A new Scottish company is taking on the North Sea decommissioning market, claiming to offer a “one-stop-shop” for plug and abandonment (P&A) of oil wells.
(Credit: Renata via CC)
Headquartered in Aberdeen, Well-Safe Solutions was formed by a group of offshore industry veterans, including Alasdair Locke, co-founder of the Abbot Group. The company is seeking to raise £200m in investment and claims it could create as many as 400 jobs. Alongside private capital, Well-Safe has also secured funding from Scottish Enterprise.
According to Well-Safe, expenditure on abandonment in the UK Continental Shelf is forecast to reach £1.1bn in 2017. Around 5,000 wells in the North Sea – 1,000 of which are subsea – need to be decommissioned. The company says that P&A activity accounts for around 60 per cent of overall decommissioning costs.
“The market dynamics in oil and gas have changed significantly,” said Mark Patterson, executive director of Well-Safe Solutions. “Before the collapse in oil price, operators were focused on maximising production, costs were very high and assets scarce and, with no real regulatory imperative, decommissioning was pushed back.”
Mark Patterson (Credit: Simon Price)
“Cost and safety are still paramount but operators are now having to face up to the well abandonment challenge. They need to prioritise decommissioning activity and, with an increasing stock of “shut-in” wells, more incentives, low asset utilisation and therefore lower rates, the economics for P&A have become more compelling.”
To deliver its P&A service, the company is looking to acquire a semi-submersible rig, a jack-up rig and a lightweight intervention vessel. These assets will be solely dedicated to the P&A market, and Well-Safe will act as the single point of contact for rig operators.
“By combining competitive asset day rates with long-term service and support contracts at a fixed day rate, we will be able to offer higher efficiency and utilisation at lower cost,” said Patterson.
“We’ve already attracted some of the most experienced people in the industry with the relevant knowledge of subsea wells to create a centre of excellence in P&A. The next step will be to acquire some of the best-in-class drilling rigs, vessels and equipment that will be able to take on any P&A operation.”