Knowing how to navigate the unknown in oil and gas decommissioning

Abstract

The decommissioning of oil and gas facilities and wells is not simply the reverse of the construction process. When oil and gas facilities are constructed, it starts with a clean slate. Equipment and wells are designed from scratch and constructed with new materials. At the time of deconstruction facilities and wells have endured decades of production, likely modification of the asset, ongoing maintenance and in some instances neglect, and in many cases the facilities and wells have changed ownership. Many have been designed and constructed in a non-digital age making records hard to find or even harder to read if they exist at all. Decommissioning therefore comes with a lot of challenges unravelling, understanding and interpreting all the available data. The data ends up in three buckets: Known Knowns – information you know you know. Known Unknowns – information you know you don’t know. Unknown Unknowns – information you don’t know you don’t know. The risks with items in each of these buckets ranges from low to high, respectively, when considering probability of occurrence and subsequent consequence if realised. New facilities have equipment that for the most part functions as planned; however, old facilities and wells have equipment that has a reasonable chance of not functioning as planned. As such it is important to look at the likely outcomes of each action taken during decommissioning in regard to time, costs and contingencies, which are almost always underestimated. This paper will tackle some of these known issues in decommissioning cost estimation.