Horizon 2030:

Offshore Facilities Decommissioning

An Exclusive Guest Lecture Series for MIGAS
8th February 2019

By:
Assoc. Prof. Noor Amila Wan Zawawi, Ph.D
Prof. M Shahir Liew, Ph.D, P.Eng. (Mal.), P.E. (Texas), FEI UK

© 2019 UNIVERSITI TEKNOLOGI PETRONAS

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Guest Lecture Objectives
 Workshop Flow

Topic Outcome Duration

Overview of Offshore • Introduction to various offshore production facilities

Decommissioning • Outlook of Offshore Decommissioning
Day 1 :
• Global decommissioning outlook, experiences & best practices
Morning
• ASEAN decommissioning ecosystem
• Stages in the decommissioning process

Innovation & Technologies in • Decommissioning alternatives

Decommissioning • Opportunities for Rigs to Reef
Day 2:
• Reuse Space
Morning
• Success Stories from ASEAN
• Opportunities for collaboration
 Over 30 publications on decommissioning as articles,
proceedings and journal papers.
Completed 15 research and industry training grants

Malaysia:
Strategic Engagements related to decommissioning, amounting to RM 1.6 mil.
Published 2 strategic reports for the industry.
• ASCOPE
Submission for
Decomm
• Rigs-to-reef with
Government/ National
Oceanography
PETRONAS CIDB-MSSA-UTP MOGSC South Korea PETRONAS PETRONAS ASEAN
Universities Directorate • BPEO Guidance
Document
• RIGS.VOLUTION
working group
• Lead,
Decommissioning
• Strategic Report on
Decommissioning &
• Reefing Index
Research
• Reefing Index Research
Phase 2
• Decomm Nexus –
Malaysia, Brunei,
Collaborators
(NOD)
submitted to exploring platform Working Group Engineering Market in Indonesia, Thailand
PETRONAS re-use, supported by Malaysia for EPCC
Singapore: CIDB S.Korea
PETRONAS
• Collaboration
• Decommissioning
RTR with ICL
Workshop with MPM /
NUS
Carigali

2012 / 2013 2014 2015 2016 2017 2018 2019 2020 ~

Malaysia Malaysia: Malaysia: Malaysia: Malaysia: Malaysia: R&D &

• Speaker Offshore • Speaker • Speaker • Offshore • Speaker, Fundamental Upstream • Review of regulations for decommissioning Commercialization
Structures Asia Fundamental of Fundamental of the Decommissioning: O&G Industry (MSSA) Malaysia: • Cut no Cut
2012. the Upstream Upstream O&G Workshop with Dutch • Decomm Teatalk, Sailing the Blue • Speaker, Fundamental Upstream O&G Industry Detection
Singapore O&G Industry Industry (MOGSC) collaborator Ocean (MSSA) 3-4 Dec 2018 • AWJ Cutting

Industry • • •
• Speaker (MOGSC) Industry Award: Speaker • SPE Asset Abandonment Discussion SPE Decomm & Abandonment, Dec 2018 Method
Prospects for DAMS Fundamental Leader
Collaborators RTR in SEA • Speaker
Decomworld
Upstream O&G
(MSSA)
South Korea: Indonesia
• Ditjen MIGAS Seminar Oct 2018
PETRONAS • Decommissioning Training for EPCC
• Decommissioning • Speaker Seminar • Speaker, POSTECH
Workshop Tukun Tiruan
Kebangsaan
International
Construction Week
• Speaker International Maritime Funds
Safety Conference, Busan
2016 Brunei: USD $400,000
South Korea: • Decommissioning Brunei Workshop
• Speaker South Korea: Indonesia:
Decommissioning • Decommissioning • Speaker 4th Indonesia
Seminar POSTECH Workshop for EPCC Decommissioning O&G
in Busan

Bronze Award from International Technology

Exhibition (ITEX 2015) for DAMS – Decision
Asset Management System. A
decommissioning preliminary decision making
tool.
 Introduction to various offshore production facilities
© 2019 INSTITUTE OF TECHNOLOGY PETRONAS SDN BHD
All rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means
(electronic, mechanical, photocopying, recording or otherwise) without the permission of the copyright owner.
 Offshore Production Facilities
Knowing what’s in the market that available for eventual decommissioning
At a Glance

