When offshore oil and gas assets reach the end of their service life, the industry must ensure that the related infrastructure and equipment are decommissioned and removed safely. Scotland has been taking a leading role in this relatively new industry.
The UK Continental Shelf (UKCS) is integral to the development of the decom industry both in Scotland and globally. With an operations history spanning five decades, the UKCS is one of the first mature basins in the world to conduct decom at an industrial scale.
This experience has resulted in the development of specialist decom capabilities in Scotland, along with industry standards and an associated specialist supply chain. Furthermore, such expertise is in demand around the world as nations look to the future of not only their own oil and gas assets, but also in offshore renewables, where there is much crossover. Growth of the decom market is of fundamental importance to the future of the renewables industry and industrial supply chain.
“Decom is a vital bridging activity that can sustain the industrial supply chain until the renewables market is strong enough for large-scale developments,” says Sam Long,
CEO of Decom Mission, a not-for-profit trade organisation dedicated to decommissioning in the oil and gas, nuclear, and renewables industries, with a multinational membership base.
Founded in 2009, Decom Mission helps the industrial supply chain pursue international opportunities, working alongside government organisations such as Scottish Development International and the UK Department for Business and Trade. The not-for-profit organisation is also involved in knowledge exchange, skills and training opportunities through programmes such as its Energy Leadership Exchange. This establishes peer-to-peer relationships between decommissioning professionals in nuclear, oil and gas, and renewables.
Long highlights how decom is central to the energy transition and moving to a circular economy. “You don’t get to decarbonise without doing the decom. It recycles the skills and the materials. It is a social licence to operate and an obligation for the industry. It’s a technical obligation on oil and gas to perform these activities,” he says. “Also, it enables us to keep our supply chain alive until the renewables market really takes off.”
“We are highly desirable for other basins that are now following the same journey,” adds Long. “The export potential is significant.”
Realising the economic potential of the decom market
There is considerable interest in Scottish decom activities from countries such as Australia, Brazil, and Norway, as well as regions that include South East Asia and West Africa. According to Long, decom services covering the global market are worth up to $15bn a year. “We are about to enter a significant period of uptick in activity, led by the North Sea, in particular,” he adds.
In the UK, the current decom market is worth £2bn per annum. However, this value is projected to increase dramatically within the next decade. Official estimates suggest the remaining amount of decom work in UK waters is worth £44bn.
Provided the timeline proceeds as currently planned, 60% of decom activity in the North Sea will be carried out in the next nine years. This projection would mean the spending of £26.4bn by 2034.
The importance of ports in Scotland for decom cannot be overstated, and many are well-suited to the varying sizes of assets that will be recovered from the North Sea. Some ports already have specialist facilities that can receive and process these materials.
Furthermore, the Scottish supply chain will play a key role in this emerging market. Northumberland-based Blyth Offshore Wind Farm was the first in the UK and began operations in 2000, with decommissioning in 2019, which was supported by Scottish companies.
Looking further ahead, many of the windfarms currently operating or planned in Scottish waters will be either decommissioned or repowered within the next few decades, ensuring long-term demand for decom services.
Companies with specialist decom services in Scotland
Well plugging and abandonment is a crucial step in decommissioning, typically instigated by a multinational corporation and supported by smaller specialist companies. Businesses based in Scotland are developing niche services in the decom value chain to support the larger multinationals involved with not only wells P&A , but also the dismantling of large-scale structures.
Companies that offer specialist decom services include those that have relocated to Scotland specifically for the North Sea industry. Such businesses include Decom Engineering, which was founded in Northern Ireland in 2011. The company offers a range of specialist subsea cutting services and tools for aspects such as pipelines and cables.
While Northern Ireland has a strong heritage of engineering and the marine industries, it does not have a comparable level of experience in oil and gas and the North Sea as Scotland does. The presence of this globally renowned industry was a deciding factor in Decom Engineering opening a facility in Aberdeen in 2018, which is now where the company is headquartered. In a sign of growing global demand for decom services, an estimated 25% of the company’s work is in the North Sea and Europe, with 75% in overseas markets such as Australia, Asia, Brazil, the Middle East, and the US.
