Well-Safe Solutions, a tier 1 contractor, has now set up five different P&A Clubs to reduce the cost of well plug and abandonment, following significant interest in this innovative approach by operators in the North Sea.
The P&A club concept introduces a new commercial model that tackles costly and complex late-life activity. By becoming a member of Well-Safe’s P&A Club and adding their well stock into the club, operators can spread the risk and cost of plugging and abandoning wells with others in the club and use economies of scale to safely remove hundreds of wells rather than focusing on individual wells, or a smaller numbers of wells.
The club approach is designed to reduce costs by 35% or more by leveraging campaign-based savings, not only for small well counts, but also by spreading spend. It offers flexibility to phase abandonment expenditure through the club’s programme of work to maximise knowledge capture and management from a multi-operator well campaign approach. It also offers cost certainty, while minimising risk and non-productive time.
The positive reception from North Sea operators to this approach convinced Well-Safe Solutions to set up five clubs focusing on the following onshore wells using a land rig and offshore wells using jack-ups, semi-submersibles, well intervention vessels (category 1 and 2 wells) and a deepwater asset. Having five clubs designed around asset types gives Well-Safe the ability to deliver P&A operations on all well types.
Well-Safe founder and executive director, Mark Patterson, explained: “We’ve hit on a way to help operators meet the challenges and regulatory imperatives around the plug and abandonment of wells that is simple, smart and cost-effective. Using the P&A Club model, whereby multiple operators will subscribe to the club and their well inventory will be pooled, the P&A operations will be delivered through a campaign-based approach. This means that operators will have cost certainty because we will be able to agree a fixed target cost per well. This will be based on well specifics rather than generic well categories and will be delivered by our dedicated P&A assets facilitated using standard terms and conditions across multiple well operations. If the well P&A work comes in under budget, then the savings will be redistributed among members of the club and various suppliers and contractors.”
Phil Milton, Chief Executive of Well-Safe added: “Decommissioning is often seen as the end of the road but it’s just a part of the lifecycle and by reducing liabilities and direct costs when shutting down uneconomic wells, there is more money to invest in exploiting other fields.
“We’re incredibly excited about the potential for our P&A Clubs, which could not only stimulate the decommissioning sector but also give a big boost to companies who want to invest more money on development and production growth opportunities. This investment could also be assisted by Operators using the cost certainty that the P&A club offers to review liabilities being held on company balance sheets
Under long-term multi-year contracts, delivered by Well-Safe’s bespoke P&A assets, with agreed inflationary linked increases, subscribers to the Club will be guaranteed long term fixed rates over a 10 to 15 year period, the best-in-class well engineering team and project management, total transparency and shared knowledge management leading to continuous improvement.
“As we get more effective, through retaining and sharing knowledge, we will adjust the cost of the well P&A operations based on greater productivity and faster results,” added Mark. “In addition, the club can introduce insurance cover to subscribers through tailor-made insurance schemes to cover cost over-runs, perpetuity and liability of field once complete, and project funding is also available and can be linked to decommissioning tax relief payments.”
Well-Safe Solutions has already created 30 new jobs in its Aberdeen headquarters and is currently recruiting for additional personnel. They have secured their 40,000sq ft marine and logistic base in Dundee and have shortliisted a number of marine assets for acquisition.