Cessation and decommissioning

Currently, just under half of the expected recoverable resources on the Norwegian continental shelf have been produced. At the same time, many of the 500 facilities on the shelf are approaching the end of their expected lifetime. In the coming years, several of these facilities will be shutdown and decommissioned in a responsible manner.
Currently, just under half of the expected recoverable resources on the Norwegian continental shelf have been produced. At the same time, many of the 500 facilities on the shelf are approaching the end of their expected lifetime. In the coming years, several of these facilities will be shutdown and decommissioned in a responsible manner.
Regulations Landing Costs

On the Norwegian shelf, there are currently 12 concrete facilities, 21 steel floating facilities and 70 steel facilities resting on the seabed. In addition, there are nearly 400 subsea installations. The concrete facilities account for about 70 per cent of the total weight of facilities on the shelf. Field developments vary greatly with regard to size, complexity and number of facilities. Major fields can have development and operation in multiple phases, where some facilities are phased out while others are still operational. Larger and more comprehensive disposal projects must be carried out over several years. The Frigg field is, so far, the largest field on the shelf where decommissioning of the facilities has been completed. Production ceased in 2004, and the offshore disposal work started in 2005. The extensive disposal work on the field was completed in 2010.

The disposal process begins once a facility is no longer being used, and requires that the facility must be removed and the area cleared. The licensees are required to provide a detailed description of all phases of this process in a decommissioning plan. The plan must be submitted to the Ministry of Petroleum and Energy (MPE) within two to five years prior to a licence expiring or being relinquished, or when use of a facility ceases.

What does a decommissioning plan consist of?

The decommissioning plan consists of two main parts, a disposal part and an impact assessment part. The disposal part describes the technical and financial aspects of the cessation project. The impact assessment part provides an overview of expected consequences of the disposal, e.g., for the environment and other users of the sea. Both the proposed impact assessment programme and the actual impact assessment report must be submitted for public consultation.

Key principles for processing a decommissioning plan are that all financially profitable and recoverable oil and gas resources must have been produced, that the decommissioning project is cost-effective and that the project can be carried out within an acceptable framework regarding health, safety and environment (HSE) and other users of the sea.

At present, the authorities have processed and approved a total of about 20 decommissioning plans, six of them in the last two years. During the next five-year period, up to 25 per cent of the fields currently on stream can be closed. That might sound dramatic, but their collective output is so small that it adds only marginally to the total production on the shelf. However, it is difficult to estimate exactly when producing fields will shut down. The figure below shows how the presumed final production year for a selection of fields has changed between the reporting in 1995, 2002 and 2017.

The field lifetimes are extended

Change in estimated lifetime for selected fields

Source: Norwegian Petroleum Directorate

Print illustration Download data The field lifetimes are extended Download PDF Download as image (PNG)

The field lifetimes are extended – Change in estimated lifetime for selected fields

Usually, facilities stay on fields longer than planned for in the development stage. On many fields, new tie-ins (satellite fields) and improved recovery initiatives have extended field lifetimes beyond what was estimated in the plan for development and operation (PDO). The commercial life of facilities which are no longer producing from their own deposits may be extended if they can function as host installations for other developments in the area. It is therefore important to explore all opportunities for utilising such facilities before a final disposal decision.

Current regulations

Cessation of the petroleum activities and disposal of facilities are regulated by the Petroleum Act and Petroleum Regulations. Norway acts also in accordance with international regulations and agreements, such as the Oslo-Paris Convention (OSPAR), which stipulates that petroleum facilities can be abandoned after shutdown only in highly extraordinary scenarios.

Section 5-3 of the Petroleum Act stipulates that the MPE makes disposal decisions. Article 60 of the United Nations Convention on the Law of the Sea (UNCLOS) stipulates that facilities shall, as a rule, be removed, and that both removal and potential abandonment shall take place in accordance with internationally accepted standards. In accordance with this and the OSPAR Convention, the authorities can make decisions on removal of subsea facilities, floating steel facilities and the topsides of concrete installations without submitting the case to the Storting (Norwegian parliament). However, if disposal of concrete facilities and the jacket on large, fixed steel facilities is subject to OSPAR consultation, the case shall be presented to the Storting before the MPE makes a disposal decision.

Facilities must be removed in their entirety; only in extremely limited cases they can be abandoned on the field after ended use

Pipelines are not covered by the OSPAR Convention. The choice of disposal options is determined in each individual case based on a comprehensive evaluation, where costs are assessed in relation to the consequences for safety, environment, fisheries and other users of the sea.

See this information from NPD for more details (in Norwegian).

Landing and scrapping/recycling

Facilities that will not be reused or abandoned on the field must be transported to shore and handled at an approved onshore facility for scrapping and recycling or disposal. In Norway, there are currently five onshore facilities that can accept installations or components of them:

  • AF Miljøbase Vats (Rogaland)
  • Kværner Stord (Hordaland)
  • Scandinavian Metall AS (Hordaland)
  • Lyngdal Recycling (Vest Agder)
  • Lutelandet Offshore (Sogn og Fjordane)

AF Miljøbase Vats – Installations landed from the Ekofisk area

Download as image (PNG)

Photo: Ellen Marie Hagevik, Medvind24

AF Environmental Base Vats
Photo: Ellen Marie Hagevik, Medvind24

Disposal costs

The costs related to shutdown and disposal of facilities are relatively small compared to the costs related to exploration, development and operations and the revenue from the field. Costs related to decommissioning are uncertain and vary from field to field. The largest cost elements in disposal projects are related to permanent plugging of wells and removal of the offshore facilities.

Cooperation between licensees, the service and supply industry, the authorities and affected interest groups is crucial for cost-effective disposal activities in the future, and in turn contributes to reducing costs.

Updated: 15.03.2018