Australia

EXCEED, an industry-leading specialist in delivering well management and performance improvement solutions to the energy sector, has announced the launch of EXCEED Australia, as it eyes the country’s burgeoning decommissioning sector and a revitalised offshore market.

The company continues to implement an unwavering strategy of international expansion with its fifth overseas entity, which builds upon recent expansion into Mexico and Norway

Brad Girdwood has been nominated to steer the ship, after his appointment as Operations Manager, Australia. He brings 30+ years’ local and international experience to EXCEED Australia.

Girdwood commented, “In the pipeline for some years, the time is now right for EXCEED to make its mark upon the region. In particular, significant legislative developments surrounding the decommissioning of Australia’s offshore and onshore assets have accelerated the sector’s timeline. Honed in the North Sea, EXCEED’s spectrum of decommissioning capability provides this evolving US$40.5bn market with critical experience and expertise.”

In with ICON

EXCEED’s entry into the local decommissioning and well management market is bolstered by the advent of a collaborative relationship with Perth-based oil and gas services provider, ICON Engineering.

EXCEED Managing Director, Ian Mills said, “ICON’s impressive track record in delivering unrivalled innovative, practical turnkey solutions to the offshore field development industry in both facilities and in support of drilling operations is entirely congruent with our approach across all stages of the well lifecycle.

“Since 2010, EXCEED has built upon its well management service through the development and implementation of efficient intervention and abandonment programmes, expertly executed in full compliance with all North Sea regularity requirements. Initially, our joint objective with ICON is to provide the emerging Australian decommissioning sector with the end-to-end project service it requires, with full focus upon compliance, safety and efficiency.”

To hear more about the blossoming opportunities presented by the Australian offshore market, be sure to attend OWI AUS, in Perth 23-24 November. To find out more information follow this link: https://www.offsnet.com/owi-aus/conference-brochure

At the OWI AUS Baker Hughes webinar, Michael Lewis, Service Business Development Leader at Baker Hughes, was joined by a panel of industry experts as they explored a number of challenges and opportunities being faced by the Australian offshore community.

Collaboration and local availability

Lewis opened the session by reflecting on light well intervention (LWI) which can bring tangible benefits to operators and suppliers in terms of reduced costs, faster operations and lower carbon footprint. The challenge, the host continued, is capturing these advantages and using global knowledge to do so. He asked how this can be achieved, and what is the importance of ensuring equipment is available locally for immediate deployment.

Mark de Castro, Business Development Manager at Sapura Energy Well Services,
was the first to respond, and explained that collaboration was a key part of this and suggested that information and lessons acquired from previous projects should be shared not just within organisations but with strategic partners, contractors, etc. The industry needs to share information from the start, rather than withholding or waiting to be asked.

The panellists echoed these sentiments with Grant Pierce, Subsea Completion & Well Intervention Consultant, Intervention Performance Ltd., adding that the withholding of information is not something companies actively pursue, rather it is just something traditionally inherent in the industry. Jay Southwell, APAC Subsea Services Leader, Baker Hughes suggested that altering this will require a change in mindset, something that needs to be challenged and which will ultimately help all players within the industry.

Turning to local availability de Castro said, “Local availability can be the difference between work going ahead or not. Preparation, shipping times etc are all major influences that can determine whether an operation goes ahead in light mode or rig mode which could add millions of dollars to cost. Having access to local engineering/facilities is a significant de-risker for these campaigns to take place both for the fast tracking it facilitates and how quickly unexpected events can be dealt with on a campaign.”

Fostering the next generation equipped with the latest technology

In the last 18 months, Lewis said, the industry has undergone a downsize with lots of experienced people retiring or leaving for other sectors. Attracting new talent has always been a challenge, but now more than ever it appears to be of paramount importance. Therefore, Lewis asked, could the industry ensure there is a competent new generation ready to enter the workforce and how can new technology support this?

