IM Experts in E&P

Assessing Ageing Assets | A gathering E&P Data Management storm

Date: 18/4/2011

Ageing assets: or should that be elderly assets?

Do you have elderly parents in your family?

Do you notice that they can't do things that were second nature to them a year ago? What additional demands for care and maintenance do they make on family, friends and carers? And who knows for how long this increasing care is needed?

Likewise, as offshore assets become elderly they demand a heightened "duty of care".

According to figures from the Department of Energy and Climate Change (DECC), UK North Sea production of crude oil peaked at around 148 million cubic metres in 1999. Since then production has declined such that oil production last year, 2010, was around 57 million cubic metres. This loss of production approximates to a decline rate of around 5.6% per annum. The corresponding figures for dry gas are: peak of 62 million ksm3 in 2000 reducing to 22.5 million ksm3 in 2010. That's a decline rate of around 6.4% per annum. In simple terms, oil will run out of the North Sea in just over 18 years and gas will run out in 17 years. Now I know that there will be a "long tail" in production and my concern is not over precise dates. My question, hoswever, is this: how practical is it to continue production in the North Sea for another 18 years or so using existing infrastructure? Let's look at the age profile of these facilities.

Of the 289 installations still active in the UKCS, 93 are more than 30 years old. 43 of these have been in active service for over 40 years, all in the Southern North Sea region. The typical design life of a platform is between 20 - 25 years. That would suggest that nearly half of all installations are operating beyond their expected design life. What does 25 years exposure to the salt water and storms of the North Sea do to a platform and its topsides? And what does 25 years of corrosive crude and other fluids do to the network of pipelines and subsea equipment?

How much longer can these installations be operated safely?

The industry regulator, the Health and Safety Executive (HSE), is alert to this situation. The HSE has initiated Key Programme 4 (KP4) as a way of monitoring hazards associated with the ageing assets of the UK North Sea. The over-arching principle of this programme is, "it's about what you know about [your ageing assets'] condition, and how that's changing over time".

The HSE is observing a trend towards extension of facilities either for late-life production or for change of use (transit hubs, re-injection, sequestration etc):

"Many of the offshore platforms in the UK sector are nearing the end of their originally-intended design life. However, with the depletion of hydrocarbon reserves, the increased use of enhanced oil recovery technologies, and the advent of carbon dioxide sequestration, there is an increasing requirement to extend the life of the existing platforms. Other installations, although no longer producing oil from their own wells are being modified to act as production hubs, taking hydrocarbons from other sub sea wells in the area and processing it there, often with new or modified topsides plant, for export to pipeline or tanker."

In this new era where assets are either being extended beyond their original design life or where they are being significantly modified for a new mode of operation, KP4 demands that operators demonstrate awareness and management of major hazards in these assets especially in changes to fire and gas, explosion hazards, emergency preparedness and plant integrity.

The demands from HSE are not especially onerous; they only need "fitness for purpose". But this is no longer the era of "business as usual" in the North Sea. Does your operation have a dedicated process for monitoring and documenting your assets' "fitness for purpose"? Do you have a competent information management system that supports your "knowing about your assets' condition and how it's changing over time"?

If not, what will you tell the HSE when they call on you?

Jeff Rogers

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