New Offshore Installation Decommissioning Consultancy Is Formed
BMT Marine Procurement Ltd, AROQUA Ltd and Decommissioning Development Consultants Ltd (DDC) have produced an innovative offshore installation decommissioning financial solution and technical consultancy, known as ‘BMT AROQUA Decommissioning Associates Ltd’. The company will help operators manage the commercial, technical and environmental risks associated with mature oil fields, optimise end of field life strategies and divest duty holder financial responsibilities.
At its core the company is introducing a new insurance product. By ensuring that the risk of a differential between the oil revenue, estimated and actual cost of decommissioning projects can be met, it will enable operators to plan for and meet decommissioning liabilities. This will help operators to manage their balance sheets more effectively. Underwritten by capital created and delivered by a major international bank, the policies will satisfy the regulations of the Financial Standards Authority and the UK’s Department of Trade and Industry under the UK Petroleum Act 1998.
The benefits to operators and the UK Government will be to extend the productivity of marginal fields by improving the flexibility of disposals, mergers and acquisitions. The company also aims to encourage and support investment in new technology for brownfield developments by offering greater financial efficiency.
BMT AROQUA Decommissioning Associates will advise operators on the most appropriate decommissioning strategy in light of potential environmental impacts on offshore, near shore and onshore locations as well as technical, legislative and commercial considerations. It is already in advanced negotiations with a number of UK oil majors regarding their oil and gas field portfolios.
Over six hundred platforms in the North West European Continental Shelf are nearing the end of their operational life and will soon need to be decommissioned. BMT AROQUA Decommissioning Associates Ltd will be able to help operators comply with the UK’s Petroleum Act 1998, which has some of the more stringent environmental protection and remediation legislation in the world with respect to decommissioning projects.
Roger Swann, Chief Executive at BMT, said: “The new company will help operators to meet the complex range of environmental, health, safety and engineering challenges which they are facing in a cost-effective way. This new model for financing decommissioning projects will provide the oil majors, second tier operators, UK government, shareholders and the general public with the confidence that decommissioning liabilities will be met in a commercially sustainable and environmentally responsible way.”
In the future, BMT AROQUA Decommissioning Associates Ltd will offer stand-alone policies for separate parties with oil installation interests and quota share programmes for installations operated by multiple producers. It also plans to introduce layered finance package programmes for refinancing insurance policies and product and revenue insurance programmes.
The DTI estimates that the decommissioning market will be worth around £15 billion over the next 30 years.