Pauline Innes, NSTA Supply Chain and Decommissioning Director, delivered a presentation during the Offshore Decommissioning Conference in St Andrews on 19 November 2024.
Pauline discussed the work the NSTA does with industry and other regulators to ensure licensees meet their decommissioning obligations.
Read the speech below and view the presentation here.
Slide 1
Good morning.
As always, it’s good to be back at St Andrews.
I want to build on some of the comments and themes we’ve already heard this morning, in particular.
But to start things off I’ll give a brief re-cap of what we do including our decommissioning aims and objectives.
Slide 2
The North Sea Transition Authority regulates and influences the oil, gas and carbon storage industries in the UK, and we’re driving the creation of an integrated energy system.
That means not only holding industry to account for traditional regulatory oil and gas obligations – supporting the UK’s energy security – but doing that in a way that aligns with the UK’s net zero target.
We know that oil and gas will continue to play an important role during the transition even as we increase the rate and availability of new energy sources.
But we’re here to talk about decommissioning and, for me, it’s a central part of our transition journey, to not only demonstrate this industry is a responsible custodian of the marine environment but also providing a vital bridge between oil and gas work today and carbon storage work in the future.
Slide 3
We, at the NSTA, work alongside other regulators to support the delivery of safe, cost-efficient decommissioning.
You’ve heard from OPRED, and they’ve obviously got a central role in this arena.
But we’ve a specific statutory obligation in relation to exploring alternatives to decommissioning and ensuring that the decommissioning programmes that OPRED approve are framed to be cost efficient, providing advice to OPRED on these matters.
We’re also the competent authority in relation to well plugging and abandonment, using the WONS system to administer applications.
And we’ve also got specific additional obligations on decommissioning that are set out in the OGA strategy.
These are our “must-do” activities, and I want to briefly explain how we deliver them.
The Decommissioning Strategy that we published three years ago frames our work. And the four focus areas that we set out in 2021 are as relevant today as they were then. To that end, we are focused on:
Working with industry to plan early, and we’ve set a glidepath, that’s shown on the right-hand side of the slide, indicating our version of “good practice”.
We also believe that we need to create the right market conditions to enable cost efficient decommissioning and so we’re keenly focused on commercial transformation. This is a theme I’ll return to.
And we support the energy transition looking at options to re-use and repurpose infrastructure.
We also recognise that the development and adoption of technology can unlock efficiencies and that the guidance and processes that organisations like mine create are an integral part of the system and as such they need to be framed to help, not hinder progress.
The way that we deliver is by working with industry, stewarding operators or licensees, using our powers of regulation as appropriate and providing information or data to address market failings and influence stakeholders.
I’ll talk about regulation in a moment, but first I want to give an overview of the tools that we’ve developed to support delivery.
Slide 4
With thanks to the operators we work with, we’re a data rich organisation. And with nearly 10 years history behind us the quality and quantity of information we have improves year on year.
We’re also in the enviable position of engaging with every operator that’s either decommissioning or in the throes of decommissioning. That gives us access to phenomenal market intelligence, and we see lessons being learned in real time.
While we share data and lessons learned with operators as part of our day-to-day stewardship engagement, we also understand that if we truly want to make the market work better, we need to share data more widely.
That’s why we’ve taken steps over the years to improve transparency.
You’ve seen that in our Data Visibility Dashboard, where we’ve worked with the Decommissioning and Repurposing Taskforce and now have 15 operators signed up to share details of their decommissioning activity for the coming five years.
You’ve also seen that in our annual decommissioning cost and benchmark reports, where we look forward and back; reporting on the progress that is being made to achieve the cost reduction target over the current decade and providing benchmarks based on actual out-turn costs.
These tools along with Energy Pathfinder serve to improve the visibility of decommissioning in the UK.
As I mentioned a moment ago, we’ve also developed a decom glidepath to explain what we expect in terms of effective planning for decommissioning.
And in September we commissioned a project with a consortium of industry experts, to develop a holistic programme for well plugging and abandonment.
And I’m delighted to announce that today we’ve launched a new “TWIST” dataset to support subsea well P&A.
Slide 5
Given the significance of well P&A in decommissioning, and our role as competent authority, it’s a topic that we’ve been targeting for a few years.
We’re constantly looking at how we can make best use of the data we collect and how to best use our regulatory powers as an enabling force.
To that end, through the work that we do with the Well Decommissioning Steering Group, we’ve worked with four operators, namely bp, CNR, Harbour and TAQA, to pilot a new dataset on subsea tooling providing tree and wellhead information, or TWIST for short.