Deep
Ultra deep

Shallow
 A typical integrated development

Separation &
Crude Pumping Processing in Offshore Platforms

Living
Quarters

Sea water Injection Bridge-connected

& Treatment well platform

Gas Compression
& Dehydration
 Concept Select of Exploration & Production Facilities

Concept Selection of Shallow water based facilities

Offshore Structure Deepwater based facilities

Exploration

Mobile Offshore Drilling Unit

Semisubmersible Rig Drillships
(MODU)

Production

Marginal Field Conventional Field Deepwater

Marginal Mobile Offshore Jacket-type Gravity-based Ship-shaped

Structure Spar / TLP
Production Unit Structure Structure (GBS) Production
(MOPU) Facilties
Mobile Offshore Production Unit
Jack-up Rigs:
MODUs & MOPUs
Usage:
Temporary works such as drilling
and short lease production fields

Design Life:
25 - 30 years with possible
extension of life (through class
audit)

Operational Expectancy:
3-5 years for production
<1 year for drilling

Water Depth:
100 – 150m (deeper exploration
would require semisubs)
150 – 190m (premium jackups)
 Types of Platforms: Fixed Jacket Platform
Jacket Type Conventional Structures

FIXED JACKET PLATFORM

A structure that is used to support production facilities and/or other equipment
(offshore) for a long time. It may be piled or tied up to the ground/seabed or simply
placed onsite due to its gravity.

Steel Jacket Structure Concrete Gravity

Structure
Types of Platforms: Fixed Jacket Platform

Usage:
95% of offshore production
platforms around the world are
Jacket supported.

Design Life:
25 - 30 years with possible
extension of life

Water Depth:
up to 400 M (depths greater than
this become impractical due to
higher costs)
Types of Platforms: Gravity Based Structure (GBS)
Gravity Based Structures (GBS)

• Fixed-bottom structures made from

concrete. They rely on their own weight to
resist the lateral environmental loads.

Usage:
Production, processing and storage
facilities. Commonly used in Norway due to
the fabrication process (fjords)

Design Life:
30 years or more (subject to extension of life)

Water Depth:
up to 300 M
 Types of Platforms: Minimal Fixed Structures

Marginal Field Structures

MARGINAL FIELD PLATFORM

TLP
FPSO with Subsea Wells

FPSO Tanker
Tripod, Monopod and Wellhead Protection
Jackets.

Subsea
Light-weight in nature,Wells
easy to install and
requires only a few wells to be drilled and
completed
Types of Platforms: Minimal Fixed Structures

1. Guy Cables: To provide lateral resistance

and stability for the platform.
2. Anchor Piles: To anchor / fix the guy wires
to the mudline/seabed.
3. Caisson: A watertight steel retaining
structure with a diameter typically larger
than the conductors which acts as the
platform’s leg, bracing points for the
conductors via clamps, and in some cases,
can be used to house several internal wells.
4. Conductor: A steel caisson or riser used to
protect the well and production tubing.
5. Conductor Clamp: To vertically fix the
conductor casings to the caisson.
6. Topside: The superstructure located above
the reach of waves, equipped with facilities
such as production equipment, jib crane,
boat landing, helideck and a flare boom.
 Offshore Installations
in Malaysia

Offshore Installations

Subsea Floaters
LQ
1% 9%
Jacket 4% Processing
12% compression
9%
Flare/vent riser Production
14% 12%

Drilling
wellhead
39%
Shallow Water Via Deep water decommissioning
challenges
• Shallow water
 Required technologies are available
 Clear and feasible framework / guidelines are in existence
 Adequate experience and plenty of specialists in the subject
 Availability of infrastructure
 Lower in cost with less logistical issues

• Deep water challenges

“It’s going to take a different set of people and equipment to do the removals successfully”

 High risk/ lack of experience

 High-cost environment due to heavy-lift requirements and the complexity of the operations
 More logistical issues
 Increase regulatory scrutiny with opportunities for dumping and toppling in Deepwater
 Outlook of Offshore Decommissioning

© 2019 INSTITUTE OF TECHNOLOGY PETRONAS SDN BHD

All rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means
(electronic, mechanical, photocopying, recording or otherwise) without the permission of the copyright owner.
 Objectives of this Session

