oil & gas decommissioning
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Inc. Langdon Seah | Hyder Consulting | EC Harris
ENSURING SUCCESSFUL DECOMMISSIONING AND ABANDONMENT OF OFFSHORE & ONSHORE ASSETSFeb 2017
© Arcadis 2015
Health and Safety First and ForemostARCADIS’ oil and gas team is committed to consistently delivering industryleading safety and technical leadership across the geographies we serve.
Safety Excellence Award: Chevron Environmental Management Company, 2009
Contractor Safety and Environmental Excellence Award: Marathon Oil, 2010
Safety Excellence Award: Chevron Environmental Management Company, 2011
Team Safety Recognition Award: Confidential Client, 17 months 100,000 hrs w/o Corporate Reportable, 2011
Team Safety Recognition Award: Confidential Client, 53,000 hrs w/o Corporate Reportable, 2011
Contractor Performance Award: BP, 5 years >5,000 hrs w/o Corporate Reportable, 2011
Supplier Safety Achievement Award: Confidential Client: 2009, 2010, 2011
Global Contractor Safety Council, Safety Champion Award: Shell, 2012 (3 Awards), 2013 (2 Awards)
2009 2010 20122011 2013
Flawless Safety Execution Award:Confidential Client (3 awards), 2013
Elite Contractor AwardMarathon for H&S performance, 2013
Supplier Safety AwardBP, 3rd year in a row for working without a recordable injury, 2014
Europe & South Africa SGW FDG Annual HSSE Award:Shell, 2014
2014
2
2015
© Arcadis 2015
I. Introduction to Arcadis Oil & Gas
II. Understanding the Decommissioning challenges
III. How Arcadis supports the Decommissioning Process
IV. Success factors – What we find
V. Where have we supported other organisations
Contents
© Arcadis 2015
ARCADIS – at a glanceK
EY S
TATI
STIC
S
GEO
GR
APH
IES
€2.8bnREVENUE
125YEAR HISTORY
28,000PEOPLEWorldwide
TOPIN WORLD10 TOP
IN EUROPE3 32%
36%
36%
Emerging Markets Europe
North America
ARCADIS is the leading global natural and built asset design and consultancy firm providing consultancy, planning, architectural design, environmental, engineering and premium management services across all markets
ARCADIS supports our clients during every step of the O&G value chain from exploration & production, refining, transportation, and marketing with integrated environmental, water, infrastructure and program management expertise throughout the asset life-cycle
.
© Arcadis 2015
Every day, 3,000 Arcadians support our Oil & Gas clients
Core Oil & Gas Services Environmental Management
Remediation & Decommissioning
Productivity Improvement
Project Management & Cost Management
Enabling Infrastructure Works
Asset Maintenance
HSSE, Process Safety
600O&G Production Facilities
50 refineries & terminals
150 pipeline sites
Our experience includes :
© Arcadis 2015
ARCADIS supports our oil and gas clients during every step of the O&G value chain from exploration and production, refining, transportation, and marketing A selection of our global IOC, NOC, and regional oil and gas clients include:
© Arcadis 2015
With over 65 years of experience with the oil and gas industry,ARCADIS supports our clients during every step of the asset lifecycle
Facility Infrastructure
Product Storage and Transportation Systems
Piping, and Delivery Systems
Instrumentation, and Control
Project Management Services
Engineering & Design
Construction Management
Cost Management & Claims Support
Safety & Risk Management
Planning and Strategy Development
Data Acquisition
Information Management
Site Investigation
Remediation
Demolition
Restoration
Decommissioning
Portfolio Approaches
Asset Management
Asset Integrity
Operational Efficiency
Project Services
Contract Management
Cost Management
Supply Chain Solutions
Process Safety Management
Regulatory Compliance
Health & Safety Services
ENGINEERING & CONSTRUCTION
OPERATIONS & MAINTENANCEFRONT END
PLANNING
Oil Field Development Programmes
Due Diligence
Feasibility Studies
Business Planning
Preliminary Engineering
Cost Estimating
Planning & Permitting
Project Development Support
Safety & Risk Management
ASSET RETIREMENT
© Arcadis 2015
Why Arcadis?
