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Case Study

Setting the strategy for the future in the Gulf of Mexico

Operator decommissioning liabilities have been growing steadily the last several years, as aging assets near their end of life. The pressure was on from leadership to proactively get control of the issue.

The Situation

The client, challenged with significant growth of abandonment activity, needed to prepare for an emerging volume of a more complex deepwater abandonment environment. Virtual organisation added to the complexity of the overall effort, requiring a comprehensive strategy.

Operator decommissioning liabilities have been growing steadily the last several years, as aging assets near their end of life. The Upstream Americas Deepwater (UAD) business unit realised they faced a problem, and felt pressure from leadership to proactively get control of the issue. Making things more difficult for all operators, decommissioning was generally perceived as a cost centre with teams who were borrowed from other parts of the business. There was typically little consistency of expertise retained from project to project. Our client requested support to develop a coherent strategy for their UAD abandonments, with a focus on safety, quality and potential improvement, including their abandonment provision. 

Approach

Our strategic analysis covered the following areas:

  • Planning and execution, and historic performance
  • Future needs and technology development
  • Contracts and procurement across work segments
  • Regulatory focus and approach
  • Workshop structure used to align and mobilise the organisation around the emerging outcomes/findings
  • Evaluate and develop a comprehensive strategy for abandonment based on external and internal analysis
  • Develop a multi-year business case, specifying key levers/scope of the improvement opportunities
  • Develop detailed implementation plan and governance structure for the implementation effort
  • Establish project kick-off and tracking methods for project success
  • Handover of running the project to the newly formed implementation governance structure

Results

After a detailed analysis, looking internally and externally, including lessons learned from other industries such as the nuclear industry, we developed a long-term strategy for the UAD. This included a differentiated approach for the more mature segments, such as shallow water direct vertical access (DVA) wells, as well as the emerging challenges in deepwater asset decommissioning. 

Improvement projects included focus areas in technology development, integrated supply chain management, regulatory focus areas, as well as shorter term incremental improvements. The defined value, over a 25-year portfolio, was approximately US$1 billion. We also supported project execution, which is currently on track.

 

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