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September 2017

Xodus advises Japan on decommissioning trends

Xodus Group has delivered a decommissioning ‘trend survey’ to JOGMEC (Japan Oil & Gas and Metals National Corporation) to provide Japanese oil and gas companies with a better understanding of the decommissioning process and how to manage their global asset and abandonment liabilities.

Xodus spent six months researching and collating international decommissioning best practice and presented the findings to over 100 operators and businesses at JOGMEC’s Technology Research Centre in Chiba, east of Tokyo.

Xodus outlined guidelines to the Japanese operators with practical information on how to approach planning for cessation of production and asset retirement activities. The team also presented cost estimation guidelines and templates to assist operators to understand cost modelling methodology and refine cost estimates as assets approach cessation of production.

Peter Tipler, decommissioning lead at Xodus Group said: “Providing a truly global perspective, it has been a fascinating project. The findings of the research give an excellent overview of the status of decommissioning internationally as well as an insight into future areas of development. 

“Our research has helped put into context the complexities of global decommissioning such as timing and cost implications for decommissioning, current and future oil and gas transactions or how an operator’s relationship with its partners, stakeholders, regulators and government is as important as its relationship with supply chain. We anticipate growing engagement with JOGMEC and from the Japanese operators in the coming months.” 

The project covered well abandonment; decommissioning technology; cost estimation; regulations; HSE; security; tax; insurance; partner and stakeholder engagement, planning methodology and guidelines. It builds on Xodus’ wide ranging experience on a range of technical and commercial decommissioning projects over the last ten years and the establishment of ‘Xodus Decom’ in 2015.

JOGMEC visited Aberdeen earlier in the year to attend meetings with key companies and experts involved in decommissioning. JOGMEC is interested in carry out joint research projects with UK companies and technology organisations and is exploring potential joint initiatives with organisations such as the Oil and Gas Technology Centre (OGTC).

Many of the Japanese oil and gas companies are non-operating partners in North Sea fields and assets, as well as operating partners in regions such as South-East Asia and Australasia. The companies were keen to develop knowledge across the decommissioning spectrum to ensure they are informed on latest technology developments and can assess decommissioning cost estimates provided by their field partners.

“Operators want to ensure they understand the extent of their potential liabilities because of the ‘joint and several’ decommissioning liability which applies in the UK and other regions,” added Mr Tipler. “In certain cases, Japanese (non-operating partner) operators have inherited decommissioning liabilities which they had not previously anticipated. Consequently, there has been great interest in the project.”

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Xodus advises Japan on decommissioning trends