Scotland's ports: Dismantle the past and build the future

Speaking at the Oil and Gas Industry Conference in June 2016, the Scotland Office Minister at Westminster, Andrew Dunlop, pointed out that the twin challenges now facing the Scottish oil and gas sector come down to finding a way of maximising the recovery of remaining reserves, while also coming up with a strategy to ensure effective and efficient decommissioning of uneconomic reservoirs – and capitalising on the valuable opportunities decommissioning will bring.

The task of ensuring that the industry works as a coherent whole to implement decommissioning successfully, falls to the UK Oil and Gas Authority, which was created as one of the key recommendations of the Wood Review. The OGA opened for business on 1 April 2015, as an operationally independent Executive Agency. On 1 October 2016 OGA became a government company with the Secretary of State for Business, Energy and Industrial Strategy as the sole shareholder.

In its paper on decommissioning strategy, the OGA is quite clear that decommissioning represents a tremendous opportunity for the UK oil and gas supply chain. Companies in this sector have the chance to develop and perfect skills that will give them a critical competitive advantage as decommissioning gathers speed in other oil provinces around the world.

The OGA, along with everyone in the field, recognises that getting decommissioning right is going to involve a difficult balancing act. At present exploration and production companies that discover new, marginal, small reservoirs, often find that wells can be commercially viable if they can tie in to existing sub-sea infrastructure and do not have to go to the expense of laying down their own, or paying for a surface collection vessel. The more infrastructure that is removed from the sea bed, the less viable such marginal finds become. This in turn hastens the decommissioning process. So the OGA’s aim, as it states in its Decommissioning Strategy, is to ensure that all viable options for infrastructure use are explored before anything starts to get ripped out.

In other words, decommissioning has to be carried through in accordance with the Scottish Government’s 2016 Maximum Economic Recovery (MER) plan, which is all about getting every last economically viable drop of oil and litre of gas out of the North Sea.

From the perspective of Scottish ports looking to ensure that they have a role to play in decommissioning, this "careful balancing" simply sounds a cautionary note. It confirms that decommissioning will be a gradually accelerating affair, rather than a massive influx of business tomorrow. In many ways this is just as well, since getting a port into a position to play a key role in decommissioning can require a significant investment.

This means that ports have to be thinking ahead and committing themselves to making the investment early, rather than scrambling to put in place the necessary port improvements to attract decommissioning work. These improvements will include developing large areas of hard standing, and possibly deeper water berths and more quay side. None of these are cheap.

As Stuart Wallace, Chief Operating Officer at Forth Ports explains, the company has already begun a multi-million pound investment involving improvements to the quayside at the Port of Dundee to create one of the strongest quaysides in Scotland. The project is designed to attract both decommissioning work and to give the Port a chance to win a chunk of the offshore renewables business, when work on the offshore wind farms planned by various consortia, really gets going.

"We have contractors coming on site at the Port of Dundee in February and we will complete the build in the fourth quarter of this year. So come 2018 we will be in good shape to win decommissioning business and to continue to serve the oil and gas support sector. We are working with Dundee City Council and a few other businesses in the region to put together a complete decommissioning solution that will cover both the Forth and the Tay estuaries. We already have deep water facilties, local skills and a high quality marine capability and with the port improvements we are making we should be able to compete not only with other facilities in the UK, but with facilities in Europe as well," he says.

To assist it in winning decommissioning business and renewables work, Forth Ports opened an Aberdeen office at the start of 2017 and has appointed a business development manager there. "We are already seeing a very positive engagement with the market, in terms of decommissioning. The evidence of this is that supply chain partners are working much more closely with us to shape a complete offering."

One of Fort Ports’ partners at this early stage is Augean North Sea Services (ANSS), which specialises in handling waste materials from North Sea offshore drilling. Decommissioned parts are going to contain a good deal of material that needs to be recycled and the fact that ANSS has the ability to dispose of this safely will be a strong selling point.

"We have an agreement with them to take some warehousing space and to set up a waste management facility in Dundee, sitting alongside the existing metal recycling facility operated by Dundee Decom. The whole idea is to show our ability to offer a complete solution," Wallace says.

Other Scottish ports are just as keen as Forth Ports to expand their share of the decommissioning market.

Peterhead has broken ground on a major project to build a new fish market (see the story on P.xx) and when this is complete the existing market will be demolished. That in turn will make way for additional oil and gas service work, and for decommissioning projects.

"North Sea Group will be operating the space freed up by our move to the new market and they are very active in targeting decommissioning. They will take over Merchant’s Quay so that could see Peterhead involved in some decommissioning projects in the near future," he comments.