WE
 Decommissioning Overview
Decommissioning Criteria

 HSE Approximately 51% of

Structures >30 years old the platforms in
Malaysia are candidates
 End of Economic Field Life for decommissioning!
Estimation of last oil, <100 bbl/day
In Indonesia 55% of the
 Legislative Requirements 613 platforms are
IMO, UNCLOS, ASCOPE, PPGUA already operating
beyond 20 years old

• Agreement:
PSCs signed after 1998 are required to pay cessation fund as of their PSC term and
condition. The cessation fund will be used fund all decommissioning projects in Malaysia
by PETRONAS.
• Current cessation collection: approx. USD 4,780 million.
• In Indonesia, recent PSCs require cess fund, but PSC renewals remain tricky
A Typical Life Cycle of an Offshore Platform

Development Production
 “Decommissioning is the final stage in the life cycle of an offshore structure,
where all wells are plugged and abandoned, the platform and associated
facilities are removed, and the seafloor cleared of all obstructions created by
the operations”

( M.Kaiser ,2013)
Source: TBS Ofshore
MARKET OUTLOOK
Decommissioning
Decomworld (2016) report estimated
decommissioning values for various
regions, including Gulf of Mexico,
North Sea and South East Asia.

• South East Asia decommissioning

business value, USD $5 billion.
• Malaysia’s offshore platforms
contributes USD $2 billion.

2019-2021 PETRONAS
ACTIVITY OUTLOOK
(PAO) REPORT
Decommissioning
Upstream decommissioning jobs to intensify as
considerable assets have been operating
beyond 40years… 11% of 353 offshore
platforms, 8% of 10,235km of pipelines and
11% of 3935 well strings….
Global Decommissioning Business Value

30-80+
630
50

4-6
20-60
4000
750
30-100
550
1800
350

Decommissioning Value $ Billion (2012)

Number of Assets Source: TSB Offshore

Source: Data from BOEM 2013
Offshore Platforms In Malaysia
• About 400+ platforms in Malaysia located in water depths of 8 to
138m, with handful platforms in water depth> 1000m
(PETRONAS, 2016)

• Based on field life estimation (last oil < 100bbl/day and/or

structure/jacket > 20years), about 15 platforms to be decommissioned
by 2015 (est. made in 2011).
• Most of which are located in water depths of 11- 76m.
• The jacket weight: ranges from 60 to approx.. 800 MT.
This scenario is not too dissimilar in Indonesia
Offshore Platforms In Indonesia

F.Purnamarwan, 2016
Decommissioning Master Plan:
PSC Expiry As A Basis
 Challenges in Cost Estimation is Big • Current cessation collection: approx. USD
4,780 million.
Structural Removal • Cessation funds are for both Structural
• Upper bound estimate, USD $18.79 – 46.53 billion Removal and P&A.
• Lower bound estimate, USD $2.68 – 6.65 billion
Large variation in
P&A estimation
• Upper bound estimate, USD 27.73 billion
• Middle bound estimate, USD 20.81 billion
• Lower bound estimate, USD 17.76 billion

Cost Total Estimated Total Estimated Cost

Cost Estimate
(USD)/tonne Tonnage, MT (billion USD)
949,500 46.53
Upper Bound
49,000 666,450 32.66
(Samarang)
383,400 18.79
949,500 26.59
Middle 28,000 666,450 18.66
383,400 10.74
949,500 6.65
Lower Bound
7,000 666,450 4.67
(Ketam)
383,400 2.68
 Middle bound Platform tonnage projection

Median of platform tonnage estimated for

decommissioning is 666,450 MT.

(data source: PlatformBrokers, 2015)

Median of cost estimated for decommissioning

is USD $18.66 billion.

