Decommissioning & Restoration: Challenges in Oil & Gas in Next 5-Years
Updated: Dec 6, 2020
D&A Challenges in Next Five Years. (2018 - 2022)
Oil and gas Industry is facing tsunami of Decommissioning & Restoration D&R. The D&R obligations are part of capital project management. According to Wood Mackenzie, US$32 billions in D&R spend is expected in next 5 years. The top 10 companies (Incl. Shell, XOM and Total) will spend 50% of this.
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The mature region facing D&R are UKCS, GOM and Malaysia. It is still an emerging industry, with lots of opportunity for supply chain industry, but the oil price collapse and the downturns, have hurt the industry
So, what are the challenges; costs, strategies, regulations and funding? D&R involves:
Cost after ceasing production, platform & pipeline removal, wells P&A etc.
There is a lack of D&R data and experience in forecasting costs, but it could be reduced through; lessons learned from previous D&R, new technologies, especially cluster D&R in UK or divesting the asset altogether or asset swaps
GOM has most experience with 55 D&R fields. The D&R strategies are; rig-to-reef scheme, some require complete dismantling others in East-Africa you can walk away without consequences so far. Regulations will have huge impact on cost. Some regulatory issues are
Scope of D&R
Tax relief if any
Liabilities and ownership issues.
The supply chain industry has lot of opportunities, but there are still some major challenges ahead that need tackling.