New DNV GL P&A Guideline Could Save Industry More Than $32 Billion

A new guideline for the plugging and abandonment (P&A) of offshore wells could save the oil and gas industry more than $32 Billion, according to DNV GL.

The new DNV GL guideline aims to introduce a risk-based approach instead of the current prescriptive practice and DNV estimates that this approach can reduce P&A cost by 30 to 50 percent, when combined with optimized project execution and new technology.

Per Jahre-Nilsen, Senior Principal Engineer in DNV GL – Oil & Gas, commented in an organization statement:

"With current practices, the wells on the Norwegian Continental Shelf (NCS) will require the deployment of 15 rigs full-time over the next 40 years. Based on the 2013 cost, this is equivalent to more than a tenth of the current value of Norway’s sovereign wealth fund (GPFG). We believe the time has come to tackle this issue head on by assisting regulators and the industry to establish a new methodology for dealing with the decommissioning of wells. This means that hazardous wells will get the attention they deserve, and benign wells will avoid excessive rig-time and expenditure. We can potentially halve the costs of plugging and abandoning wells. We're looking at potential cost savings of more than $32billion on the NCS alone, and even more globally."

DNV GL - Oil & Gas CEO Elisabeth Tørstad stated in a DNV GL press release:

"DNV GL’s contribution as a risk-management expert is to help the industry, which is facing increasingly complex and demanding operations, to understand the risks and find the most efficient way to deal with these risks. Risk-based approaches are widely used in all other offshore disciplines, ensure appropriate long-term environmental protection and also represent the most rigorous method to enhance safety. It is time to apply these principles to P&A."

DNV GL claims that traditional P&A methods have remained unchanged despite technological advances across many other aspects of the industry. The organization believes that the main barrier to change in this sector is the current prescriptive approach to regulations, which represents a conservative interpretation of past experience, according to DNV.

DNV plans to release the new guideline in the second half of 2015. There are currently around 2,350 wells that will require P&A on the NCS and 3,000 more wells are scheduled to be drilled in the future. In the UK, almost 5,000 offshore wells will need P&A.

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