The Cost Estimate is an essential document in the preparation of decommissioning cost projects and entails the quantification of commercial and schedule risks. This study lists the Lessons Learnt from the preparation of Cost Estimates for North Sea decommissioning studies. It reviews on a holistic manner the considerations by Estimators on the impact of statutory and contracting regime and the major influences of cost in decommissioning. This study also proposes theoretical cost savings and efficiencies currently being explored in the North Sea.

This study was conducted via interviews with a leader in North Sea decommissioning as well as extensive research of journals and web-based articles and releases. The identification of major cost elements which influenced decommissioning cost applied probabilistic analysis using Monte Carlo simulation.

Following the processing of data received, the author then applied the results to current conditions in Asia Pacific by considering the related challenges faced (and anticipated) by the region's offshore decommissioning industry.

The Lessons Learnt have been summarized into 5 main areas:

  1. Development of the Cost Estimate: Areas that have been highlighted as potential hazards include the preparation of the accuracy of estimates and cost consolidation over multiple projects. Suggestions are made to include the application of probabilistic analysis in cost estimates, a process to challenge cost-driving assumptions and adopting integrated Cost & Schedule Risk analysis in the development of the cost estimate.

  2. Collaboration and Data Analytics: The report highlights the opportunities that regional collaboration can drive a richer environment for data analytics. In the North Sea, organisations including the Oil and Gas Authority (UK) and the OSPAR commission have been tasked with centralising and disseminating.

  3. Statutory Regime: it is imperative to remind ourselves in this region that operators, and contractors, in the North Sea have had to keep up with changes in regulations and ever greater environmental obligations.

  4. Contracting Regime: Consideration of Contingent Liabilities and financial responsibility for decommissioning, even those who have sold, relinquished or otherwise disposed of their license is discussed. Contracting Strategies as well as the use of Decision Trees, Project Controls and Project Management in contract preparation and insurances are discussed.

  5. Adoption of Circular Economy Principles: Findings in the North Sea suggest that increasing re-use over the recycling of equipment and structures on installations can increase values by between five and seven times.

You can access this article if you purchase or spend a download.