(data source: PlatformBrokers, 2015)

Then why do we decommission
a platform?
Cessation of Production is difficult to predict
Decommissioning in the North Sea – Setting the scene

1995 Brent Spar

 Shell evaluates various options for removal and selects in
consultation with the UK government
> Dumping in the Atlantic basin as best option
 Greenpeace, in need for publicity, protests and occupies
the platform.
 Extensive media attention / Debate on presence of
pollutants
 Danish, German and Dutch Ministers of Environment in
need of Brownie Points and support the rally

 Consumer Boycott in Germany

 1998 Shell decides for onshore dismantling including
reuse of Spar as a quayside in Norway.
41
Regulatory Regime Hierarchy

International
Convention { Obligations imposed
National Governments
on

Regional Convention

National Legislation
{ Obligations imposed on
Companies and
Organizations

Industry Standards & Corporate Requirements

Policy { Imposed on
Decommissioning Projects
2008 Hurricane Ike Damaged Platforms

Source: TBS Offshore

Planning for Decommissioning

Taking a look at the big picture……

Before we decommission, what
are the information we need?
 Planning for a success decommissioning

Stakeholder
Engagement
Program
& Project
•3 Activities are critical to Environmental Management
the execution of successful Options Study Cost
Decom Project : Advocacy Estimation
• Environmental Options & Reporting
Assessment
• Environmental
Management &
Technical Services
Develop Pre, During
• Project Management Environmental Cost
& Post
Services Management Management
Environmental
Plan Remedial & Studies
Restoration
Recommend-
ations
Decommissioning process in Malaysia
Decommissioning Process
Decommissioning preparation starts as early as 3-5 years before the
actual execution. The flow below simplifies the process:

Post
Decommissioning

Phase 3
• Site Clearance
Phase 1 Pre-
Decommissioning
• Wells • Verification
Works • Pipelines • Residual Liability
• FFR • Topside • Close Out Report
• Integrity/ • Study Options (BPEOA) • Sub-structure • Environmental
• Legislative HSE • WPB • FSO/FPSO/SPAR Monitoring
Requirements • Subsea Wellhead • Degazetting and
• Decommissioning Plan
• Consultation with • Environmental Monitoring Admiralty Chart
Government.
Field Review Decommissioning
Execution Phase Phase 4
Phase 2
Let’s take a look at the planned
activities in advance to
decommissioning execution
 Malaysia and Indonesia’s Decommissioning
Malaysia
Industry - Authorities
Department Of Environment
•Protection and preservation of the marine environment

Federal Marine Department

Indonesia
•Safety of navigation, search and rescue and other maritime services

Maritime Enforcement Coordination Center

•Coordination of the enforcement of maritime activities in Malaysian waters

Department of Fisheries
•Fishing industry, marine parks and reserves, including coral reefs and
artificial reefs, enforcement on fishing activities

Inland Revenue
•Taxation

Royal Customs
•Exercise duty

Attorney General’s Office

•Legal aspects of maritime affairs

Local Authorities F.Purnamarwan, 2016

•Disposal and potential use of platforms on land

Department of Safety and Occupational Health

•Policies and legislations of occupational safety and health
Stakeholders Activities are highly interdisciplinary
and having an integrated decom unit helps!
Interdisciplinary complexity
Activity Department
1 P&A of wells Drilling, wireline
2 Removal, transport and onshore recycling Construction, barge operators,
crane operators, cutting
contractors
3 Subsea clean up Pipeline, diving support
4 Overheads HSE, Planning , Cost reporting,
Doc control, Procurement etc.
5 Project management Cost engineering, PM
When is the best time to
decommission?

A look at the bottom-line..

Source: Ferreira et al, 2004
 What makes the cost factor rise?

1. Many departments involved

2. Few operators have experience especially outside GOM
3. Inaccurate & unreliable data
4. No strategy or plans present
Drawing some numbers from established
parts of the world
 1996 Estimate USD Actual Cost USD Year of Removal
Maureen 60 300 2001
Frigg 328 450 2006
NW Hutton 116 160 2005
Ekofisk cat 2 391 1,000 2009
Indefatigable 78 124 2005
DECOMMISSIONING COST COMPARISON BY WEIGHT AND YEAR
DECOMISSIOING COST V WEIGHT
1200

ConocoPhilips Norway
1000 (Esofisk Cessation cat1)
2009-13

800
Total Norway
COST (MILLION USD)

2006-09
600

Philips Petroleum
400
2001
BP UK 2008-09
ConocoPhilips Norway
200
(Esofisk Cessation cat1)
2006-08

0
0 20000 40000 60000 80000 100000 120000
WEIGHT REMOVED (TONNES)

