Delivering our priorities

Cost certainty and reduction

The primary KPI for decommissioning is the cost reduction in late-life asset management and the execution of decommissioning projects by at least 35% relative to the 2015 base case cost, premised upon existing methodologies and approaches.

The 35% overall cost reduction will not be achievable across the entire work scope, nor immediately, but some areas are more favourable than others and will enable this overall target to be achieved.

These areas include well abandonment, topsides removal and post-cessation of production operating expense, which together currently constitute approximately 70% of the total costs.

The majority of decommissioning activity is likely to occur after 2018, with activity potentially peaking in the early 2020s. Interim KPIs have therefore been developed.

Interim KPIs

  • 2016

    • Calibration and publication of a base-line cost estimate, working with BEIS, Oil & Gas UK and industry experts, covering the full decommissioning scope, but with a particular focus on the next 10 years of activity.
    • Identification and agreement of cost reduction targets by major Work Breakdown Structure (WBS) element.
    • Identification of cost reduction enabling technologies, to be assessed and plans for deployment developed.
    • Identification and assessment of potential transformative business and execution models for decommissioning.
    • Preparation and publication in an industry portal a minimum of three industry level tools to assist in cost effectiveness.   
  • 2017

    • Documentation of detailed area plans and associated cost saving targets.
    • Drive information sharing and technology adoption for cost saving technologies.
    • Preparation and publication in an industry portal a minimum of three industry level tools to assist in cost effectiveness.  

Decommissioning deliver capability

The primary decommissioning delivery capability KPI is the delivery of demand-led supply positions for successful execution of late-life management and decommissioning projects in the UKCS.

Work on preparing for transformative solutions is considered appropriate as a short-term goal and is being developed in line with industry status and gap analyses.

The most attractive transformative effort is the development of new business and contracting models, designed to align stakeholders, eliminate the adversarial relationships of traditional investment projects and appropriately allocate risk and reward.

This multi-faceted KPI will require close interface with the MER UK Supply Chain, Exports and Skills Board. Interim KPIs have been developed.

Interim KPIs

  • 2016

    • Preparation and publication of a supply chain gap analysis between current and future required capabilities for late-life asset management and decommissioning.
    • Development and publication of transformative business models, including potential liability allocations and risk and reward schemes, designed to reduce costs by at least 20%.
    • Publication of demand led supply chain requirements 2017 through 2020, with transparency of data and scope.
    • Preparation and publication in an industry portal a minimum of three industry level tools to assist in supply chain development or business model design. 
  • 2017

    • Implementation of at least one transformative business model, potentially as a pilot, as identified in 2016.
    • Publication of an expert focused expertise and capability report.
    • Preparation and publication in an industry portal a minimum of three industry level tools to assist in supply chain development or business model design. 

Decommissioning scope, guidance and stakeholder engagement

The primary KPI for decommissioning scope, guidance and stakeholder engagement is to develop the necessary evidence base for decommissioning scope, with a view to moving from a predominantly case by case approach and introducing industry-based solutions, where appropriate. Interim KPIs have been developed.

Interim KPIs

  • 2016

    • Identification and characterisation of decommissioning scope areas that may support MER UK outcomes if re-examined and clarified.
    • Identification and assessment of potential transformative actions that would enable significant cost reductions in decommissioning.
    • Study and report on applicability of alternative comparative assessment methods and principles in helping guide positions and quantification of benefits; for example Net Environmental Benefits Analysis (NEBA) and Best Practical Environmental Options (BPEO).
    • Preparation and publication of OGA decommissioning guidance on the Energy Act 2016.
    • Preparation and publication in an industry portal a minimum of three industry level tools to assist in guidance interpretation and compliance.   
  • 2017

    • Publishing a template for creating an appropriate stakeholder engagement plan for compliance.
    • If found appropriate in the 2016 study and report, implement an applicable alternative comparative assessment method and principle in helping guide policy positions and quantification of benefits; for example NEBA and BPEO.
    • Preparation and publication in an industry portal a minimum of three industry level tools to assist in policy interpretation and compliance.