Engaged as a global environmental partner by 4 of the top 5 oil companies for Environmental Strategy, Planning & Assessment
Leading Project Cost Management company in Asia… saving over 15% on CAPEX costs for our Oil& Gas clients on major projects
Managed and delivered the successful end-to end decommissioning of over 24 challenging wells in North America plus many other projects globally
Currently engaged in UK North Sea largest Decom Project (Brent)
Developer of innovative environmental strategies for offshore structure decommissioning
Environmental partner for worlds leading oil companies
Expert in Cost Management
Deep O&G Decom Experience
Involved in the largest Decom projects
Thought leader in Decom Strategies
© Arcadis 2015
What are the Challenges?Major capital projects are not easy to deliver...
64% of projects face cost overruns 73% of projects are reporting
schedule delays
Source: Ernst & Young Spotlight on oil and gas megaprojects 2014
Decommissioning Projects face even greater uncertainties with rapidly evolving regulatory frameworks, highly public visibility, lack of experience, challenging environments……
© Arcadis 2015
Decommissioning in SE Asia faces a number of specific challenges … (1)
Abandonment / decommissioning of onshore wells and offshore facilities is fast becoming a critical issue in SE Asia. It is estimated that over 100 on-shore wells currently need to be sustainably abandoned in Sarawak & Borneo alone ; and over 400 offshore structures and their associated wells are expected to be decommissioned over the next 20 years in Malaysia and Borneo. Similar needs are developing across SE Asia.
Thought leadership will be required to assist in developing environmentally and economically sustainable strategies to ensure that this issue can be managed responsibly.
Arcadis look forward to the challenges ahead. Together we can ensure that we leave a sustainable legacy for future generations.
© Arcadis 2015
Decommissioning in SE Asia faces a number of specific challenges … (2)
Developing Regulatory Environment : Multiple stakeholders at national, state and local level in SE Asia; potential conflicting interests. Absence of well developed Regulatory frameworks. Disparate environmental expectations/standards eg from IOCs and local regulators
Cost Estimation : the paucity of decom project experience in the region can lead to in-accurate Decom cost estimation
Lack of Decom Experience : this is a relatively new sector for the industry and local and regional companies lack experience and capability. Need to build a local decom indutsry
Minimising Cost : Completing the Decom process at minimum capital cost requires an optimal Decom strategy and effective project and cost management
Decom Strategy : selecting and implementing the best Environmentally Sustainable and economically viable solution requires a deep understanding of the environmental issues and alternative approaches combined with strong project governance
© Arcadis 2015
Potential IMPACTS to Your Business?
Insufficient consideration of environmental,
social and economic issues
can result in substantial but
avoidable project delays and cost
overruns
© Arcadis 2015
Arcadis Decommissioning services provide a comprehensivesolution
Integrated environmental, engineering,
advisory and commercial
services
Improved investment
decisions and anexpedient receipt of
development permits
Anticipate and manage
increased stakeholder expectations
Secure and maintain the
social ‘license to operate’
Consider likely issues across the
whole decom project life cycle
Fully developed
business case; strategy to retain
permits; and an exit plan
in place
Go beyond regulatory
compliance
Manage your reputation
Detailed understanding of stakeholderrequirements
Ensure project viability
Combine global resources with local market
knowledge and presence
Reliable on the ground delivery
Trusted partnerwith detailed
understanding ofyour business
Actionable andunambiguous
advice
Knowledgeshare andinnovation
Deliver cost effective
and fastersolutions
Early strategic consideration
of likely environment
and economic challenges is a low cost, high impact activity
© Arcadis 2015 May 1, 2023Deccommisioning VP - Arcadis 14
Decommissioning – Arcadis Proposition
Stakeholder Needs
PRODUCTION CESSATION MANAGEMENT
VALUE & COLLABORATION
RELATIONSHIP MANAGEMENT
LEGAL LEGACY & STATUORY COMPLIANCE
BRAND REPUTATION
PROCUREMENT AND CONTRACT SUPPORT
RISK ALLOCATION/OPTIMISATION
SCHEDULE & PROGRAMME
REPEATABILITY & LESSONS LEARNT SAFETY ENVIRONMENTAL
COMPLIANCE
CERTAINTY (Time & Cost)
© Arcadis 2015 May 1, 2023Deccommisioning VP - Arcadis 15
Legally Brand Reputation
STAKEHOLDER NEEDS : DELIVER THE DECOMMISSIONING PROGRAMME SAFELY WITH INCREASED CERTAINTY,
VALUE & REPUTATION INTACT
Risk allocation /
OptimisationCertainty
• Understanding of Legal and statutory obligations
• Recognised by Authorities as industry leader
• Experience/ Expertise dealing with Government organisations and relevant bodies.
