An Aberdeen energy services company has landed a near-£200million contract with oil giant Shell as the north-east gears up for a multitude of offshore decommissioning projects expected to lead to thousands of new jobs.
PSN has won a major deal for dismantling work in the Brent field, which one of its bosses said yesterday would position Aberdeen as the global centre of excellence for offshore decommissioning.
The Brent Delta project will create an initial 70 onshore management and engineering jobs at PSN in the Granite City.
The contract award marks a significant step towards the final chapter in the 30-year-plus life of the Brent field – Shell’s flagship asset in the UK North Sea.
Decommissioning of the Brent platforms will be a major opportunity for the likes of Lerwick, Nigg and Peterhead to pick up onshore work dismantling installations.
PSN is to prepare the Delta rig to be taken out of operation. The work is expected to begin late next year.
There are four installations in the field – the others being Alpha, Bravo and Charlie – and their multibillion-pound decommissioning over more than 10 years will be the largest project of its kind in the world.
PSN is now in pole position to repeat its Delta work on the three other Brent platforms, which could be worth a total of several hundred million pounds to the energy services company.
Around 700 people currently work on the Brent platforms and a similar number will be needed offshore during the decommissioning.
Aberdeen-based PSN, which has a worldwide workforce of more than 8,000, has been involved in several other North Sea decommissioning projects since the 1990s, but this is its biggest to date.
Peter Brown, UK managing director of PSN, said yesterday: “The award of this contract following a competitive tendering process reflects the strength of our ability to provide Shell with proven decommissioning expertise.
“We are confident the contract will provide a significant number of new job opportunities in the decommissioning services sector. It will also position Aberdeen as the centre of excellence for offshore decommissioning.”
Brian Nixon, chief executive of decommissioning industry body Decom North Sea, said: “This news is highly significant and marks a milestone in the history of the North Sea.
“The fact such a major engineering contractor as PSN has been awarded the contract is great news for the region’s supply chain as many smaller companies will benefit in turn and gain experience that will stand them in good stead in years to come.
“It is vitally important that the UK industry and supply chain is prepared to secure maximum opportunity from the North Sea decommissioning programme and, through doing so, becomes globally recognised as a source of expertise and experience.
“With a programme of decommissioning expenditure in the North Sea estimated at up to £30billion by 2040, the north-east is one of the regions ideally placed to win work.
“The northern North Sea has larger, more substantial platforms which will require more innovation and effort to remove. Annual decommissioning spend in UK continental shelf is forecast to top £1.5billion within 15 years.”
Paul Dymond, operations director of industry body Oil & Gas UK, said: “Over the coming decades, the UK oil and gas industry will begin large-scale decommissioning of some of the 470 installations which have been producing oil and gas over the past 30 to 40 years.
“Each decommissioning project is a complex process with considerable technical, economic, environmental, health and safety issues which the industry has to address and manage properly.”
The Brent field was discovered in 1971 and oil production began in 1975. Following a £1.2billion field development project in the mid-1990s, Brent became mainly a gas field.
Shell said that, as Brent’s reserves fall, it has moved from providing 10% of the UK’s gas consumption to around 2%.
The energy company said yesterday it saw the UK, North Sea and Europe as a core business area and continued to invest significantly.
It said Brent was a huge success story, having produced around 2billion barrels of oil and about 5.7trillion cubic feet of gas. It has exceeded its original planned lifetime by 10 years.
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