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Reducing the bill for well abandonment

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Per Jahre-Nilsen Per Jahre-Nilsen
Business Development Leader, Drilling and Well, DNV GL - Oil & Gas
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Reducing the bill for well abondanment
Photo: Harald Pettersen/Statoil
New ways of working could halve the cost and enable smarter plugging of oil and gas wells
The world’s portfolio of wells is ageing. Some operators are postponing plugging and abandonment activity, awaiting a change to regulations, and for new technology to enter the market. When a company does decide to permanently plug and abandon existing wells, high expenditures are involved.

It can take several weeks of expensive rig time to permanently plug and abandon a well by setting zonal-isolation cement plugs and, where required, removing parts of wellhead/casing systems.[1]

Plugging and abandonment (P&A) could account for USD150 billion (bn) of forecast decommissioning spend on the UK and Norwegian Continental Shelves (UKCS and NCS) from 2014 to 2050.

The highest portion of the overall decommissioning cost is devoted to well P&A, which is estimated to be 44% of the cost of the total,” said Per Jahre-Nilsen, senior principal engineer with DNV GL - Oil & Gas.

Almost 5,000 offshore wells will require P&A on the UKCS, while the equivalent number offshore Norway is currently 2,350, with 3,000 new wells planned for drilling in the future, he added.

To illustrate the challenge facing one major operator, Norway’s Statoil has around 1,200 wells due for P&A on the NCS by 2040, according to Steinar Strøm, lead advisor P&A for Statoil’s drilling and well engineering improvement projects. Statoil drills 100 new wells, more or less, each year, some of which may also need to be plugged and abandoned in the future.

“Our main task in the short term is to transfer experience between our different assets planning and executing P&A, and to implement more cost-effective methods,” Strøm said. “Our slightly longer-term view includes introducing new and even more efficient approaches and technologies.”

Tackling costs

The quest for greater efficiency may be a greater challenge than is currently thought: forecasts may underestimate cost. “We have heard of plugging and abandonment programmes taking double the time planned, and of significant cost overruns,” said Jahre-Nilsen.

Uncertainty over downhole conditions is a major driver of such scope creep. “Lack of information on wells is one root of uncertainty,” Jahre-Nilsen explained. “A well may have been drilled decades ago, before widespread digital documentation and archiving. Paperwork may be lost or misplaced. Ownership may change without all data being passed on.”

Industry suggestions to improve P&A include the idea that operators should share information on well locations, construction and planning data, lessons from abandonment, and on what specialized tooling was required. Collaborative, multi-year, multi-well P&A campaigns between rival operators could cut costs, and have been discussed with contractors.[2]

Regulations vary in detail between countries, and even between states in the US. However, there is a consensus across the industry that strict compliance with the prescriptive regulations found in many US states will not, in the event of a later leak, eliminate the liability of operators who originally plugged and abandoned a well. Indeed, some wells have leaked post-abandonment.

“I believe a risk-based approach to P&A will increase efficiency while still maintaining acceptable safety levels,” Strøm said. “Plugging and abandonment is generally in the starting phase on the NCS. When P&A becomes more mature, a risk-based approach will be an integrated part of our day-to-day operations, just as it is for our other activities. We see indications that this change in attitude is happening.”

A new way forward

“The realization has indeed dawned that something needs to be done to improve methods to solve the P&A challenge more efficiently,” Jahre-Nilsen observed.

DNV GL believes that more appropriate regulation could play a key role alongside new working processes, technologies and materials towards achieving that goal. The company has received support from operators, including Statoil, to develop a new approach to P&A.

DNV GL has further collected information and best practices to form a new guideline reflecting the company’s view that regulation of P&A should be risk-based rather than prescriptive. The guideline is intended to persuade and help regulators to adopt such an approach.

“The complexity of intervention applied to a well should reflect the risk of a well leaking in the future,” Jahre-Nilsen stressed. “We believe the guideline aligns with that growing consensus in the industry.”

Guideline offers big savings

DNV GL’s guideline to best practice for P&A addresses the need for cheaper and smarter solutions while still protecting health, safety and the environment.

The company estimates that combining the guideline’s approach with optimized project execution and new technology could reduce P&A costs by 30–50% (USD32–54bn) for offshore Norway alone by 2055. The guideline is based on DNV GL’s conviction that the practising of today’s prescriptive barrier requirements can lead to costly P&A well designs. “It makes no sense to insist on the same requirements for a dry exploration well as for a highly-pressurized oil-producing well,” said David Buchmiller, well specialist,
DNV GL - Oil & Gas.

“We are trying to challenge some work processes, and to persuade the industry to allow well-specific solutions. Certainly, we need a level of quality, but at reasonable cost. A one-size-fits-all approach delivers neither of those.”

Read more at: dnvgl.com/pa

Reference:
[1] Recommended practice DNVGL-RP-0142 Wellhead fatigue analysis, DNV GL, April 2015.
[2]Club decommissioning could cut P&A costs by 40%: Marathon Oil’, decomworld.com, 26 May 2015