomconf2010

Can local networking help to develop an industrial cluster in a new and expanding part of the economy? Definitely, believes Iain Todd – Aberdeen Renewable Energy Group’s Renewables Champion and Chair of the Grampian Biomass Working Group.

Now in its fourth year, Grampian Biomass Working Group is coordinated by the Forestry Commission and brings together clients, supply chain and supporters with an interest in harnessing the wood fuel resources of the region. Mr Todd believes that while much more remains to be done, good progress has been made.

“For me, one of the breakthroughs came when NHS Grampian decided to consider using wood fuel to provide heating for its massive Foresterhill campus in the city,” he said. “When they calculated the cost and carbon savings involved, they welcomed the idea and the new boiler facility – hybrid biomass and gas – is now being built.”

NHS Grampian’s new energy solution is believed to be the first use of wood fuel at a major acute NHS teaching hospital. Another development site in Aberdeen is the new council headquarters which are to be based at Marischal College. The beautiful and historic granite facade in the city centre has been retained while the interior is rebuilt to a modern design. When complete, the interior will be heated in part by wood fuel – demonstrating the political support locally for Aberdeen becoming a green city. The system to be installed will run on wood pellets, as space is at a premium. The manufacture of wood pellets is another major development in the North East of Scotland’s biomass sector.

Iain said: “We now have two wood pellet producers in the region, one near Portsoy (Puffin Pellets) and one near Laurencekirk (Arbuthnott Pellets). They were among the first producers in Scotland, and neither existed before the networking group was established. I can see them expanding in future as demand for their product increases.”

The link between the region’s wood resources and the energy needs of a major city like Aberdeen is clear and transparent. The city is also considering a broader strategy on renewable heat – in effect, a distributed network of pipes delivering hot water around the city. Aberdeen’s Beach Ballroom, Leisure Centre and Linx Ice Arena are among some prominent seafront buildings as well as 500 homes already being supplied with heat and hot water through the leading Aberdeen City Council initiative.

Aberdeen Heat And Power Ltd was set up by the council to develop and operate district heating and combined heat and power (CHP) schemes across the city. The plans are ambitious with studies into the engineering and the financing also anticipated.

The commitment in the city is at least matched by that of Aberdeenshire, where a number of wood-fuel programmes are under way. Aberdeenshire Council has already converted two of its schools - Aboyne Academy to run on wood chips, and Banff Academy to run on wood pellets with more school conversions planned. A programme of conversions to Aberdeenshire’s village halls – of which there are more than 200 – is also under way.

Among other biomass initiatives is the conversion of the city’s Duthie Park greenhouses from oil heating to wood fuel with the fuel coming from the prunings of the park itself. In Aberdeenshire, there are plans for a new distillery in Huntly to run on wood fuel.

The private sector is also active, with biomass heating installed by organisations as diverse as Macphies of Glenbervie (food ingredient manufacturer ), James Jones and Sons (sawmill), and Crichiebank Business Centre (office building). In the domestic sector, Bancon Homes has constructed 40 new homes in Banchory with a distributed heat network – designed for conversion to wood fuel at the end of the year.

Among other projects in the region was an initiative at one of Aberdeen’s major parks. Iain said:  “The conversion of the Duthie Park greenhouses from oil heating to wood fuel involves the fuel comes from the prunings of the park itself. In Aberdeenshire, there are also plans for a new distillery in Huntly that will run on wood fuel.”

Iain is confident that when the UK Government’s new Renewable Heat Incentive (RHI) comes into force in April 2011, there will be a significant expansion in the demand for wood fuel. The new policy initiative will provide financial incentives to the owners of buildings to heat their buildings renewably.

He said: “The new policy initiative is expected to become an anchor of further increasing the momentum of biomass with Scotland aiming for 11% of the country’s heat to be produced from renewable sources by 2020 and biomass being one of the principal means. Both Grampian Biomass Working Group and Aberdeen Renewable Energy Group believe that the North East of Scotland can play a major role in helping to achieve this.”

www.aberdeenrenewables.com