Oil and gas companies need to engage earlier with regulators and learn from past projects for the North Sea decommissioning sector to realise its potential, according to an industry chief.
Jim Christie, head of decommissioning at the Oil and Gas Authority (OGA), said companies know they must deal with late life assets and are starting to focus on the challenge at hand, even though there is no profit in it for operators.
But he admitted the rules were not always clear and said the OGA was determined to improve communication between the UK energy department and industry.
Mr Christie said: “We want to improve guidance on what the regulations are and disseminate that throughout the industry.
“I can appreciate there is sometimes a lack of certainty around regulations – sometimes there is not enough to go on.
“At Marathon Oil (one of Mr Christie’s former employers) we engaged with regulators at the earliest opportunity on projects, whether they were in the North Sea or the Gulf of Mexico, and that only brought benefits to us.
“It was may be unusual but we actively encouraged that – regulators appreciated early involvement.”
Mr Christie was speaking ahead of today’s launch of the OGA’s Decommissioning Delivery Programme.
He said the programme explains how the OGA planned to achieve the objectives that were set out in its decommissioning strategy.
Cost certainty and reduction was one of the priorities highlighted in the strategy document, which was published in July.
Mr Christie said the OGA intended to provide a credible cost estimate by the end of the year.
The last estimate provided by an independent adviser was £47billion through to 2050, but the OGA wants to come up with a fresh figure with input from various organisations.
Mostly importantly of all, the programme shows how costs can be lowered.
Whatever the cost estimate comes to, the OGA wants to cut it by 35%, said Mr Christie, who started his career in construction in the Middle East.
Improving understanding of regulations will play a part in delivering the strategy, but the OGA is also likely to focus on learning from other industries’ approaches to decommissioning.
Mr Christie said: “Oil and gas does not have all of the answers for decommissioning.
“Other industries have executed work in many different ways, so how best do we employ business models that are already out there?”
The delivery programme identifies which of those models the OGA wants to test next year.
Mr Christie also said companies could afford to take their time with decommissioning, unlike with exploration and production, where time is of the essence.
He added: “For new production, speed is key. Companies want production as soon as possible. The economic return is not there for decommissioning so the schedule becomes your friend.”
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