Potential and pitfalls: the decom landscape

It’s no secret that the biggest challenge in decommissioning is that it continues to be a rapidly evolving sector. And whilst that’s not unique to decommissioning, it can be a bit more of a moveable feast than most.

Whilst great strides have been made in clarifying upcoming projects – the North Sea Transition Authority’s Energy Pathfinder to name but one – the supply chain can still find it difficult to predict when projects will take place, what the approach will be to each and, crucially, to whom the operator or tier one supplier is likely to issue a call for tenders.

Where do the valuable relationships lie?

Until recently, the heavy lift companies were the recipients of many of the large tender opportunities which included activity outwith the heavy lift remit. Making them the subsequent disseminators of the various contracts required means, of course, that it made sense for the supply chain to start building relationships with the heavy lifters. That’s been a great opportunity for some meaningful collaboration: in this sector, the greater understanding we all have of each other’s business, the more efficient and effective the results will be.

Interestingly, however – and in tandem with an increasing focus on the volume of well P&A work still to come – a new pattern may be emerging where well companies are being approached to submit large decom tenders, which cover much more than well P&A. This is understandable, given the level of sector spend committed to P&A activity and in turn, is likely to galvanise the rest of the supply chain into refreshing or building relationships with them. Not surprising considering the level of spend on well P&A.

Again, this is ideal for improving collaboration right across the sector, and is also influencing the continued development of contracting models, as those with liability work out if there are new ways to decide when, how and with whom they work. This is a great opportunity and as they say, fortune favours the brave - but it’s hard for supply chain companies to be both risk averse and entrepreneurial at the same time. However, there are examples of new alliances springing up across the sector which are, perhaps, the answer to this conundrum.

How much of a gamble is the supply chain taking?

I predict that this new landscape, together with a continued drive from the wells sector, has the ability to create a steady stream of decommissioning work for the supply chain – but fundamentally it’s critical that the supply chain gets the sight and understanding of upcoming opportunities that give them the confidence to invest time and money in this sector.

If that doesn’t happen, my concern is that a focus upon the more certain renewable energy sector may start to draw the supply chain’s attention away from a decommissioning sector that has so much potential. This may be why we’re starting to see the emergence of some real market disruptors; companies who bring no previous oil and gas experience but do offer a fresh approach to our projects and are willing – and able - to roll with the punches of a volatile timeline. But that doesn’t change the fact that we have an existing skilled and highly capable supply chain, which will eventually benefit not only from the inevitably increased decommissioning schedule, but also from the ability to export its expertise to the growing overseas decom market.

In my day to day job, I’m a part of the decommissioning supply chain and I know how critical solid intelligence is when it comes to investing in decom as a specialism. This is true for every region in which decommissioning is taking place, but if we look at it from the UK’s perspective - where the decom sector is at its most evolved - then it’s critical that we don’t impede our supply chain’s capability to build a highly profitable, exportable track-record. We are leading the way, others are learning by our example, and if we can’t continue to provide that example then there is the potential for a huge knock-on effect across the global decommissioning sector.

I believe that the answer must lie in a solid alignment between the operators’ plans and the supply chain’s ongoing strategy. A thriving supply chain is the foundation to a successful, efficient and sustainable decommissioning sector which plays a central role in the energy transition. We need to ensure it’s given the very best chance of survival and there is no more suited organisation better placed to be at the Nucleus of the international decommissioning sector than Decom North Sea.