Shell decommissioning to create opportunities for contractors

Thursday 15 May 2014

Limited company contractors in the oil and gas sector are well placed to benefit from Shell's decommissioning efforts.

The oil giant has recently announced that it will be investing millions to dismantle one of its North Sea oilfields - the Brent Spar platform - The Journal reported.

North-east company Able has been awarded the contract and has already completed 20 decommissioning contracts for smaller oil fields.

At an NOF Energy-organised meeting, Austin Hand, general manager of decommissioning and restoration at Shell E&P UK, said: "Many of the decommissioning projects have been moved to the right over the years as everyone chases the extra barrels but the industry is now reaching a tipping point and decommissioning is becoming a reality."

For contractors this spells good news. By 2040, it is expected decommissioning plans will total £35 billion.

Over the rest of the decade, decommissioning expenditure is predicted to average £1 billion per year.

Activity will centre around 40 platforms and 80 fields that have reached the end of their lives. These will range from unmanned platforms in the southern North Sea to integrated facilities located in the central and northern parts of the North Sea.

In a bid to make it easier for companies to source businesses to help with their decommissioning efforts, David Hardy from oil and gas consultancy Hardy AVAAR, has created a consortium in the north-east of engineering contractors and ports.

The group is expects that it will capture 20 per cent of this work, creating more than 7,000 jobs, The Journal revealed.

Decommissioning of the Brent oilfield was commissioned through this platform. During the project, the four topsides will be taken away. Three concrete pillars will be left in the North Sea, as they may collapse if removed.

Able expects to create around 100 jobs during the 18-month construction period of a new quay, while a six-year recycling contract will lead to a further 100 vacancies.

This comes at a time when activities are being ramped up in Aberdeen. Statoil has recently announced that it will be creating 200 jobs in its North Sea head office.

What's more, 500 offshore jobs will be added to support production from the Mariner field.

Production will begin in 2017, with over $7 billion (£4.2 billion) invested in the project over the 30-year lifespan of the field.

Scottish secretary Alistair Carmichael says the creation of more opportunities in Aberdeen "reflects the city’s status as a global oil and gas hub and shows that for multinational companies like Statoil the expertise and skills available in the North East are an invaluable resource in themselves".

Yet decommissioning will continue to be big business for contractors. Between 2013 and 2022, £10.4 billion is expected to be spent on this.

As part of this, according to Oil and Gas UK, over 2,300 kilometres of pipeline, infrastructure from 74 fields, more than 70 subsea projects and over 130 installations will take place over the next decade. This will require access to a range of skills in order to be completed successfully.


By Victoria McDonnell

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