Stuart Payne, the NSTA's Chief Executive, delivered the keynote speech at the Decom Week Exhibition and Conference in Aberdeen on 17 May 2023. His speech, which highlights the decommissioning and repurposing sector's important role in the energy transition, is below:
Thank you for the chance to be here. It’s great to see so many people in attendance and I hope you have a superb conference.
I’d like to take a few moments this morning to look back at some of the great achievements made by you, the people in this room, and your colleagues around the UK. Also, to look ahead to the challenges in front of us and explain how the NSTA is working to support continued, successful decommissioning and repurposing here in the UK.
The NSTA’s job is to regulate the oil, gas and carbon storage industries and – subject to a live government consultation – hydrogen storage and transportation.
Our work focuses on three equally important activities:
- Helping support secure energy supplies for the UK;
- Cleaning up that supply by lowering production emissions;
- And accelerating the transition, meaning the storage of carbon and deployment of hydrogen.
Underpinning these activities is our work to ensure that we make the UKCS an ever more integrated place to work and invest.
Why do we do that?
The North Sea is the crown jewel in the UK’s energy mix.
We’ve got oil and gas, wind, and storage resources which can secure our supply of cleanly-produced energy, rapidly reduce greenhouse gas emissions, and support hundreds of thousands of skilled jobs.
There is potential for up to £200bn of private sector investment in the UKCS by 2030.
Our Energy Integration Report showed that taken together, CCS, hydrogen, wind, wave and tidal can deliver 60% of the UK’s net zero abatement needs.
We have a world-class offshore supply chain, skilled at doing the hardest things, the cleverest things, and most innovating things – all in the most testing environment.
We need to move at pace and get ahead in growing new technologies like CCS, hydrogen and floating offshore wind and export them globally.
It is only by integrating these energy systems that the North Sea’s enormous potential can be maximised.
The safe decommissioning and repurposing of the oil and gas industry’s infrastructure is very much part of the transition.
I’m hugely proud of the work that industry, with support from us and others, has delivered in reducing future costs.
The results are hugely significant. Between 2017-2021, the cost estimate for decommissioning was cut by 25%, or £15 billion.
These are vast sums of money saved by the Exchequer, a real contribution from the sector back to the UK.
These are also vast sums saved by industry, which can be invested in new production, emissions reduction and net zero projects.
The reductions were due industry’s ability to collaborate better, share lessons and execute projects more efficiently, aided by the deployment of new technologies and techniques, as well as better forecasting.
It has also shown the value of setting clear targets, having regulations in place and holding each other to account.
And we’ve seen that with the right regulations, right behaviours, right technology and the right investment – real alliances can be formed, real partnerships and genuinely innovative business models.
This is a success I want us to build on.
We know that decommissioning has often been the “coming soon” event in our sector, but now we really are in the delivery period.
£20bn of decommissioning activity is forecast over the coming decade – a massive opportunity and a major challenge.
With such a large prize on offer, we felt the time was right to consult with industry and set a new target to help deliver the next phase of continuous improvement.
The revised cost estimate that we agreed with industry indicates even further progress, but we believe there’s more we can do together.
That’s why we’ve set a further 10% cost reduction target, based on NSTA decommissioning benchmarking and actual cost savings secured by the sector’s top quartile performers in recent years.
Importantly, the new target will be applied to the actual cost of completed projects, as well as the overall estimate.
This objective is ambitious and challenging in light of inflation. But it is also achievable. There is still plenty of scope to deliver further savings. Industry needs to keep its focus and keep improving.
The forecasts for expenditure should also give suppliers confidence that real work and real activity is going to continue to come their way. The supply chain needs to keep investing in skills and technology to ensure it can meet demand.
ENABLING COST-EFFICIENT DECOMMISSIONING
So, what are we doing to play our part?
We’ve focused on setting out what we expect from operators, helping them achieve this, and using our regulatory role if we think it’s going off track.