Data source: PB Consultants

REGIONAL PLATFORM DECOMMISSIONING COST COMPARISON
BY DEPTH

Source: TSB Offshore

Decommissioning Projects in Malaysia
 www.utp.edu.my
© Institute of Technology PETRONAS Sdn Bhd 2017
 Decommissioning Projects Executed

• 2014, PETRONAS & Royal

Malaysian Army (RMA)
• Converting retired Mobile
• Sent to 5 separate fabrication Offshore Production Unit
yards (MOPU) to Military Sea Base
• RIGS-to-REEF • Weight = 180 MT for the Eastern Sabah Zone
• Weight = 3000 MT • Was not disposed as reef due (ESSZONE)
• Participating Members: to unavailability of gazette
• First ever decommissioning i. PETRONAS artificial reef
project in Malaysia Tun Sharifah Rodziah MOPU, 2016
ii. Department of • Cost: USD $8.5 million
• Weight < 3290 tonnes Marine Fisheries
• Water depth, 54m Sarawak (DoMFS)
• Platform decommissioned at iii. SHELL
Samarang platform, PETRONAS, 2012
USD 16.5 million iv. Lembaga
Pelancongan
Sarawak (LPS)
Baram 8 platform, PETRONAS & SHELL, 2005

Ketam platform, SHELL, 2003

Decommissioning Costs –
Past Experiences (MALAYSIA)
Decommissioning Costs –
Past Experiences (MALAYSIA)
Decommissioning Costs –
Past Experiences (MALAYSIA)
 • Current cessation collection: approx. USD 4,780 million.
• Cessation funds are for both Structural Removal and P&A.

Structural Removal
• Upper bound estimate, USD $18.79 – 46.53 billion
• Lower bound estimate, USD $2.68 – 6.65 billion
Large variation in
P&A estimation
• Upper bound estimate, USD 27.73 billion
• Middle bound estimate, USD 20.81 billion
• Lower bound estimate, USD 17.76 billion

Cost Total Estimated Total Estimated Cost

Cost Estimate
(USD)/tonne Tonnage, MT (billion USD)
949,500 46.53
Upper Bound
49,000 666,450 32.66
(Samarang)
383,400 18.79
949,500 26.59
Middle 28,000 666,450 18.66
383,400 10.74
949,500 6.65
Lower Bound
7,000 666,450 4.67
(Ketam)
383,400 2.68
 Middle bound Platform tonnage projection

Median of platform tonnage estimated for

decommissioning is 666,450 MT.

(data source: PlatformBrokers, 2015)

Median of cost estimated for decommissioning

is USD $18.66 billion.

(data source: PlatformBrokers, 2015)

 Malaysia however targets to be best in class in the region to reduce the
exponential growth in costs

Cost of Decommissioning USD/tonne vs water depth

8,000
Ketam &
7,000
Dana/D30

6,000 Competitive

5,000
USD/tonne

4,000

3,000
Best in Class
2,000

1,000

0
0 50 100 150 200 250 300 350 400
Water Depth (m)

Malaysia Gulf of Mexico

Internal
 Seven of these platforms had been removed–26 more shortlisted in the next five
years execution pipeline

Baram-8 Kapal
D30
Dana

2003 2012
26
platforms

2005 2016 2018 - 2022

SM-4
Ketam
SMV-A

A decommissioning report by Vision

Global estimates that only around 50
decommissioning projects have been
completed in Indonesia
Internal
 Lessons Learnt in Malaysia and ASEAN
• Cutting tools, marine spread and engineering teams are available locally.

• Local decom project management teams. Few locals have the decom experience to manage such projects.
• Clients tends to be cautious when executing and giving approvals of key documents and specific project procedures
for the decom project.

• Explosive as cutting tools are not allowed for decommissioning.

• Decommissioning project tenders are still driven by costs rather than by contractor reputation or cutting

techniques available.

• Stakeholders engagement are still being carried out in an apprehensive or cautious manner.

• Costs of decommissioning depends very much on vessels charter rates (month-dependent), team experience in
pricing/scheduling of offshore (cutting, lifting) activities and pipeline cleaning.
 THANK YOU
© 2017 UNIVERSITI TEKNOLOGI PETRONAS
All rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means
(electronic, mechanical, photocopying, recording or otherwise) without the permission of the copyright owner.