• Proven record in delivering complex decommissioning programmes
• ARCADIS share value linked to delivery
• Scale in market
• Willing to share risk by linking Brands
• Global No.1 in remediation
• Scope definition
• Data sets and knowledge
• Contracting strategies
• Estimating knowledge and systems
• Risk Management
• Tech Knowledge
• $931m of projects
• Supply chain knowledge
• WAN’s & Productivity knowledge
• Asset Condition surveys
• Environmental Capability / History
• Contracting strategy & Solutions – PDCC Decoupled contract
• Performance Based Contracting e.g. and Project Foxglove, GRIP®
• Project Controls
• Programme & PM experience and processes
• Experienced Risk managers and industry recognised process
Safely
• Health & Safety embedded in our culture and approach
• Environmental experts
• Onshore HSE / CDM experts
• Breadth of knowledge and cross capability
• Proven record
• Awards
• Global safety systems
Schedule
• Knowledge & data sets
• Planning
• Productivity Measurement & Enhancement
• WAN’s
• Streamlined contracting strategies to optimise time
• Front end engagement models
• Knowledge of permitting
Value
• Cost Estimation
• Optimised cost management
• Safe pair of hands
• Programme partner committed to long term
• Recycling and resale of equipment
© Arcadis 2015
Decommissioning of Offshore Structures
EnvironmentalOptions Study
DevelopEnvironmentalManagement
Plan
StakeholderEngagement
Pre, During& Post
EnvironmentalStudies
Advocacy & Reporting
Remedial &Restoration
Recommend-ations
Cost Estimation
Programme & Project
Management
3 Activities are critical to the execution of successful Decom Project :
• Environmental Options Assessment
• Environmental Management & Technical Services
• Project Management Services
Cost Management
© Arcadis 2015
Offshore Facilities Decommissioning Project Management• PMO/portfolio
management• PMC• Project scheduling• Field Monitoring and
HSSE Oversight• Report day-to-day
operation• Risk Management
Cost Management• Cost estimation &
benchmarking• Quantity Surveying• Cost monitoring and
control• Contract Strategy &
Management• Claims and variations
avoidance and management
Develop Environmental Management Plan• Environmental
Impact Assessment• Environmental
Baseline Study
Pre, During & Post Environmental Study• Pre, During and Post
completion Site Environmental Monitoring and reporting
Remedial and Restoration Recommendation• Provide
environmental options and recommendation for remedial and restoration of site
Environmental Option Study• Conduct
decommissioning option study
Stakeholders Engagement• Identify and engage
stakeholders on decommissioning study, program and activities
Advocacy and Reporting• Compliance to
regulatory requirement and legal framework for transfer of removed and abandoned facilities
• Data update and reporting of “new site”
• Legal documentation
Project Management Services
Environmental Management & Technical Services
May 1, 2023 17
Environmental Options Assessment
3 Critical Activities to ensure environmentally sustainable decommissioning at minimal economic cost
© Arcadis 2015
Decommissioning of Onshore Structures
AgencyConsultation
Develop &Implement
EnvironmentalManagement
Plan
Reporting
Develop Planfor Site
Condition Control
Advocacy
DevelopPlan forAccess
Cost Estimation
Programme & Project
Management
3 Activities are critical to the execution of successful Decom Project :
• Environmental Options Assessment
• Environmental Management & Technical Services
• Project Management Services
Cost Management
© Arcadis 2015
Onshore Facilities Decommissioning Project Management• PMO/portfolio
management• PMC• Project scheduling• Field Monitoring and
HSSE Oversight• Report day-to-day
operation• Risk Management
Cost Management• Cost estimation &
benchmarking• Quantity Surveying• Cost monitoring and
control• Contract Strategy &
Management• Claims and variations
avoidance and management
Develop Environmental Management Plan• Environmental
