Following the general pace of much oil and gas industry activity this year, the offshore decommissioning sector has struggled in 2020. However, Aquaterra Energy reports the 2021 outlook for decom looks encouraging. Christian Berven, business development director with the offshore oil and gas engineering firm, offered an explanation for the rosier decom forecast in a recent interview with Rigzone. Read the transcript below for details.
Rigzone: Please briefly outline the state of the offshore decom sector from 2019 through 2020 to date?
Christian Berven: We had anticipated that 2020 would be the year in which the pace of growth in the U.K. Continental Shelf market would pick up significantly after 2019 showed activity starting to pick up. However, reality has been quite different. Our own market assessment suggests around 70 percent of planned work has been deferred (in part or entirely) and 10 percent cancelled, leaving only 20 to go ahead in 2020.
Rigzone: What are some emerging offshore decom trends as we approach 2021?
Berven: Over the past two or three years, integrated work packages have become more popular as an efficient and integrated way to deliver on a project’s objectives. Operators are now increasingly looking for complete solutions from a single provider. This is a trend occurring across the industry and we expect to see this mirrored in decom, too.
Rigzone: Given these signals, what do you think 2021 will look like in offshore decom?
Berven: It signals that decommissioning activities will increase notably in 2021 – especially if we can begin to put the COVID-19 difficulties behind us – and continue a strong growth trajectory through 2023. There’s a further dimension to decommissioning that I expect will become more prevalent over the coming years, and it represents an opportunity both to move the energy transition agenda forward and to monetize offshore assets that would otherwise be discarded – carbon capture and storage (CCS).
Rigzone: From your perspective, how are operators changing their mindset about offshore decom and what are some effects we might see given this shift?
Berven: Timing invariably poses the biggest dilemma for operators – low oil prices incentivize the process but deliver cash flow challenges, while higher prices make ongoing production more feasible. This timing issue looks set to shift more towards decom. More wells are approaching end of life and, as a greater focus is placed on sustainability, we’ll see decom become more popular – particularly if wells are suitable for CCS.
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