Rise in decommissioning sites make case for firm regulations in West Africa

An Offshore Decommissioning Study Report published by IHS Markit, a London-based information resource for major industries and markets last year forecasts an uptick in decommissioning of aging offshore oil and gas platforms, subsea wells and related assets.

IHS Markit expects spending on decommissioning projects to increase from approximately $2.4 billion in 2015, to $13 billion-per-year by 2040, or an increase of 540 percent, which will see more than 600 projects expected to be disposed of during the next five years.

The research firm also expects an additional 2,000 offshore projects will be decommissioned between 2021 and 2040, the report noted, and total expenditures from 2010 to 2040 will amount to $210 billion.

While the reports says Europe will absorb approximately 50% of global decommissioning spending as the industry removes major offshore structures from the North Sea, North America will represent the biggest market for decommissioning, Angola and Nigeria will drive decommissioning spending in Africa,

 “While North America is the largest market for decommissioning, the European region has the largest amount of offshore decommissioning spending, based on the size and volume of the structures being decommissioned in the North Sea, including concrete gravity-based structures (GBSs),” said Grigorij Serscikov, senior manager, Upstream Oil and Gas at IHS Markit.

Some wells in the Jubilee Fields in Ghana are nearing their decommissioning period and in Nigeria several wells like the Oloibiri in Bayelsa state have already been decommissioned. However, the rising cost of decommissioning wells poses a threat in Africa where regulatory checks are grossly inadequate.

Poorly decommissioned wells experts say is responsible for hundreds of associated oil spills that blight the environment and pose threats to flora and fauna. When wells are decommissioned, there is little effort invested in returning the fields to the good state.

The Bodo creeks oil well is an example of an abandoned oil well in Rivers State, Nigeria. It was among the abandoned oil wells inspected by the United Nations Environmental Programme officials conducted an environmental assessment on in 2010 and recommended a cleanup.

The Niger Delta ecosystem has seen massive degradation from abandoned wells coupled with the burning of associated natural gas. This is where embarrassing lawsuits draw their inspiration.

At a time of low oil prices, where countries are competing for scarce investment dollars, it is easy to give in to the temptation not to prioritise properly cleaning up after oil exploration, especially as the cost continues to incline northwards, the environment but that will not indicate sound policy.

According to the report, as exploration and production activity continues to shift into deeper waters, harsher environments and increasingly complex projects, some of which comprise hundreds of wells and miles of risers tied back to a few ultra-large platforms, operators now face enormous challenges when planning the removal of these assets.

IHS Markit says that some of these decommissions can cost billions of dollars and take years to successfully dispose of, and decommissioning delivers no return on investment or revenue, but instead carries significant environmental and regulatory liabilities.

Major concerns in decommissioning wells in deep offshore is how to deal with marine life and ensure appropriate use and containment of hazardous substances, and addressing waste management issues, including seabed debris accumulated during the life of the platform.

The challenge for African governments is to ensure that environmental and waste management regulatory requirements keep pace with environmental challenges in the subcontinent. As the report already shows, it will get more complex as decommissioning activity shifts from individual assets to entire fields, and to larger, more complex structures.