Are you ready for the golden age of decommissioning?
Dawn Robertson, Bureau Veritas Global Strategic Sales Director, Global Services – Marine & Offshore, and Decom North Sea Vice Chairperson
Record activity levels in the first half of 2022 for Bureau Veritas and promising signs for the year ahead support optimism that a growth explosion in the decommissioning sector is underway.
Towards the end of last year, information services provider HIS Markit forecasted global offshore decommissioning spending would reach almost $100 billion for the 2021-2030 period, up over 200% compared to the previous decade1. This is due to multiple fields around the world reaching end of life plus a greater focus on the energy transition and greenhouse gas (GHG) reduction by many countries.
According to the IHS Markit report, nearly 2,800 fixed platforms and 160 floating platforms could be decommissioned between 2021 and 2030. That represents 33% of fixed platforms and 43% of floating platforms currently in operation. Additionally, more than 18,500 wellheads, 2,850 subsea trees and 83,000 km offshore pipelines and umbilicals currently in operation will be subject to decommissioning during the same period.
Since the report was published, there has been a rapid rise in commodity prices. This is due to supply shortages caused by the global return to economic activity after more than two years of the pandemic and embargoes on Russian oil and gas. Brent crude prices above $100 per barrel have prompted speculation that decommissioning might once again be pushed to the back of the queue2.
However, the experience of Bureau Veritas Solutions Marine & Offshore (BV Solutions M&O), part of Bureau Veritas, suggests global decommissioning activity is still rising and that a period of sustained growth could be on the way.
A rapid expansion in decommissioning business
Decommissioning activity in 2022 for BV Solutions M&O is currently far exceeding early expectations.
In the six months to the end of June, the company achieved 72% of annual business targets that were set before the economic downturn caused by the pandemic.
BV Solutions M&O has already globally identified, and are tendering, for a larger pipeline of work than previously anticipated,, indicating that the second half of the year will prove to be at least as promising as the first.
The majority of the new contracts secured have been in supporting decommissioning rather than late life activity, including high profile projects in the UKCS, Brazil, Australia and New Zealand.
Projects have been mainly focused on risk assurance and marine operations assurance, including risk studies, assurance of aspects of decommissioning plans such as lifting, and marine assurance of the project.
Additional work for BV Solutions M&O has included consultancy for the certification of three decommissioning facilities in the UK for EU list applications for vessel recycling. The certifications have been undertaken by Bureau Veritas Group, which has also secured a contract from an international utilities company for vessel decommissioning certification for its entire portfolio of yards, establishing the group as the most experienced classification society in this field in the UK.
Bureau Veritas is a world leader in laboratory testing, inspection and certification services. Created in 1828, the group has 80,000 employees in more than 1,600 offices and laboratories around the globe. Bureau Veritas helps its clients improve their performance by offering services and innovative solutions in order to ensure that their assets, products, infrastructure and processes meet standards and regulations in terms of quality, health and safety, environmental protection and social responsibility.
BV Solutions M&O has been supporting the decommissioning industry since 1992 and contract awards for its integrated decommissioning solutions now span across all key geographies. The company provides technical advisory, asset management and assurance solutions for the Marine and Offshore energy markets. It works with offshore asset owners to help them navigate the challenges of late life and decommissioning efficiently and sustainably. Its solutions enable clients to resolve new and complex issues, increase performance reliability and efficiency, de-risk projects and optimize costs.
BV Solutions M&O offers life extension services, including asset safety and integrity validation, technical due diligence and full decommissioning project assurance. The company is at the forefront of supporting its clients through the ever-present challenges of the energy transition and green decommissioning.
The right solutions for a changing market
Increasing market demands for decommissioning and late life services have been an important factor in supporting the growth in business for BV Solutions M&O. However, the ability to offer a service that meets the needs of these markets has been critical in the company’s success.
In the lead-up to the 2050 net zero target, the spotlight is on both the environmental impact of offshore assets’ production life and the cradle-to-grave carbon emissions generated from decommissioning. BV Solutions M&O has spent several years evolving its offering to match the requirements of the decommissioning and late life sectors. This includes working in close collaboration with owners and operators to overcome today’s challenges and optimize the late life and decommissioning phases of offshore assets.
Decommissioning requires a physical presence, wherever the relevant assets are in the world. Each asset poses a unique set of challenges requiring bespoke solutions. Supported by a global network, BV Solutions M&O is able to respond to these needs with a minimal environmental footprint and supports its clients in navigating their obligations.
The challenges and opportunities for decommissioning
Significant opportunities exist for the growth of the decommissioning industry. However, a robust, committed and experienced supply chain will be critical in ensuring these opportunities are exploited to the full.
Delayed starts to the launch of widespread decommissioning programs over several years have encouraged some supply chain providers to move away into other sectors, such as new energy markets. This can potentially create bottlenecks in project delivery.
In other cases, lack of operator transparency on plans and timings for decommissioning projects has left the supply chain without clear visibility of upcoming opportunities. This creates business pressures, limiting clarity and the ability to plan effectively for potential work.
A strong argument in support of decommissioning is the environmental benefits it generates through the removal of old and less environmentally efficient assets. Green decommissioning is now a major focus. Customers are voting with their wallets, shareholders are voting with their investments, and regulators are paying attention to climate change-related business risks. Climate neutrality is a serious commitment that requires material investment and prioritisation of action and social governance.
Alongside recycling, emphasis is being placed on the reuse of materials and assets where possible, such as the potential deployment of disused oil platforms as maintenance hubs for offshore wind farms.
Regulation and scrutiny will increase in the years ahead. However, in order to create a more sustainable world and for the net zero targets to be truly embraced, government messaging on carbon tax and the need for every business to take accountability must be stronger. No single sector within the supply chain holds all of the responsibility for achieving net zero and everyone has to play their part.
A survey conducted last year by Bureau Veritas Solutions M&O and Decom North Sea found 81% of respondents confirmed that they were either not ready or unsure about what they had to do in order to demonstrate their green credentials.
A separate global survey conducted by Bureau Veritas across 18 industry sectors, including the oil and gas industry found 71% confirmed that GHG reduction was important to their business. A total of 70% said for upstream emissions they expect suppliers to measure, report and verify and 90% revealed that the driver for measuring and management of emissions was enhanced sustainability credentials and customer demands.
The findings from the two surveys indicate that the energy sector is lagging behind other industries.
A solution would be for greater collaboration between all parties involved in the energy transition, including regulators, industry bodies, fossil fuel and new energy providers and the decommissioning supply chain, to create a holistic view of the opportunities and problems that exist.
Bureau Veritas M&O will continue to be at the heart of that debate. The company regularly speaks to regulators and industry bodies worldwide to raise awareness of carbon mapping and supports companies demonstrate their green credentials through technical advice, asset management and assurance solutions.
We share the decommissioning industry’s drive to leave the maritime world in a better place than we found it. It’s what unites us, our passion for the oceans and our desire to not just protect our seas, but to create a better environment for the next generation.
For more information on our late life and decommissioning solutions visit our website.