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Deloitte looks at the opportunities presented by decommissioning

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LNG Industry,

Deloitte has released a new paper that looks at the opportunities and challenges around what has the potential to be Australia’s next oil and gas boom.

The paper, entitled ‘Decommissioning: the next wave of opportunity in Australian oil and gas’ looks at how the upcoming decommissioning wave will provide an excellent ‘greenfield’ opportunity for the Australian oil and gas industry to use innovative thinking, new technologies, new workforce skills and collaborative approaches.

Bernadette Cullinane, Deloitte Australian Oil & Gas Leader and report co-author, said: “Decommissioning is an opportunity for Australia to demonstrate global leadership in this inevitable final stage of the oil and gas lifecycle.

“With the recent focus on the massive investment in LNG, it is easy to forget the Australian oil and gas industry is nearly 100 years old and many assets are reaching the end of their producing life.”

However, Deloitte claims that the Oil and Gas Competitiveness Assessment, which was recently published by the National Energy Resources Australia Growth Centre, listed Australia at the bottom of 30 oil and gas producing nations in terms of abandonment and decommissioning.

Susan Gourvenec, UWA Professor, added: “With more than 100 platforms and subsea structures located in Australian waters, spread out across Australia’s vast coastline, founded in notoriously fickle carbonate seabed deposits, in some of the most pristine and unique marine environments on the planet, offshore decommissioning is going to be complex, challenging and costly.”

Reportedly, the current cost of decommissioning oil and gas infrastructure in Australia is estimated at over US$21 billion over the coming 50 years.

Gourvenec added: “The industry needs to work together, and with the government, regulators and research sector to facilitate the transdisciplinary, transformational strategies needed to address this looming challenge, to reduce the cost and risk of decommissioning and deliver the best outcomes for Australia.”

Both Gourvenec and Cullinane have focused on four key areas, which regulators, the government and the oil and gas industry will need to address in order to efficiently handle the upcoming decommissioning wave. These include:

  • Evaluate a number of approaches from complete removal to allowing assets to remain in situ. The base case for decommissioning offshore infrastructure is complete removal, which is complex and costly, leads to technical challenges, and has risks to both personnel and the environment. The optimal decommissioning solution may not be complete removal, and will be dependent on what is technically feasible and desirable from an environmental, economic and societal point of view.
  • Develop multi and inter-disciplinary solutions based on the collaborative input of all stakeholders and ocean users to create a framework that is suited to the location and environment. Any decommissioning decision must be made based on scientific evidence. The holistic body of knowledge applicable to the unique challenges of Australian waters is still being developed. Decommissioning will need a balance of learning from best practice globally, whilst at the same time making use of local knowledge, capability and services. This phase of the lifecycle provides an excellent opportunity to develop and apply a variety of new techniques, equipment and skills.
  • Develop fit-for-purpose policies and regulations to support the most appropriate decommissioning framework for Australia. Policy and regulation play a key role in the development of decommissioning solutions. Australia needs clear evidence-based policy and regulation (relevant to its location and environment) in order to allow optimal decommissioning solutions to be realised. A one-size-fits-all approach may not necessarily be practical for existing developments and deter future investment in the industry.
  • Build workforce capability and capacity to support efficient decommissioning activities and stimulate economic growth. Currently, the Australian supply chain lacks some of the necessary vessels, tooling, disposal facilities and the trained workforce for offshore decommissioning. Importing these capabilities will be expensive, so it is crucial to develop expertise locally. Significant opportunity exists to export this capability to the broader Asia-Pacific region where almost 50% of offshore platforms are more than 20 years old, and where more than 600 fields – the majority of which are offshore – are expected to stop production within the next 10 years.

Cullinane concluded: “With so many offshore decommissioning projects on the near to medium-term horizon, Australia has the potential to become a leader in end of lifecycle asset management, further building on the experience in the construction, operations and maintenance of major capital projects. Developing regional-specific techniques and technologies for decommissioning presents a great opportunity for both operators and our services sector in Australia and in APAC.”

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