Baseline Study• Pre, during and Post
Environmental Monitoring
• Site Environmental Remedial and Restoration
Develop Plan for access• Route access roads
around sensitive receptors
Develop Plan for site Condition Control• Erosion and
sedimentation control, spill control
• Well Plugging Design
Agency Consultation• Engage stakeholders
on well plugging program and activities
Advocacy• Ensure compliance
to regulatory requirement and legal transfer of site to owner complete with reports
• Acceptance of well plugging design and completed well plugging report
Reporting• Well
Reconnaissance• Completed well
abandonment inspection report
• Legal documentation
Project Management Services
Environmental Management & Technical Services
May 1, 2023 19
Regulatory Framework and Advocacy
3 Critical Activities to ensure environmentally sustainable decommissioning at minimal economic cost
© Arcadis 2015
Where have we done this before?Selected profiles from our hundreds of projects worldwide
© Arcadis 2015
Offshore Asset Decommissioning
21
From this ..
.. to this
ImagineIn Depth Study into the impact of artificial offshore reef creation using abandoned Offshore Oil & Gas Structures
ApproachMulti-year study to determine the health, development, and maturation period for a new artificial reef to provide data to O&G offshore Decom sector
WHY – The oil industry needs to have solid data that demonstrates that leave-in-place options provide a positive environmental outcome, and that reefs can be part of the available options with a net benefit.
Result
Oil production structural material can effectively be left on the sea floor and converted into a viable and productive reef.
Bird Island Reef DevelopmentNetherlands
Report for : • National Conference on Ecosystem Restoration• SETAC Europe – Special Session on Offshore
Abandonment• Ecological Society of America/Society of Ecological
Restoration
Roost Completion
Before Demolition
© Arcadis 2015
Offshore Asset Decommissioning
22
From this ..
.. to this
ImagineIncrease the productivity of offshore decommissioning activities through improved work estimating and scheduling process for a major production asset in the UK North sea
Approach Development of Work Activity Norms for
offshore topside decommissioning work disciplines
Assessment of contractor productivity using Time on Tools Approach
Identify & implement approached to improve productivity
Refine decom project scheduling using refined Norms & known productivity levels
Result Work Activity Norms for Offshore
Decommissioning Improved productivity for Decom work Will lead to reduced cost and reduced
time for completion of the project
Major Offshore Production Assets Decommissioning Productivity Assessment & Improved work Scheduling
UK North SeaClient Confidential
Before Demolition
© Arcadis 2015
Ecological re-use of abandoned platforms
Offshore Platform Abandonment Strategy : Arcadis ERAP StrategyUK North Sea
ChallengeMany old offshore platforms on the North Sea Continental Shelf must be dismantled. Dismantling is very expensive and risky. Is there an alternative with lower risks and costs? Our idea Do not dismantle the platforms, but re-use them ecologically. This will help the Marine Strategy Directive and is much cheaper and less risky than dismantlingWhat’s the ecological advantage? The North Sea floor is mainly sandy. Several species benefit of hard substrate environments (e.g. benthos, fish). On hard substrate spots in the North Sea, like ship wrecks, you find a wealth of species. So hard substrate structures in combination with a sandy environment leads to higher biodiversity. Changes and risks The ERAP concept offers a effective solution for dealing with abandoned platforms. It enhances the ecosystem diversity and help to obtain a good environmental status. Next to ecological value a platform can have multiple uses, like diving, fishing, research, international cooperation, and governance.
