As global economies transition away from fossil fuels towards more sustainable energy sources, the shutting down of oil and gas operations presents a huge decommissioning challenge.
The UK’s North Sea fossil fuel infrastructure, for example, comprises 250 fixed installations, 3,000 pipelines and 5,000 wells, with projected decommissioning costs ranging from £39 billion to £80 billion.
But with challenge comes opportunity. As decommissioning activities increase, more and more suppliers are looking to expand into this area to take advantage of lucrative contracts.
For operators, this widening pool of decommissioning capability can make supplier selection a difficult process. So it’s important to understand how buyers and suppliers of decommissioning services benchmark against the industry average. Armed with insights into supply chain trends and behaviours, operators can make informed decisions to help minimise risk and cost.
At Achilles, as part of our global supply chain services and solutions, we have captured a wealth of decommissioning data via our bespoke FPAL platform. Leveraging this data, our decommissioning trends report offers vital insights into buyer and supplier activities and characteristics.
For example, from our data we can see that 65% of organisations sourcing decommissioning services are operators.
Next come contractors, at 25%, followed by government/public agencies at 10%.
This information could be of major value to suppliers, particularly SMEs looking to grow their decommissioning business through accurate buyer targeting.
Our FPAL performance feedback scores also show us that health and safety trends higher within decommissioning compared to the FPAL industry average, as does customer interface, planning and delivery and skills, competence and training.
Using these performance areas as a benchmark, operators and other buyers can begin to set rigorous selection criteria for their own decommissioning supply chain.
Similarly, observations made within our report offer food for thought for buyers and suppliers alike. For instance, whether suppliers have the right asset base in place (for example heavy lifting facilities) or whether they are too focused on “reverse engineering” are key issues for buyers to consider.
And for suppliers, looking at whether buyers are expanding their procurement categories, for example to include scrap steel contracts, could open up new service avenues and opportunities.
While our data-based decommissioning research is available as a first-step analysis, we also offer bespoke benchmarking to meet individual clients’ needs.
As a global leader in supply chain management solutions and insights for the oil and gas industry, we can leverage data on a range of sector-specific disciplines and activities.
In this way, we are committed to helping clients optimise and manage their supply chains now and in the future.
To benefit from our decommissioning data and insights, get in touch with the Achilles team today – www.achilles.com.
Monika Ziaber is customer engagement manager at Achilles
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