Danish offshore driller Maersk Drilling and vessel provider Maersk Supply Service have established a joint venture (JV) company to provide decommissioning services to oil and gas operators, the two companies said in a statement.
The JV will initially offer bundled solutions for up to 80% of the process required in decommissioning an oil field. The companies said that these solutions will, in addition to project management, cover work scopes such as plug and abandonment (P&A) of wells, towage of floating units, and removal of subsea infrastructure. In the longer term, the JV plans to provide the full end-to-end process of decommissioning.
“With the growing need for decommissioning mature fields, governments and oil and gas operators are looking for experienced partners to manage and perform this challenging task,” Maersk Drilling CEO Jørn Madsen said. “By leveraging the track record of the two companies, as well as our complementary asset base and competencies, we can lower the risk and reduce the overall cost for the customers.”
After decades of production, an increasing number of offshore fields are approaching the end of their economic life. The companies said that in the North Sea alone more than 400 fields are expected to cease production by 2026 at an estimated cost of $56 billion. Globally, more than 700 fields are expected to require decommissioning.
Since 2016, Maersk Supply Service has been project managing and executing the full scope of decommissioning services for the Janice, James, and Leadon subsea fields in the UK North Sea for Maersk Oil and later, Total. It also provided the marine asset coverage on all three subsea fields and did the engineering, subcontractor management, offshore planning, interface management, and associated logistics, as well as the disposal. For the project, Maersk Supply Service developed an alternative method to recover flexible and umbilical products in a complete section, which eliminated the need to use reel drive systems and minimized trips to port. Work on all three fields is expected to end this year. Maersk Drilling did the P&A for the James and Leadon wells, which began last February.
Both companies will invest an equal amount in the JV over the coming year and provide assets to the JV through standard commercial conditions. The joint investment is approximately $20 million covering the first years of operations. With the projection of adding up to three new projects per year after 2020, the companies said the JV’s revenue is expected to grow steadily over the first 5 years.
The companies also said the JV’s foundation will be a “lean and scalable base organization,” covering only core capabilities and drawing upon support from each company. It will be headquartered at their joint headquarters in Lyngby, Denmark.