23
© Arcadis 2015
Offshore Environmental Assessments & Planning
Over 50 Arcadis Environmental Assessments & Planning for the Oil & Gas sector on Asia
SummaryThe Arcadis Environmental team have completed over 50 engagements for oil & gas projects in Asia, including : Environmental Impact Studies Quantitative Risk Assessment Environmental Planning Baseline Environmental Surveys Permitting
Andaman Sea One example is our work for ENI where we were responsible for conducting Environmental Impact Assessment studies, Quantitative Risk Analysis and Emergency Response Planning for ENI India’s offshore drilling operations in AN-DWN-2003/2 block, Andaman Sea. Major tasks included:
Collection of Secondary data, Preparation of Environmental Management Plan Quantitative Risk Assessment Formulating the Emergency Response Plan
An important element of the project was oil spill modelling in the form of OILMAP and HYDROMAP and contingency planning
24
© Arcadis 2015
Offshore Project Cost Management
Cost Management for project work for over 200 offshore structuresClient Confidential, SE Asia
Arcadis have been providing ongoing cost management for over 10 years for a portfolio of over 200 offshore production structures for an lnternational Oil Company in SE Asia
The scope covers Cost Estimating, Cost Engineering & Quantity Surveying services for a wide range of projects including new build, brownfield, life extension, maintenance and decommissioning.
Outcomes• Overall cost of projects reduced by 15-
20%• Through the work, Arcadis has built up
an in-depth knowledge base of offshore oil & gas project costs in SE Asia, particularly for East Malaysia & Brunei.
25
© Arcadis 2015
Well Abandonment
On Shore Well Abandonment
Confidential Client Netherlands
ImagineRemediation of an old oil production site in the Netherlands, overcoming severe groundwater contamination issues and soil contamination
ApproachARCADIS managed the remediation of the site, overcoming major issues with soil contamination with petroleum products, mercury and arsenic.
ResultARCADIS successfully completed the project, gaining substantial regulatory and client satisfaction with the remediation.
© ARCADISMay 1, 202326
© Arcadis 2015
Well Abandonment
Well Abandonment24 Wells, USA
Confidential Client,Pennsylvania, USA
ImaginePlugging Program Management – Manage the Quaker State Legacy Oil Well Plugging Program on Behalf of Shell
Approach• Project Management• Health and Safety Management of
Subcontractors. Share Learnings Between Downstream and Upstream Programs
• Due Diligence- Determine Plugging Responsibility,Research Historical Production Records, Sales Agreements, Lease Documents, Maps, and Interviews WithFormer Employees.
• Subcontractor Procurement and OversightResultARCADIS completed the plugging program and gained confirmation from the Pennsylvania Department of Environmental Protection that all plugging and site remediation activities had been completed satisfactorily.
27
© Arcadis 2015
Well Abandonment
28
From this ..
.. to this
Arcadis managed the entire program from identification of well locations through to site restoration and regulatory approval
© ARCADISMay 1, 202329
CONTACTS
29
dd +6 (0) 3 2106 8168m +6 (0) 1 2712 5076e syed.mahadzir@arcadis.com
ArcadisLevel 5, Menara TSR | 12 Jalan PJU 7/3, Mutiara Damansara | 47810 Petaling Jaya | Malaysia
SYED MAHADZIRHead, Cost Management, Malaysia
dd +6 (0) 3 2106 6032m +6 (0) 1 3350 0038
e ian.kennedy@arcadis.com
ArcadisLevel 5, Menara TSR | 12 Jalan PJU 7/3, Mutiara Damansara | 47810 Petaling Jaya | Malaysia
DR IAN KENNEDYHead, Oil & Gas, Asia
dd +6 (0) 3 2106 6099m +6 (0)1 9815 4557e jerry.langan@arcadis.com
ArcadisLevel 5, Menara TSR | 12 Jalan PJU 7/3, Mutiara Damansara | 47810 Petaling Jaya | Malaysia
JERRY SIRAN LANGANSenior Consultant, Oil & Gas Decommissioning, SE Asia
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