With wellhead and “Christmas tree” systems coming in different shapes, sizes and ratings depending on when and why they were made, and by whom, we were getting feedback that a lack of technical information about well architecture and the availability and accessibility of tools was frustrating delivery.
And we could see that with a little effort we could share the data we already collect to help operators and the supply chain.
So that’s what we’ve done.
The dataset also lists the equipment maker and manufacturer lineage, which can otherwise be difficult to find due to past mergers and acquisitions.
We think operators will find it useful in helping to find the tools they need and also help identify other operators with wells built using the same type of kit, potentially creating campaigning opportunities.
As I’ve said, this is a pilot with four operators. We’re confident it’ll add value so we’re going to engage with all owners of subsea wells in the coming months to see if they’ll sign up to sharing their data.
But, as always, we’re keen to get your feedback so do visit our stand (35) and speak to the team.
TWIST is a great example of using and sharing data, promoting transparency in a way that benefits everyone.
But that’s not all we are doing on wells.
I mentioned we were in the enviable position of having a holistic picture across the basin. We not only have data on existing suspended wells, but we also have sight of planned cessation of production dates and therefore know when wells may fall due for decommissioning.
In our cost report this year we signalled concerns about the pace of delivery of well decommissioning and the impact it was, and could have, on the supply chain. While each operator undertakes its own market assessment, we can see that we have the potential to take a broader perspective, so in September we commissioned consultants to produce a holistic programme for well decommissioning.
The project will identify the UKCS well bores that will be ready for decommissioning between 2026 to 2030 and consider the supply chain capacity required to undertake the work.
Ultimately this will give us a resource level plan, that will help us identify campaign opportunities. And the analysis will support our engagement with operators in setting realistic well decommissioning deadlines that we’ll hold licensees to deliver using our regulatory powers.
On that note I want to finish by talking about regulation and how we use our powers.
Slide 6
I’ve spent a lot of time recently talking about regulatory action, and many of you will have seen that my colleagues in our Regulation Directorate opened an investigation into missed deadlines for well decommissioning earlier this year.
That’s a first for us.
But I want to set that in context.
As you’ll have seen in our cost report, we are in the decade of peak decommissioning activity, and last year industry spent £2bn with many licensees delivering their decommissioning programmes in accordance with their approved plan.
If we look at wells, the figures industry provide us show that we expect to have over 1,500 wells to be decommissioned by 2030.
Many of you will be aware that our regulations require wells to be plugged and abandoned within two to five years of production ending.
Last year 122 wells were decommissioned. That number needs to double if we’re to catch up and keep pace with the increasing volume.
We’ve got an expert supply chain ready to execute work, but the lack of contracts in the UK is causing them to look elsewhere.
That doesn’t make sense.
If we lose the supply chain, it’ll be costly to bring them back to the UK.
We all know and respect that decommissioning is an obligation that competes for precious resources, and we know resources are limited.
Now, the good thing about this conference is that everyone in this room wants the same thing.
We all want to deliver decommissioning.
I suspect no-one wants to see it deferred, or to deviate significantly from the plan that’s been put in place and approved by OPRED.
But to date, the lack of consequence of non-delivery could be perceived as passive agreement from regulators that it’s ok to defer work.
And that’s not the case.
So, the way we ensure compliance is by using the enforcement powers we’ve been given.
For my organisation that’s following a measured escalation process, taking a more structured and focused approach with operators where key delivery milestones or expectations are not being met. And potentially issuing sanction notices and financial penalties if it’s deemed appropriate.
That’s what we said we’d do, and so it’s what we are doing and will continue to do.
OPRED has related, but different, powers to address non-compliance, and given the complementarity of the work we do (as you’ve heard) we’re working with OPRED to make sure we’re joined-up regulators pulling in the same direction.
I’m acutely aware that talking about regulatory action can have negative connotations, and it’s my mission to reframe that perception.
We’re all in this together.
And I believe we all want the same thing.
As a regulator we have a few carrots and a few sticks, some of our carrots are better than others and some of our sticks are gentle while others might be a bit spiky.
If we use them wisely, they could help provide the visibility and certainty that the decommissioning sector needs to enable delivery.
If we don’t use them, we’re not doing our job and that doesn’t help anyone.
But I know there’s more we can do, and I know that there’s always scope for improvement.
I said at the beginning that good regulatory action is fundamental to successful delivery, but we need your help to get that right.
Engaging at conferences like this is a great way to hear your views.
There are several colleagues here so if you have a question or comment do let us know. You’ll find us on stand 35.
I think that good decommissioning regulation has to enable those we regulate to do the right thing.
That’s what we’re aiming for.
Slide 7
Thank you
ENDS
Please note - There may have been some slight variations in the delivery of this speech.