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Bumper North Sea contract highlights scale of decommissioning challenge

Bumper North Sea contract highlights scale of decommissioning challenge

 

OIL services firm Well-Safe Solutions has won a contract to help decommission two North Sea fields which is understood to be worth tens of millions of pounds underlining the potential value of the market.

The Aberdeen-based firm has been appointed to decommission up to 21 wells on the Ketch and Schooner gas fields by Norway’s DNO.

The fields ceased production in 2018, months before DNO bought in to them through the £640 million hostile takeover of Aberdeen-based Faroe Petroleum.

This formed part of DNO’s attempt to build a big North Sea business after focusing on the Middle East.

The contract with DNO provides a big boost for Well-Safe and vindication for its owners’ belief in the potential of the North Sea decommissioning market.

Well-Safe expects to more than double employee numbers to around 100 this year, from 40, in response to demand for its services.

The new jobs will be in Aberdeen, offshore and in a marine support base the firm has established in Dundee.

The company was founded in 2017 by sector veterans who reckoned there would be strong demand for the services of a firm that specialised in the process known as plugging and abandoning wells.

More than 2,400 wells are expected to be plugged and abandoned across the North Sea by 2025 alone as fields reach the ends of their economic lives.

Well-Safe’s shareholders include Alasdair Locke who made around £120m when the Aberdeen-based Abbot drilling operation he built was sold to private equity group First Reserve for £906m in 2007.

His decision to back Well-Safe provided a clear sign that seasoned North Sea operators saw long-term potential in the decommissioning market.

Spending on new facilities has been under pressure in the fall-out from the plunge in the crude price which started in 2014.

Schooner and Ketch ceased production amid retrenchment moves by firms that control oil and gas fields in the area.

Faroe slashed the valuation of Ketch and Schooner in its 2017 accounts. It noted production from the fields was expected to end in the third quarter of 2018 with the closure of the relevant export system and onshore gas facility at the Theddlethorpe terminal in Lincolnshire.

The facilities were operated by US giant ConocoPhillips which sold its remaining North Sea business to private equity-backed Chrysaor in April for $2.7bn.

Separately Aberdeen-based engineering giant Wood said yesterday it had won a contract to help design a huge petrochemicals plant in Oman in the Middle East.

The company has been looking to win more work in industries such as petrochemicals as it tries to reduce its reliance on the North Sea oil services business in which it achieved renown..

Aberdeen-based drilling contractor KCA Deutag, which developed out of Abbot group, has appointed a new chief executive designate.

Joseph Elkhoury will take up the post on July 1. He will succeed Norrie Mackay who intends to retire later this year.Mr Mackay will remain with the group in an advisory capacity until December 31. He joined eight years ago.

KCA Deutag’s chairman, Bob Ellis, said the group had flourished under Mr Mackay’s strong leadership "despite the worst downturn the oil and gas industry has ever experienced”.

Mr Elkhoury has worked for oil services giant Schlumberger and the Apollo Global Management investment business.

 

Source: The Herald

Published: 23-06-2019

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