Southwell pointed at the importance of working with universities, developing apprenticeship programmes and sponsoring graduate schemes as essential to foster the idea that it is an exciting time to join the industry. He also pointed at cross-training between product companies, something that Baker Hughes has been very successful in, which has helped ensure that a new, capable, workforce is ready to take the reigns in the future.

Francis Norman, General Manager Decommissioning and Strategy at National Energy Resources Australia (NERA), built on this by pointing at competency benchmarking as an area which can put people off companies. He said, “There is a tendency to think what we do is so different to what competitors do and so we end up building all these internal competency benchmarking and internal training which in fact mirrors what competitors do. This can be a significant cost to a lot of businesses.”

He advocated, instead, common competency frameworks which can make it much easier to identify where some shared skill gaps may be. He added, “If people move around you are not looking to completely rebuild them and make them forget everything they have learned before you hire them. When you look at the costs organisations expend on doing this it is astronomical.”

The panellists explored how the introduction of new technology, in the form of remote communication for example, can help to attract and train the next generation of engineers and commented on some advances which they will be working with, and which will surely help the industry.

De Castro commented that remote operations and remote control brings safety enhancements and cost enhancement and advances in the integration of machine learning, and machines becoming semi-autonomous will be a step forward. This will be bolstered by things such as low orbit satellite which will reduce latency and the cost of high bandwidth.

Returning to the conversation, Southwell also highlighted the importance of utilising the vast amount of data the industry holds and by introducing advanced software and AI this can really become a formidable weapon for operators to become more effective with diagnostics, monitoring wear and tear, and making decisions on interventions and performance etc.

Australian Decommissioning

Decommissioning has been a hot topic in Australia due the ongoing debate around the Northern Endeavour FPSO. With many more Australian assets coming to the end of their productive life, Lewis asked the panellists how the cost of decommissioning can be reduced and how can operators be encouraged to perform this work.

Norman took the chance to note that there was a staggering opportunity for decommissioning in Australia, highlighting that there was US$40bn+ worth of work that needs to be executed over he next 20-30 years. In order to being nibbling away at this, he suggested it was important to disseminate such information to ensure everyone understands the size of the challenge ahead. Once done, relatively simple ideas such as sharing equipment for campaigns can have an enormous cost reduction effect.

De Castro commented, “If we understand the scope of work and the timing of the scope it will help. In the past we have seen service providers make investment into the region on the expectation that work would follow and it didn’t. They therefore had to wear the costs on a gamble effectively. More clarity on timing and requirements of operators would be helpful.”

The panellists also noted the importance of learning lessons and best practices from around the world, especially from regions where decommissioning is more regularly carried out. Pierce added that an open mind about contracting models would be essential here. While it wouldn’t be advantageous to take a whole model from other regions and apply it in Australia, it would help to take pieces or ideas from contracts (such as West Africa’s contracting models regarding vessel shares) and change them to suit.

One of the biggest decommissioning challenges which is faced in Australian and global waters alike is the difficulties with entering older wells where, often, data and information is lacking. The panellists noted that in addition to this, the condition of equipment is continually degrading with every year that passes. Whilst this is enough to put operators off from conducting decommissioning work, in reality it should be an encouraging factor. As de Castro added, “Regulations are also becoming more onerous. The longer operators delay, the cost and risk are only going to go one way due to those three factors. It therefore presents a good case to move quicker.”

Despite this, Southwell commented, “I think the future of decommissioning in Australia is exciting and something that will be very prominent going forward. I would love to see it as an add on in the life of a field as well, as opposed to it being pushed after production ends. All operators know its coming; it was always on the cards and will always be there. If we can plan for it now, they can reap the rewards from a cost perspective. We are still fairly young compared to other regions, described as a teenager, we are still learning. We have a great opportunity to take lessons from other regions therefore.”

These topics, and more, will be discussed in further detail at OWI AUS, in Perth 23-24 November. To find out more information follow this link: https://www.offsnet.com/owi-aus/conference-brochure

Perth Basin oil producer Triangle Energy, on behalf of the Cliff Head Joint Venture, has announced that the CH-6 well at the Cliff Head Oil Field returned to production on 23 August, following the completion of the workover programme.