Michael O’Neill is head of business development at Decom Engineering and joined the company around three years ago. He explains how the company has grown significantly in that time, in line with increasing demand around the world.
“When I joined, we had a fleet of six tools. Now we’re sitting with 18 fleet tools with a couple of bespoke units as well, and they are used for some more niche projects. So, the fleet’s grown massively,” he says. “The demand has ramped up significantly across the world. Even in the last 12 months, we spoke about potential decom projects in North America and Brazil. But now, we’re actively delivering projects over there.”
How the decom value chain is developing in Scotland
Aberdeen is becoming a hub for decom expertise, where the value chain of this new sector is developing for companies that collaborate to offer the full suite of services.
One such company is PDi Ltd, which has more than two decades of experience in oil and gas. The company’s services cover consultancy in subsea and topside engineering and project management for the entire asset lifecycle, including decommissioning. Alongside this, the company has extensive experience in renewables, starting with offshore wind projects in 2007. The company operates in 26 countries and counts major energy companies among its clients. IDP (Integrated Decommissioning Projects) is a PDi ledventure focused on decom, leveraging 15 years of experience in North Sea operations. Partnership organisations work together to share decom expertise, including Phoenix Decom.
Services provided by Phoenix Decom include project management, decontamination, offshore safety and compliance, and training. A crucial service offered by the company is waste management, including naturally occurring radioactive materials (NORM) that are handled at specialist facilities. The company targets a 97% recycling rate of waste from decommissioned offshore projects.
Another company based in Aberdeen is established engineering consultants, Xodus. The company’s services begin with initial concepts and extend to decommissioning. Xodus has a proven history in decom support across the energy industry, providing advice to operators and government organisations alike. Strategic solutions can manage the expectations of stakeholders and facilitate smooth engagement with regulators to meet efficient timelines. The company has four offices in Scotland, in Aberdeen, Edinburgh, Glasgow, and Orkney, and a further UK office in London, as well as operations in Australia, the Middle East and Africa, and the US.
Aberdeen-headquartered THREE60 Energy provides engineering solutions and tech innovations in both oil and gas and renewables, built on decades of experience. In oil and gas, services span the entire asset lifecycle, from planning and subsurface modelling of reservoirs and fields to well engineering, construction, and commissioning. This understanding of subsea surface and asset engineering offers advantages in decom, with assessments provided for abandonment liability and methodology reviews.
How Scotland is primed for growth in the decom industry
There is an old saying about how most oil and gas projects around the world feature a Scottish influence, and there is a strong sense that the same could soon apply to decom.
“Even when you look away from Scotland, if you go to Houston, for example, you’re going to find an Aberdonian, or at least a Scottish expat living there, and they’ve relocated because they have that knowledge,” says O’Neill.
“For us, there’s access to the assets and for the work that needs to be done. But also, it plays back into the people. There’s the expertise. There’s the knowledge pool of everyone here that has lived and breathed oil and gas for decades at a time,” says O’Neill. “Especially for the oil and gas sector, there’s nowhere else in the world that has that level of knowledge and level of expertise on your doorstep,” he adds.
Scotland has the combination of expertise, assets, and legislation to support the long-term growth of the decom industry as it establishes itself in oil and gas, then develops further for offshore renewables. Government agencies such as Scottish Enterprise, the domestic arm of Scottish Development International, can provide advice and support for businesses seeking to optimise economic opportunities.
“It helps when you’ve got regulators and legislation in place. It’s not extend, extend, extend. It is pushing us towards that decom phase. So, it’s not an optional thing,” says O’Neill. “For a long time, the operators have been given that notice. So, there’s money to do it. There’s reason to do it, and they’ve got the push from the regulators to enforce it.”
To learn more about the decom industry in Scotland and the opportunities available, register for the webinar here or download the document below.
