Overview of International Offshore Decommissioning Regulations
This article is the second of a six-part series. In case you missed the first article you can read it here.
Tackling the challenges of safely and economically decommissioning thousands of oil and gas wells globally in the coming years is one of the biggest tasks facing our industry today.
"It’s a $100 billion problem—in the North Sea alone. And the bill could double or even triple depending on decisions oil and gas operators make now. Shareholders, employees, suppliers, governments, and taxpayers are all on the hook for the tab."
Source: https://www.bcg.com
From a legislation perspective, the quality, robustness and philosophy of well abandonment and decommissioning guidelines vary significantly by country.
Additionally, new well plug and abandonment (P&A) technologies are typically not covered within these existing guidelines e.g. resin plugs and "melting the cap rock"
Historically the decommissioning legislative trend of major oil and gas hubs, such as the Gulf of Mexico and North Sea, has been to adopt a "prescriptive" Regulatory approach (see Example 1 below). This trend appears to be slowly shifting towards a "goal-setting" approach (see Example 2 below) as illustrated in the figure below:
So what is the difference between a "prescriptive" and "goal-setting" approach and which, if any, is the best approach?
Below are two examples from Decommissioning Regulations to highlight the different approach between the prescriptive and goal-setting approaches.
Example 1: Prescriptive Decommissioning Regulations
Open hole requirements of casing cement & cement plug
–Where casing is part of a permanent barrier, at least 100ft MD of good cement in the annulus is a requirement in order to form a permanent barrier.
–The internal cement plug must be adjacent to the annular good cement over a cumulative distance of at least 100ft MD of overlap. The overlap section of the plugs must be of good quality cement on both sides.
–A combination permanent barrier can be chosen to replace two barrier.
–A permanent barrier is required in cased hole or extending at least 100ft of good cement into cased hole. The barrier across cased hole is to fully isolate the open hole.
Source: Guidelines for the Abandonment of Wells (OGUK, 2015)
Example 2: Goal Setting Decommissioning Regulations
Source: Offshore Petroleum and Greenhouse Gas Storage Regulations (Australia, 2011)
Best Regulatory Approach for Decommissioning
Both approaches (prescriptive and goal-setting) have their merits and their weaknesses and depending on a person/organisations viewpoint one could argue for or against either approach.
The goal-setting approach arguably offers greater flexibility to the Operator to design a fit-for-purpose well abandonment plan without unnecessary overspend to meet Regulations which may not be applicable/suitable for the particular well type.
Having less clear guidelines in place puts increased emphasis on the Regulator to carefully review, and subsequently approve, any Decommissioning plans to ensure they are fit for purpose to achieve well integrity for the long-term (more on that later).
Interestingly, in countries who have adopted a goal-setting approach to Decommissioning it is common to see the Operators refer to guidelines from prescriptive bodies (such as OGUK) to demonstrate that they have followed "industry best practice." If all countries adopted a goal-setting approach one wonders what the benchmark for best practice would become?
Risk-Based Approach to Decommissioning
In 2016, DNV GL issued a Recommended Practice (DNVGL-RP-E103) on risk-based abandonment of offshore wells. DNV GL believe that in combination with optimised project execution and new technology, this approach could potentially reduce P&A costs by 30-50%.
Conclusions
Thanks for reading this far and I hope you found the article useful. In conclusion I would like to highlight the following key messages:
From a legislation perspective, the quality, robustness and philosophy of well abandonment and decommissioning guidelines vary significantly by country.
New well plug and abandonment (P&A) technologies are typically not covered within existing guidelines e.g. resin plugs and "melting the cap rock." If we are to find innovative solutions to abandoning wells cheaper and more safely then the guidelines will need to accommodate this.
Globally today there is an increasing trend of Regulators adopting a "goal-setting" approach to Decommissioning rather than a "Prescriptive" approach which has historically been adopted in our industry.
In the next article I will be writing about Key Challenge #2 - Data Availability & Quality which is without doubt one of the major challenges of decommissioning projects we are facing today.
What are your thoughts on the best approach for Decommissioning guidelines? Please add a comment below so we can share knowledge and experience collectively on this subject..