In terms of setting out what we expect, I hope you’ll agree that we’ve worked to put in place a clear – and refreshed – strategy, underpinned by the different stewardship expectations, including specific decommissioning and supply chain expectations, such as prompt payment terms.
We’ve clarified licence expectations, ensuring everyone is on the same page.
We regularly engage with all operators involved in decommissioning through our stewardship process, reviewing plans and providing feedback. We challenge and support.
In addition, I think we’ve set a world-leading example in data usage. We have a single, transparent cost model and we have individual and industry benchmarking, helping the rest learn from the best.
We’re also supporting the supply chain with data. Working with others on the Decommissioning and Repurposing Taskforce we launched our Decommissioning Data Visibility Dashboard pilot project, which gives suppliers the inside track on upcoming activities.
A number of major operators published highly-prized decommissioning schedules on the dashboard. This was the first time some of these schedules had been shared in the public domain, before the Decommissioning Programmes were even published on the government website. In the coming months, we want to see more operators sign up to the dashboard project.
The Energy Pathfinder tool is a free resource showing all upcoming oil and gas activities, as well as wind, CCS and hydrogen projects.
And at the end of the day, we’re the regulator. We’ve shown that we’re more than willing to hold people to their responsibilities and commitments.
We have made use of our facilitation and enhanced facilitation processes to help align outcomes.
We’ve made it clear that we will hold operators to their licence commitments.
Through our Supply Chain Action Plan (SCAP) process, we can track and support contracting strategies to ensure meaningful and timely engagement with the supply chain, encouraging the right collaborative behaviours, sharing of risk, information and benefits.
SCAPs are also used to track delivery against the North Sea Transition Deal voluntary commitment of 50% UK content in decommissioning and net zero projects.
When we’ve combined all of these things -- clear rules, support to deliver, strength in enforcement -- we’ve seen real impact. A good example being open water well plugging and abandonment, which combined clarity of expectation, support to form partnerships, provision of usable data for the supply chain and holding people to account.
The upshot is there are 12 rigs and five vessels active in well P&A this year, with demand set to continue steadily for the next decade.
CRITICAL FOR TRANSITION
But what about repurposing?
The repurposing and reuse oil and gas infrastructure for low-carbon projects, including hydrogen and carbon storage, is a key part of the NSTA’s drive to integrate the UK’s offshore energy systems and accelerate the transition to net zero.
Our own analysis, based on what we already knew about the North Sea, indicated that dozens of pipelines could be repurposed, potentially saving operators around £7bn, massively helping future project economics.
Last year, we launched a project to help broaden our understanding of the potential opportunity for repurposing, before we go on to explore feasible options alongside industry and other regulators.
We asked 20 operators with 120 fields nearing cessation of production to do a deep dive into their portfolios and suggest options for repurposing. The response was encouraging, with lots of engagement and some really ambitious concepts highlighted.
So, I’ll finish where I started: looking back and looking forward.
Looking back, I want to say thank you. You are delivering a safe and successful effort to decommission and repurpose the North Sea in a cost-effective manner. You’ve achieved some break-through improvements and innovations and it is appreciated.
This has been achieved by partnership between operators, partnership with the supply chain and even partnership with the regulators. Thank you.
Looking forward I want to ask for yet more of the same. But faster and even bolder – but with no loss of focus on safety.
We are in the period of delivery. £20bn will be spent on UKCS decommissioning in the coming decade and I need us to show the best of what we’ve done so far and leave behind some of the poor behaviours.
I urge you to collaborate, engage early, share your data and lean into the right technologies and the right behaviours.
We’ll continue to play our part, setting the expectations, making the demand visible and holding people to account.
What you’ve done in the last decade has been great. What you’re going to do in the next decade has to be even better.
Thank you, good luck, and enjoy the rest of your conference.
Please note - There may have been some slight variations in the delivery of this speech.