The workover included the installation of a new ESP in a more technically and cost effective configuration than previously adopted. All of the technical and well integrity expectations of the programme were met, and the well was handed over from well services to production on 22 August.

Performance testing and verification is currently underway, and the company expects that production associated with the CH-6 well is expected to stabilise at around 120 bopd, bringing the total field production to approximately 850 bopd.

The company’s Hydraulic Workover Unit provider, Clear Cut Interventions (CCI), with the assistance of R&D Solutions, successfully deployed the first Omega Gemini plug on Slickline using a time delay hydrostatic setting tool in an offshore environment in Asia Pacific. Omega provided virtual training to the CCI supervisor due to COVID travel restrictions preventing a specialist being deployed to Australia.

The joint CH-6 and CH-11WI workover campaign provided the company with the rare opportunity to evaluate the condition of the downhole completion and wellbore equipment with regards to long term well integrity and corrosion management.

Robert Towner, Managing Director, Triangle Energy said, “Well integrity management is a priority at Cliff Head, and the condition of the recovered equipment from both the CH-6 and CH-11WI wells showed no visible evidence of corrosion or physical degradation.

“This is an excellent outcome considering the years since this equipment was installed, and supports our plans to continue to extend the operating life of the facility. The company looks forward to future well activities and exploring asset life extension opportunities.”

Triangle Energy (Global) Ltd is an ASX-listed oil producer and explorer based in Perth, Western Australia. The company operates and has a 78.75% interest in the Cliff Head Oil Field,
encompassing the onshore Arrowsmith Stabilisation Plant and offshore Cliff Head Alpha Platform. Triangle also has a 50% share of the Mt Horner L7 production licence and a 45% share of the Xanadu-1 Joint Venture, both located in the Perth Basin. The company continues to assess acquisition prospects to expand its portfolio of assets.

READ Cased Hole, a leading provider of cased hole logging services and technologies to the global oil and gas industry, has appointed Kevin Giles as its new Managing Director.

Giles has worked within the well intervention market for more than 30 years and, prior to joining READ, he spent six years at Welltec in senior management positions. Before that, he worked with Schlumberger’s electric wireline business for 20 years, progressing from offshore-based operations to key client account management and then to leadership of its UK cased hole wireline business.

The new Managing Director has now been at READ for some time, having spent the last three years as global commercial director for the company. In his new role, he will be responsible for the day-to-day management of the READ business worldwide. This includes all activities at its hub facilities in Aberdeen, Doha, Houston and Anchorage where the company supports its valued customers including oil and gas operators, major service companies, and specialist business partners.

Emerging from uncertainty

Giles said, “This is a significant time for our industry, and I am delighted to be stepping up to lead the READ business as we start to emerge from a long period of uncertainty and disruption. It’s never been more important for us to support new and existing customers and business partners looking for robust cased hole logging expertise. As an organisation, we will be wholly focused on delivering READ’s exemplary standards of safety, service quality, technical excellence and customer care.”

Tor Erling Gunnerød, Norvestor Equity Partner and Chairman of READ, added, “Kevin’s knowledge of the global cased hole logging market, the technologies involved, and the needs of oil and gas operators is second to none. I have every confidence that Kevin will continue successfully growing READ’s international reach, customer base and service portfolio, and look forward to seeing the company emerge even stronger under his leadership.”

ICON Engineering, an oilfield service company, and IK-Group, a supplier of specialist products and services for subsea and topside pipe and pipelines, have formed a strategic alliance to offer operators repair, decommissioning intervention services to the Australian offshore market.

The innovative provision of often bespoke solutions to offshore engineering problems was a common factor that led to the alliance. This partnership will combine IK-Group’s 30 year experience working in emergency repairs for offshore subsea equipment as well as ICON’s expertise installing and servicing offshore platforms, for which the company received an engineering award from the British Government.

