The Press and Journal (Aberdeen and Aberdeenshire)
Ports get set for decom boom
North Sea: Key will be keeping costs down to compete with rest of Europe
With decommissioning edging its way to the forefront of North Sea industry minds, UK shipyards are already vying for a slice of a pie thought to be worth £50million over 30 years.
Ben Wilby, analyst at Douglas Westwood, believes there should be enough decommissioning work to keep UK ports busy once the market gets into full swing.
More than 250NorthSea fixed installations, 250 subsea production systems, 3,000 pipelines and 5,000 wells need to be dealt with.
And although lifting topsides in one fell swoop looks impressive, there is more to decommissioning than the headline-grabbing projects such as Shell’s plan for the removal of the Brent Delta topside.
Many ports in Scotland have already invested in bringing their facilities up to scratch, are doing so now, in the case of Dundee, or have plans to do so in the near future, such as Aberdeen.
Even the relatively small ports like Montrose can play their part by taking in pieces of equipment which have been cut up and harvested at sea.
But Maersk’s recent de- cision to award the decommissioning job for the Janice floating production unit to a port in Norway, a country which benefits from having ultra deep-water berths, has caused concern UK rivals are missing out.
Mr Wilby said one of the keys to securing decommissioning work will be keeping costs down.
He said: “There are a lot of yards in Europe that are more experienced and could be cheaper, so getting costs right from the off will be crucial.
“We already have visible individual examples of projects and I think there will be a lot more activity in two years and more projects going around, so being competitive with Europe is important.
“Even south-east Asia might be cheaper than the UK. It has generally been cheaper to build things elsewhere and bring them here. We don’t want to see that happening again with decommissioning.”
Mr Wilby also said government regulation would play a part. Decommissioning tax relief means the Treasury could be lumbered with covering a large portion of the costs.
If that transpires, the UK Government will likely try to ensure British yards are favoured by operators.
Ultimately, the market will decide who has the best offering.
“Operators like dealing with companies with track records,” Mr Wilby said. “They want things done as cheaply but as safely as possible. Issues with safety always come back to bite operators. They want to know they can hand things over and they care of.”
Over the coming weeks, the Press and Journal’s sister website, Energy Voice – at energyvoice.com – will find out what is being done to help UK bases win more work in the sector.
“There will be a lot more activity in two years and more projects going around”