Earlier this year, Gordon Nardell QC and Maria Kennedy examined the impact of the statutory OGA Strategy on decommissioning of late-life UKCS assets in our bulletin Offshore decommissioning: Zeroing in on trends and challenges.
In May, the OGA published an updated Decommissioning Strategy, supporting the OGA Strategy and its “Net Zero” Stewardship Expectation 11. The Decommissioning Strategy sets out what is required from infrastructure owners in relation to decommissioning, casting additional light on aspects of the OGA Strategy covered in the April bulletin. In a follow up piece, the same authors summarise the focus areas for the Decommissioning Strategy and offer some key takeaways.
(i) What are the focus areas for the Decommissioning Strategy?
The key objective of the Decommissioning Strategy is to reduce decommissioning cost estimates by 35% by 2022. The OGA aims to do this by focussing on four areas:
1. Planning for decommissioning;
2. Commercial transformation;
3. Supporting energy transition from late life into decommissioning; and
4. Technology, processes and guidance.
(ii) Planning for decommissioning
The ultimate aim is to drive cost efficiency through effective late-life stewardship and to create a platform for timely delivery. The OGA has now emphasised that continued late-life decommissioning-focused stewardship will require a clear and detailed plan and that infrastructure owners are expected to ensure that they have a clear strategy three to six years before the end of production.
The OGA’s Priority Actions for the period 2021 to 2024 are:
· Structured engagement with infrastructure owners to ensure plans are being progressed; and
· Promotion of learning, sharing of knowledge and continuous improvement, capturing and promoting learnings from infrastructure owners and the supply chain, working in collaboration with industry groups including Oil and Gas UK, East of England Energy Group and Decom North Sea to maximise learning.
The Decommissioning Strategy signals the OGA’s concern to avoid lengthy periods of well inactivity pending decommissioning, reminding stakeholders that it will not ordinarily grant a well suspension consent for more than two years.