IK-Group COO, Adrian Gamman, said, “With ICON’s local presence and IK’s track record, we believe this agreement will suit the Australian market very well. ICON’s head office is located in Perth WA, which will enable ICON to provide IK-Group’s solutions to the local market with a much quicker response time and a better understanding of the local market.”

“Specifically, this will be hugely beneficial to the end client when working on fast track deployment of emergency repairs that are synonymous with IK-Group. These are exciting times, and we are looking forward to growing this relationship in the years to come,” Gamman added.

David Field, ICON Managing Director, commented, "ICON and IK-Group have very similar innovative cultures. Our respective, and complimentary, product and services lines have all evolved from solving technically challenging and real problems, often when there simply isn't a solution anywhere.”

“At our respective Company's cores are very capable technical and management teams, experienced with execution in the field, and the proven ability to respond quickly.

“With Covid-19 restricting travel it makes a lot of sense for the two companies to collaborate by sharing our service offerings on either side of the planet. Nothing beats face to face meetings with Clients; the collaboration means there is a way to meet face to face to understand the problem and develop solutions using our combined technical horsepower.”

The Government of Australia has taken the next step in its plans to remove the Northern Endeavour FPSO facility by releasing a Request for Expressions of Interest (REOI) for Phase 1 decommissioning works, in spite of the debate that continues to rage over the decommissioning levy.

In 2019, the 170,000 bpd Northern Endeavour FPSO was shut down by the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) after an immediate threat to health and safety was found at the facility.

The task of decommissioning the infrastructure fell to owners Northern Oil & Gas Australia (NOGA) but, in late 2019 the company went into liquidation and so the facility has been abandoned, with the national government forced to maintain the facility. At the end of 2020, the government decided it was finally time to push the facility into retirement, announcing it would take on responsibility to decommission the FPSO and all related infrastructure.

In order to cover the estimated cost of US$200mn for this task, the Australian government issued a levy to the oil and gas industry to help foot the bill, which was met with disproval from many organisations such as the Australian Petroleum Production and Exploration Association (APPEA), ExxonMobil and Chevron.

Despite this, the Resources, Water and Northern Australia Minister, Keith Pitt, is pressing ahead and said that the release of the REOI was the next step in the process to disconnect and decommission the Northern Endeavour from oilfields in the Timor Sea.

A REOI from the Department of Industry, Science, Energy and Resources has been published on AusTender, inviting qualified and experienced organisations to demonstrate their capability and capacity to undertake the Phase 1 works to decommission and disconnect the FPSO from the related subsea equipment.

“The Australian Government committed to decommission the Northern Endeavour last December to remove potential future risks to the environment,” Pitt commented. “The department intends to use this process to shortlist organisations for a more detailed request for proposal stage later in the year.”

Responses to the REOI are due before 2:00pm Australian Eastern Standard Time, 29 July 2021.

A report by Rystad Energy has predicted that with Australia about to see the largest-ever wave of offshore development wells reaching the end of their producing life, the decommissioning market in region is set for a huge uptick.

The report shows that Australia’s number of ageing wells nearing retirement will jump from 160 (today) to more than 440 by 2026, with a further 172 offshore exploration wells waiting in the queue.

As a result of this, the Australian decommissioning market may exceed a total of US$40bn a figure which could even double, depending on how many decommissioning projects materialise.

“Recent developments have made it more difficult for operators to sidestep decommissioning obligations by selling ageing assets, as the market appetite for such assets is drying up. Many producers will have to deal with the issue in coming years, with ExxonMobil having the lion’s share of liabilities in Australia,” said Jimmy Zeng, senior analyst at Rystad Energy’s upstream team.

Rystad Energy’s analysis of the P&A potential takes into account the production status of each operator’s offshore wells, the likelihood of producing fields ceasing output in the coming five years, wells that have been already suspended but not yet abandoned, along with partially abandoned wells. While development wells make up the bulk of the total, exploration wells are also in need of P&A to a lesser extent.

