What Goes Up Must Come Down: the Challenge of Rig Decommissioning

What Goes Up Must Come Down: the Challenge of Rig Decommissioning
Decommissioning oil rigs is quickly becoming a major financial and logistical problem for virtually every oil company.

Rapid fluctuations in both the price per barrel of oil, coupled with shifts in the global political landscape, make predicting the industry’s future impossible. However one area where forecasts can be made with some accuracy is on the issue of decommissioning oil rigs – which is quickly becoming a major financial and logistical problem for virtually every oil company. The cost of decommissioning is rising sharply, with experts predicting it will reach $13 billion a year globally by 2040. Inevitably, the final costs will vary from rig to rig – decommissioning operations in the North Sea are expected to require around 53 billion pounds in total; a huge sum in comparison to deepwater installations in the Mexican Gulf, which are expected to incur approximately $2.4 billion. However, even with less costly decommissioning projects, these are not inconsequential figures that companies can simply brush aside.

The cheapest and most straightforward option – simply sinking the rigs – is not feasible. In 1995 when Shell proposed sinking the Brent Spar rig, the result was protests, boycotts, and a substantial fall in share price, ultimately resulting in the Ospar Treaty. Therefore, a range of alternative engineering solutions have been proposed – such as removing platforms in a ‘single lift’ swing, or dismantling the platform piecemeal and shipping in batches. Given the complexities of dismantling an oil rig, decommissioning is a challenging engineering problem with many factors needing to be considered. Yet, with around 600 rigs expected to be taken offline by 2021, it’s also one that oil companies need to get used to tackling. The challenge facing oil companies is to be able to accurately predict the costs for decommissioning these aging structures safely and in environmentally friendly, but cost effective ways.

The Environmental Trade-offs

Predicting and addressing the environmental impacts of decommissioning is complex. There can often be competing interests and trade-offs to be considered and evaluated. For example, the most carbon-neutral option might not be the best from a health and safety (HSE) perspective. One example is the current debate within the environmental community about whether it’s best to clean and sink parts of the rig as part of a ‘rig to reef’ program, or, whether this is merely leaving behind waste that will cause unpredictable issues for centuries afterwards. The fact that this rig-to-reef issue is still unresolved – despite first being raised over 20 years ago as per the Brent Spar platform – demonstrates the difficulty of decommissioning.

Determining the right path is rarely straightforward, for instance, do water pollution concerns and the welfare of marine life trump issues around carbon emissions? Confident decisions must be data-driven – companies need to ensure they are assessing all the relevant, accurate, and up-to-date research and information, and that no better alternatives have been missed. It also pays to look beyond the environmental impact research.  Research into new chemical and material innovations is being published at volume and velocity, and such technologies could potentially be repurposed to significantly reduce the cost of decommissioning. For example, if the graphene desalination sieve technique could be applied to protect oily residues from leaking into the ocean, it could mitigate one of the biggest concerns and challenges of decommissioning offshore platforms.

The Engineering Challenge

Making sure that all the implications of a decommissioning plan are understood requires an incredibly broad range of expertise across the business – from marine engineers to structural engineers to environmental engineers – with each able to access the necessary data in order to make a recommendation about the best course of action in the planning, execution and post-decommissioning stages. The practical problems of decommissioning will vary due to a range of environmental factors – such as the local geography, topography and climate, age of the rig, materials used in construction, and whether it’s land- or sea-based. But the fundamental problem of anticipating and deciding on the right strategy will remain the same. For each project there are multiple debates that need to be had. For instance, if rig struts are to be left in place, which anti-corrosion coating would be best used in order to avoid environmentally toxic corrosion and leakage? And is this a better long-term solution than removing the legs and shipping them back to be recycled?

Effective decision-making requires modelling of environmental and HSE risks, along with the predicted short-term and long-term costs. This requires companies to have access to the best scientific and technological information to produce the most accurate models and predictions. Therefore, businesses need to make sure they are providing their engineers with accurate and trusted information platforms, allowing them to be as efficient as possible in their work and make confident decisions.

A Long-Term Challenge

The decommissioning challenge is not one that is going to get any easier for oil companies. Since 1998 only five exemptions to Ospar have been granted. Further, with the price of oil continuing to fluctuate, the costs of decommissioning is a huge stress on oil company finances – at a time when funds are still required for exploration for new resources and innovation in finding new energy sources. Unless engineers and asset managers have access to world-class engineering data and solutions to make these decisions, oil companies could end up wasting billions unnecessarily while causing unintended environmental damage – both of which could impact the value of the company as a whole.


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