Qyrin Petroleum Technology is at the forefront in developing Integrated Decommissioning solutions for IOC/NOCs. Given our vast experience and technologies employed in operating and developing brownfields, we are able to provide integrated decommissioning solutions that are economical, and which can be executed within established regulatory framework and existing laws.
Current Environment:
Malaysia wants to see 50 wells decommissioned in 2016, with 20-25 firm candidates already slated for either partial decommissioning or suspension.
Dilemma – “high price of oil, operators too busy for abandonment. Prices are so low, no longer economical to abandon”.
65% of Malaysia’s 300-plus platforms aged 25 years or more.
In a low price environment, operators around the region consider immediate decommissioning a more economic option than maintaining inactive facilities.
Asia is home to more than 1,750 oil and gas assets. Decommissioning these assets will cost anywhere from $30 billion to $60 billion USD.
85% of these assets are located in Indonesia or Malaysian waters, and more than half of them are at least 20 years old. Northwest Java is home to 223 offshore platforms, 46% of which were built before 1985. Thailand, faces an even greater challenge on its 619 platforms, 321 of which are aged 20 or more.
While Malaysia may not be alone in the race to decommission, it certainly faces the biggest hurdles. In 2010, Petronas faced a decommissioning backlog of 32 platforms. Petronas, as the owner of all petroleum resources in Malaysia, remains fully accountable for decommissioning of platforms.
Abandonment needs to be one of the key activities of the operatorship; currently it’s more like an option.
Process of decommissioning hampered by the absence of an economical solution, and the lack of clear and specific regulations from national authorities. Process of brownfield rejuvenation or extension of existing production facilities however is less a mystery.
Decommissioning will never happen if there isn’t an economical solution and strong regulatory framework in place.
Solution: Integrated Decommissioning
New specialist operator comes into alliance with IOC and/or NOC via a fresh brownfield PSC, provided the target assets are economically viable.
Decommissioning is immediately defined, quantified, and incorporated into the fresh PSC – the decommissioning costs will be absorbed by revenue from rejuvenated production
IOC/NOC clearly and specifically regulates and transfers the responsibility or economic burden of decommissioning to the operator.
The economics and fiscal mechanisms in the PSC will reflect the appropriate equity of the PSC parties given their respective burdens and risk exposure.
Salient features:
Immediate solution for IOC/NOC to address decommissioning
Established regulatory framework and clear existing laws to govern
Relieves IOC/NOC of financial burden on decommissioning
Transforms liabilities of IOC/NOC into revenue generating assets by unlocking “stranded reserves”
Decommissioning transformed into a profit centre to IOC/NOC vs cost centre as currently viewed
Catalyst for IOC/NOC human resources and asset utilisation/optimisation
Source of low UPC oil in current low oil price environment
Contributes to IOC/NOC inventory of recoverable reserves
Improves IOC/NOC average recovery factor (RF)
Aligned and contributes to EPP:1 and EPP:2 as outlined by Government Policy (Malaysia)
