Listen to this article


Total has landed a reconnaissance team on the stricken Elgin platform in the North Sea to help stem the gas leak that forced its evacuation two weeks ago.

But as fears of a catastrophic explosion recede, Total faces a considerable task in plugging a well that blew out during an attempt to shut it down.

More North Sea fields will be decommissioned during the next two decades as operators extract the remaining reserves.

Total confirmed at the weekend that a team had inspected the Elgin’s production and accommodation platform, and identified the source of a leak calculated to be releasing up to 200,000 cubic feet of gas and condensate a day.

The French energy group is considering using a semi-submersible rig to pump mud into the well head to stabilise the leak before it can be sealed with concrete.

Back-up plans for the drilling of two relief wells are also in place. These would be far more costly and time-consuming as a potentially lethal plume of gas continues to escape.

Following the inspection, Wild Well Control, a contractor, said: “Everything went as we would have hoped, and the planned well intervention is achievable.”

As output from North Sea oil and gas fields declines, the abandoning of wells will be increasingly common – as will the retrieval and disposal of redundant platforms and pipelines.

The cost of well-capping and deconstruction was recently put, by Deloitte, at about £30bn for the UK sector and £47.5bn or more across the North Sea basin, including Denmark, the Netherlands, Norway and Ireland.

Research in November by Deloitte and Douglas-Westwood said most of the decommissioning would be between 2016 and 2031. It pointed to not just the financial burden but also the business opportunities presented by oil installations coming to the end of their usefulness.

Angela MacCormack of Douglas-Westwood said that with 4m tons of platforms to be returned to shore, the task was an opportunity for vessel operators and well service companies. Decommissioning should provide expansion for yards and generate skilled jobs.

Graham Sadler, managing director of Deloitte’s petroleum services group and co-author of the report, said: “Decommissioning itself is not a new phenomenon – indeed, over 100 small platforms a year have been removed from the Gulf of Mexico using well-developed procedures. However, the challenge posed by the North Sea structures – because of their heavier weight and the local climate – represents a major challenge on a totally different scale.”

FTSE 100 oil services companies John Wood Group and Amec will be among companies competing for business decommissioning North Sea infrastructure and finding ways to extend the use of installations.

Neil Bruce, chief operating officer of Amec, said: “The market for decommissioning of North Sea oil platforms is huge. There are more than 500 fixed installations in production and the eventual cost to decommission them and all the other facilities over the next 30 or so years could be in the many tens of billions of pounds.”

“It’s estimated that in the next four years alone something like £4bn will be spent. However, so far, in relative terms to the size of the overall task, only a small amount of decommissioning, about 7 per cent, has been carried out.”

Although some decommissioning has been carried out, the heavy lifting is about to begin. Deloitte and Douglas-Westwood envisage the development of “super heavy lift vessels” capable of lifting upwards of 15,000 tons, in the dismantling of North Sea installations.

“Having designed and built such platforms, we know exactly what is required. We can ‘reverse engineer’ them,” Mr Bruce said.

He and Sir Ian Wood, chairman of John Wood Group, have welcomed signs that the government is accepting arguments that policy must to tailored to avoid premature decommissioning, which would leave pockets of adjacent reserves unexploited.

“We need to keep the infrastructure in the North Sea to maximise extraction, and we need to unlock assets to allow the next wave of investment,” Sir Ian said. “A lot of fields have only been developed with the [help of] established infrastructure.”

The key question is, he adds: “How do we maximise recovery?”

Copyright The Financial Times Limited 2017. All rights reserved.

Follow the topics mentioned in this article