Repsol Sinopec drives transformational change in well decommissioning commercial models

Posted 16, Sep 21

Repsol Sinopec has awarded a multi-million-pound contract to Aberdeen-based Well-Safe Solutions to execute the decommissioning of all wells in its Buchan and Hannay fields.

The contract is the first fully-inclusive well decommissioning contract of its kind and enables Repsol Sinopec and Well-Safe Solutions to manage efficiencies, knowledge and cost. The schedule control provided as part of this contract enables Well-Safe to deliver its Plug & Abandon (P&A) Club approach helping to deliver a campaign-based approach aligned with the OGA Decommissioning Strategy.

The commercial model represents a step-change from a conventional transactional approach to an outcome-oriented model, empowering the supply chain to deliver the most innovative and efficient solution with a fair shared risk-management philosophy within the contract.

This shift in mind-set has taken considerable time and collaborative effort by both Repsol Sinopec and the supply chain in evolving, concluding and assuring the tender process for this contract.

The contract has been welcomed by OGUK and The Oil & Gas Authority (OGA) as a strong example of collaboration, campaigning and innovation.

José Luis Muñoz, Repsol Sinopec’s Chief Executive Officer, commented today:

“There are 14 subsea wells in the Buchan and Hannay fields that require decommissioning as part of planned activities. We are pleased to appoint the contract for this work to Well-Safe Solutions, who will take a campaign approach to the work, recognising that schedule flexibility is key to driving efficiency.

“Collaboration has been key to achieving a solution that enables innovation and maximises efficient use of resources, whilst minimising the carbon footprint of the project. We are pleased the contract has been awarded to an Aberdeen-based company – the agreement will exceed the UK local content target as set in the North Sea Transition deal, of over 50% for decommissioning projects.”

Luis Batalla, Repsol Sinopec’s Head of Decommissioning said:

“The work to be delivered by Well-Safe Solutions aligns with our decommissioning strategy, which is focused on efficiency, performance management, innovative contracting models, technology development and fit for purpose design. All project delivery will be coordinated and managed by Well-Safe Solutions in accordance with the contract; with Repsol Sinopec retaining oversight of the technical delivery of the project as the well operator.”

Well-Safe Solutions will utilise its purpose-built decommissioning unit specifically designed for decommissioning of subsea wells, the Well-Safe Guardian. It will be the first time it has deployed its Dive System and Subsea Modular Decommissioning Riser Technology (SMART) system onboard the semi-submersible unit. The offshore well decommissioning activities are planned to commence in 2022.

Decommissioning in the Buchan and Hannay fields commenced in 2017 with the off-station and onshore recycling of the Buchan Alpha platform, which was completed at Dales Voe in Lerwick Shetland, after ceasing production as planned in 2017 - after 36 years and almost 150mm barrels of oil produced. The decommissioning and recycling of the Buchan and Hannay Subsea Infrastructure commenced with pre-works in 2019 with final completion of this scope currently ongoing and expected to finish by Q4 2021.

Phil Milton, Chief Executive Officer at Well-Safe Solutions, said:

“This is a fantastic achievement for Well-Safe Solutions. Our team has worked closely with the team at Repsol Sinopec to develop a contracting delivery model that enables this project to be delivered in a manner that aligns with Repsol Sinopec’s decommissioning strategy, OGA’s decommissioning strategy and Well-Safe’s P&A Club approach. With complete schedule control this enables us to optimise our efficiencies, retain learnings and deliver a multi-operator, multi-well campaign.”

Pauline Innes, Head of Decommissioning at the Oil and Gas Authority, said:

“The OGA congratulates Repsol Sinopec Resources UK and Well-Safe Solutions on this ground-breaking agreement, which will provide welcome investment in the UK’s world-class supply chain, as well as employment.

“They have shown what can be achieved when operators and suppliers adopt a collaborative, flexible and innovative approach.

“In our new decommissioning strategy, we pressed the case for the cultivation of a more collaborative culture, including the development of new procurement models, and the adoption of well decommissioning campaigns.

“We will continue to encourage companies to agree on sizable campaigns which drive greater efficiencies both in terms of cost and CO2 reduction and give the supply chain confidence to invest in new technologies – to the benefit of industry, the Treasury and the environment.”

Katy Heidenreich, OGUK’s supply chain and operations director said:

“Conventional procurement processes will not deliver what our industry needs to be competitive, and it is great to see companies thinking differently, working together to develop innovative contracts that drive enhanced and mutual value. This bold approach, together with a multi-year well campaign, shows how companies committed to OGUK’s Supply Chain Principles are driving a step change in commercial behaviour that unlocks the full potential of the supply chain and improves performance, eliminates unnecessary cost and adds value whilst boosting competitiveness. We encourage others to be bold about how they can drive support for the Principles within their organisations as this is how we will ensure our supply chain is fit and ready for the energy transition challenges of the future."