As it stands, the focus for the North Sea is ‘new’. New fields. New projects. New production. New energy sources.
A revival in drilling means available rigs are being snapped up like hot cakes as companies try to ensure their operations run to time.
Though generally unpopular amongst oil and gas firms, the energy profits levy – and the investment relief included as part of it – has given necessary momentum to some sluggish projects.
And with the oil price hovering around $100 a barrel, it would stand to reason that retiring old fields would not be a priority for operators.
It is a prediction that has been echoed by analysts too, and there are fears that with companies being incentivised to spend on new projects, decommissioning could be given the cold shoulder.
Oil price not slowing decom drive
That may well be the case in some instances, but well plug and abandonment (P&A) specialist Well-Safe Solutions’ activity levels suggest it is not the case across the board.
“Since the latter half of 2021, and certainly the first six months of 2022, it has been extremely busy,” said company chief executive Phil Milton.
He is optimistic too that even with rig day rates increasing in line with demand, meaning P&A campaigns will be more costly, work for the Aberdeen firm wont slow.
“We haven’t seen any impact to date from the energy profits levy or any direct correlation in the number of opportunities,” he said.
“Something that probably protects the wells, in terms of still seeing them going forwards, is that a number that we have been contracted to complete – or are working towards – have already had their route to export removed.
“Whether it be the pipelines being decommissioned, or the infrastructure that they tie into being removed, the FPSOs et cetera; without that it really is a case of progressing forward to fulfil the obligations that the operators have.”
Mr Milton added: “Part of our model is to offer up a cost-efficient, delivered service, and we like to think we’d always be able to give them to appropriate solution to allow them to fulfil their decommissioning obligations.”
Well-Safe Defender
Fresh from celebrating its fifth birthday at the beginning of August, the company recently named Spirit Energy as the operator for a 14-well contract for the Well-Safe Defender.
It is a first campaign for the rig under its new guise, having been recently acquired from Awilco Drilling, with work expected to get underway in March 2023.
© Supplied by Awilco DrillingWell-Safe chief executive Phil Milton, said: “We took ownership of the Defender from Awilco in early June, and she’s currently undergoing some enhancement work to get her ready for delivering P&A projects.
“It has done a number of projects already, while under the ownership of Awilco, but now the rig will be deployed purely on well decommissioning campaigns.”
Ongoing push to grow the business
Even though it has only just expanded its fleet, Well-Safe is already looking at other opportunities, and further assets “are still very much and then the cards”.
With a chronic shortage of available units, it could be a tough ask, but Mr Milton says there is a “huge amount of support” behind the scenes.
“Our investors are very pleased with the progress that we’ve made in our five years. Covid and the oil and gas downturn impacted our business and our industry, but the way we managed to navigate through it and take Well-Safe forward has been well received by our backer. They continue to be supportive.
© Supplied by Well-Safe Solutions“We’re still looking at other opportunities to grow the business – both in the UK and overseas – and further assets are still very much on the cards.
“The land market is also something that we’re very interested in, particularly in continental Europe, so there’s openings there that we are exploring and progressing.
“There is a real appetite to continue to grow the business and to offer more of a solution around well decommissioning to our customers.”
A global game
In the last year particularly, Well-Safe has built up a sizeable pipeline of work, bagging numerous contracts for P&A campaigns with operators including Ithaca Energy and CNR International.
The company’s Guardian rig headed to the North Sea for its first UK contract, while a first deal for the Protector was sealed in June.
With a growing number of projects on its CV, Well-Safe is now keeping its radar tuned to emerging decommissioning hotspots overseas.
Mr Milton said: “We’ve got some solid foundations here in the UK. We’ve got three assets and we want all of them safely mobilised and delivering the efficiencies we believe we can put out there. That is our goal first and foremost.
© Supplied by Bloomberg“Moving on from there is to grow our offering into the international markets, and look at areas around the globe where our solution can offer some real value.
“Well-Safe is already delivering a number of engineering desktop studies for customers in Australia, New Zealand, Newfoundland and several other places. It’s really a case of building upon that and taking them from desktop studies into more detailed engineering, and ultimately, helping customers to deliver the projects when they’re ready to do so.
“South East Asia is another key area for us. Our model works really well in highly regulated areas, like the UK. That’s where our value proposition is the strongest.”
Looking for a price ‘sweet spot’
Of course, long-term planning is always going to be a tough ask in an industry that hinges so heavily on the price of a volatile commodity.
“Whether it’s a low oil price or a high oil price, it can always have an impact on our customers’ plans,” acknowledged Mr Milton.
When a barrel of oil is fetching $100, firms will naturally prioritise further development opportunities, but that doesn’t necessarily spell bad news for decommissioning.
Mr Milton said: “With the oil price where it is, it certainly helps our customers, giving them the funds to carry out their decommissioning obligations.
“There’s a sweet spot and prices are higher as it stands, but things are progressing nonetheless.”
Recommended for you