It is estimated that 890 offshore wells in total were drilled in Australia before 2015, of which 108 have been permanently abandoned. Of the 782 wells not yet abandoned, Rystad identified a group of wells that we consider good candidates for P&A activity in the years ahead. Filtering out wells that are more likely to be identified for upcoming P&A, 440 wells are P&A candidates, the majority of which are in the Gippsland Basin.

The report continues by noting that the dominance of the Gippsland basin is to be expected given the legacy of offshore development in the region, driven by ExxonMobil and BHP’s Gippsland Basin Joint Venture (GBJV). Within the Gippsland group, most wells are located on fixed platform facilities, while in other basins the distribution of facility types is more mixed. New resource developments in the Gippsland Basin are becoming more capital intensive, but the outlook for P&A opportunities in the area should prove attractive to service suppliers.

In the North Carnarvon Basin group, Rystad has identified an age distribution that shows non-producing wells are relatively ‘younger’ than those in the Gippsland, with the majority being no more than 20 years old. Even so, various measures intended to ensure operators fully decommission facilities and wells are likely to provide a tailwind for service suppliers seeking P&A mandates in the North Carnarvon basin as well – spurred by the industry controversy over Northern Oil & Gas’s inability to fund its decommissioning of the Northern Endeavour FPSO and associated wells.

ExxonMobil leads the way in its decommissioning liabilities, with a rapid increase in the number of wells likely to cease production over the next five years. While this is a high-cost endeavour, most of these wells are platform-based, where per-well abandonment costs are likely to be significantly lower than for subsea wells.
Furthermore, regulatory pressure on ExxonMobil to decommission these wells has increased significantly lately.

Outside of ExxonMobil’s high well burden, operators Santos, Woodside, BHP and Vermillion Energy will also experience growing decommissioning obligations in the next five years. Woodside and BHP have mostly subsea wells in this category, which could mean their decommissioning bills will be higher on a per-well basis. Woodside recently communicated its intention of starting abandonment of up to 18 subsea wells on the Enfield field from 2022 to 2024.

While this could be a very costly development for operators in the region, it opens up a huge opportunity for service providers and companies involved in decommissioning operations who could see many campaigns coming their way as these wells continue to age.

The Australian oil and gas industry is, unfortunately, making all the wrong headlines at the moment as a serious row over a decommissioning levy proposed by the Australian Government continues to rage.

The tinder for this firestorm is the Northern Endeavour floating production storage and offtake (FPSO) vessel, moored between the Lamarinaria-Corallina oil fields, which was shut down by the National Offshore petroleum Safety and Environmental Management Authority (NOPSEMA) after an immediate threat to health and safety caused by structural corrosion was found at the facility. Since the former owners Northern Oil & Gas Australia (NOGA) went into liquidation in late 2019, the national government has been maintaining the vessel until, at the end of 2020, it decided to decommission the facility and all related infrastructure once and for all.

To help cover the US$200mn expected cost of doing so, in its 2021-22 budget, the Australian Government announced it would be enforcing a levy to the Australian oil and gas industry, a decision which has so far come under heavy criticism from the sector.

Last week, Australian Petroleum Production and Exploration Association (APPEA) Chief Executive, Andre McConville, led the criticism against the Australian Government calling it an outrage that many companies who were never involved with the project will have to help pay. He also noted that such a decision could potentially hold back the Australian economy as well as the 80,000 jobs that it supports. 

Now ExxonMobil and Chevron have expressed their disapproval towards the Australian Government’s decision as well.

As reported by Reuters, a spokesperson for Chevron commented, "Chevron Australia is committed to working with the government on a decommissioning policy framework that would effectively preclude the need for this type of ad hoc, arbitrary action.”

Similarly, ExxonMobil noted that it had established a track record of executing successful decommissioning operations around the world and so shouldn’t have to shoulder the burden of covering costs for other companies as well. The company, therefore, was disappointed in the decision by the federal government, as detailed by Reuters.

While the debate will no doubt carry on for some time, the problem remains that at some point the Northern Endeavour and associated infrastructure will have to be decommissioned and dismantled. At this stage, however, who will pay for it is anyone’s guess.