Unlocking Value in Decommissioning: A WA Business Imperative
With many of Australia’s offshore facilities more than 20 years old, decommissioning of late-life assets remains a hot topic, with participants in the WA industry seeking to build a competitive edge by leveraging global best practice, applying lessons learnt and fostering collaboration between operators, contractors and local suppliers. This article explores a few of the insights shared by key industry leaders during a recent panel discussion at the Energy Club WA’s August Industry Dinner.
The evening’s discussion was kicked off from the regulator’s perspective by Chief Executive Officer NOPSEMA Sue McCarrey who highlighted the magnitude of the decommissioning challenge and the importance of safely and responsibly managing late-life assets.
“WA faces an estimated $60 billion of offshore decommissioning liability, with half of that work expected in the next decade.
“Nobody expects for a facility of any type to be bright and shiny new in its last five years of producing, but it must be safe for the workforce, and it must continue to have those controls in place that protects the environment from any potential hazard,” she said.
Sue reminded industry that the regulators are looking for operators to proactively undertake regular integrity checks for late-life assets,
and continue to invest in ongoing maintenance.
“Our focus, as the regulator, is to ensure that when we're dealing with late-life assets that are getting closer and closer to that cessation of production,
is what kind of maintenance is underway, and what kind of integrity checks are being done to ensure the facility and the well integrity infrastructure
continues to operate in the way that it was designed to do.”
Sue pointed out that the challenge ahead had the potential to be an opportunity for industry to “do decommissioning… and do it extremely well.”
The panel went on to discuss the challenges of decommissioning in further detail, including recent examples such as the decision to send the
Northern Endeavour in the Timor Sea to Europe for final decommissioning.
Director Offshore & Decommissioning Australian Energy Producers, Jason Medd, was quick to emphasise the extensive due diligence processes
behind the Northern Endeavor decision.
“It was a safe decision by government in the scheme of things,” he said.
The question then turned to: So in that context, where can – and where should – Western Australia proactively take on decommissioning work.
Jason suggested the Northern Endeavour was “probably a missed opportunity for Australian businesses and the economy.”
“It would have been great if it was in Australia… somewhere closer in the region.”
Xodus’ Late Life and Decommissioning Manager, Carrie McIntosh, reinforced the complexity when it comes to offshore field decommissioning,
pointing out that what can be seen on the surface is a minor proportion of the depth of infrastructure.
“For example, the Laminaria and Coralina fields, include at least subsea eight wells. These are supported with around 100 kilometres of flow lines,”
Carrie suggested WA needs further infrastructure investment before local industry will have the capacity to perform subsea equipment decommissioning onshore. She referenced Darwin Port as a positive model noting the Port is undertaking feasibility studies to attract decommissioning industry onshore for late-life fields close to the Territory.
Carrie went on to comment that WA can secure decommissioning opportunities by learning from global projects, and continuing to attract talent and capability into WA.
“We sometimes say Australia should be able to do all of it… (the decommissioning). I don't think that's necessarily the case. WA is competing with other
global locations that are already set up to be able to deal with it and deal with it safely,”
“Yet, there are examples of local WA companies with exceptional engineering and environmental expertise. This, coupled with pre-existing facilities that
can deal with the smaller pieces of offshore equipment, put us in a good position for upcoming onshore decommissioning,” said Carrie.
Carrie pointed to a range of local suppliers such as Cleanaway’s Karratha facility that can decontaminate equipment from NORMS (naturally occurring radioactive material) and mercury, and Hayes Recycling’s technology that split umbilicals and flow lines into their constituent parts, taking out the plastics and metals.
Sales & Marketing Manager OceanTech Innovation AS Fredrik Karlstad further discussed the use of technology in decommissioning. He reinforced the
importance of technology suppliers working hand-in-hand with industry and decision makers.
“Industry, regulators and tech suppliers are investing time together to share knowledge to future problems, and using technology to develop solutions.”
“As a robotic technology company, we provide a range of services into the decommissioning space. But, like many tech companies, we will not take
new investment risks without having the decision makers working together with us to define and solve issues facing industry.”
Sue noted the value and role of technology companies across industry, particularly around applying ALARP to mitigate integrity, safety and environmental risks.
“Today’s vessels and technologies show just how far capabilities have come… things unimaginable 10 or 15 years ago… As humans, we look for solutions.
We want to encourage that problem solving approach to manage risks, and that includes using technology.”
The panel went on to discuss the growing importance of stakeholder communication in decommissioning, with Sue suggesting that engagement
should be undertaken for the full project lifecycle, not just for decommissioning.
Facilitator Kirsty Danby, CEO of Platform Communications suggested that the landscape has changed significantly, and operators are responding accordingly.
“Stakeholders expect proponents to take the time to develop trusted, respectful and credible relationships. And in my experience, that’s exactly what
proponents are doing,” she said.
“Operators are dedicating time and resources to educate stakeholders on the whole of industry, and entire asset lifecycle, not just what is required
from a regulatory perspective. These aren’t six-week engagement processes, it’s an ongoing, real commitment.”
In true Energy Club fashion, the discussion brought together a spectrum of voices, including the regulator, industry, contractors and a technology
specialist to give insight into a complex issue.
And, what was ultimately agreed on, is that if decommissioning is a $60 billion expenditure, with half of that to be spent over the next ten years,
there’s a huge opportunity to build capability in Western Australia.
Thank you to our industry dinner event sponsor: Odfjell Technology, SLB, PMPiping Australia, Platform Communications and our table sponsors Xodus and Santos.
You can find the event's photo gallery here.