SPE-193963-MS

Seeking the Proper Decommissioning Method in Gross Split Era

Karyadi Junedi, PT Pertamina Hulu Energi Offshore North West Java

Copyright 2018, Society of Petroleum Engineers

This paper was prepared for presentation at the SPE Symposium: Decommissioning and Abandonment held in Kuala Lumpur, Malaysia, 3 - 4 December 2018.

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Abstract
PT Pertamina Hulu Energi Offshore North-West Java (PHE ONWJ) presently operates a fleet of more than
200 fixed offshore platforms and nearly three quarters of these platforms have been in operation for more
than 30 years. Under newly implemented Gross Split Production Sharing Contract (PSC) scheme, PHE
ONWJ is driven to seek an effective and efficient method for offshore platform decommissioning. Three
offshore decommissioning options, i.e. Total Removal for Onshore Disposal, Total Removal for Rig-to-
Reef, and Leave-in-Situ for Mariculture are examined closely. A qualitative evaluation, which involves
comparing the total expected cost of each option against its total expected benefits, is conducted in view of
decommissioning drivers, i.e. Safety, Environment, Technical, Cost, and Social Impact to other sea user and
community. The evaluation of the expected cost of each decommissioning options is presented. The first
two options are subjected to high cost activities e.g. platform removal; mobilization and demobilization of
derrick barge; and material disposal onshore or reefing site. The Leave-in-Situ for Mariculture option, on
the other hand, is not exposed to those activities as it leaves the retired platform on its existing location and
turns the structure into the site for offshore cage system fish farming. This is significant because in the Gross
Split PSC scheme, PHE ONWJ is expected to be more prudent and focus on cost efficiency. The social
impact of the Mariculture method is potentially important considering the rapid growing of global per capita
fish consumption and the fact that there are no offshore cage systems fish farming using retired offshore
platform in Indonesian waters or even Southeast area yet. The suitability of the proposed mariculture site of
Offshore North West Java waters is further evaluated against the guidelines from the Food and Agriculture
Organization of the United Nations (FAO). The Mariculture method can be not only the most cost efficient
solution for offshore platform decommissioning, but also providing alternative technique to increase marine
fish production.
Keywords: Decommissioning, Offshore Platform, Mariculture

Introduction
PHE ONWJ operates oil and gas block located offshore North-West Java Sea (see Figure 1) and presently has
a fleet of 218 offshore platforms. The platforms in this fleet have installation dates ranging from 1970 to the
present; however the majority of the platforms were installed in the 1970s and 80s. Ensuring proper end-of-
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life cycle management for its asset, PHE ONWJ initiated the development of decommissioning strategy with
focus on all aspects of decommissioning e.g. Planning, Authorities, Financials, Execution, Liabilities, and
Late-Life Operational Excellence. The objective is to ensure safe, effective, and efficient decommissioning
activities. Effective or successful decommissioning is not only about ‘how’ to remove facilities or abandon
wells, but also rely on identifying the required scope in compliance with the related regulations, building
the necessary engagement with all stakeholders, and seeking the proper decommissioning method.

Figure 1—Location of Offshore Northwest Java PSC (Source: Google Map)

There are notable changes recently, on the related regulations in the Indonesian upstream sector of oil
and gas business. On 16 January 2017, The Indonesian Ministry of Energy and Mineral Resources (MEMR)
issued Ministerial Regulation No. 8 of 2017, which institutes Gross-Split system as a new Production
Sharing Contract scheme. Under the new system, Gross Split PSC Contractor is responsible for all of the risk
associated with exploration through to relinquishment of the field. After the signing of PSC renewal for the
Offshore North West Java (ONWJ) block on 18 January 2017, PHE ONWJ became the first PSC Contractor
to enter into a Gross Split PSC. With an increased PSC Contractor risk, PHE ONWJ is encouraged to
explore, operate, and abandon the ONWJ field by means of a more efficient and lower expenditure.
The other change is the MEMR Regulation No. 15 of 2018 concerning post-operation activities for
upstream oil and gas businesses. This regulation, which was issued on 21 February 2018, requires all PSC
contractors in Indonesia to carry out Abandonment and Site Restoration (ASR) operations and to establish
and contribute to an ASR fund. MEMR Regulation No. 15 of 2018 revokes and replaces MEMR Regulation
No. 1 of 2011 on technical guidelines for total removal of offshore oil and gas installations, including
eliminating specific technical requirements relating to cutting, dismantling, and sealing of conductors,
piling, jacket structures, transmission pipeline, and top side facilities. The technical guidelines will then be
embedded in the revision of Working Guideline No. 040 (PTK 040) on Abandonment and Site Restoration
by The Special Taskforce for Upstream Oil and Gas Business Activities (SKK Migas). There is indication
that more decommissioning options will be recognized for the PSC contractors to evaluate and propose, as
long as they are in accordance with the Indonesian National Standard and relevant International Standards.
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This paper describes the initial development of decommissioning strategy i.e. assessing and selecting
feasible decommissioning options for PHE ONWJ in view of the requirement for cost efficiency imposed
by the Gross Split PSC implementation.

Offshore Decommissioning Options

Under international and regional legislations, offshore production facilities have to be shut down and
decommissioned when they have reached the end of their production life. Offshore decommissioning
covers the pre-decommissioning inspection, platform preparation and cleaning, dismantling, and disposal of
process equipment and facility structures. This involves a multidisciplinary process and demands balanced
considerations from several drivers, e.g. safety, environmental, technical, societal, and economic.
In this study, three possible decommissioning methods i.e. Total Removal for Onshore Disposal, Total
Removal for Rig-to-Reef, and Leave-in-Situ for Mariculture, are evaluated. Total Removal for Onshore
Disposal is the base case option for the decommissioning of oil and gas offshore installation in Indonesian
waters.
All three methods require the platform to be properly prepared for abandonment. In preparing a platform
for decommissioning, it is assumed that processing vessels, tanks, and piping must be flushed and cleaned.
For the structure, both topside and underwater part, detailed inspection is to be conducted to confirm latest
condition and to identify any structure strengthening requirements. The wells plugging and abandonment
need to be done before the platform decommissioning activities.

Comparative Assessment
Comparative Assessment is used to evaluate decommissioning methods under consideration against a
defined set of criteria and sub-criteria. For this exercise, the Indonesian technical guidelines for comparative
assessment approach for decommissioning and restoration is not ready yet. Therefore, the author uses the
guidelines defined in Brunei UPSTREAM GUIDELINES no. 9/2018.
The main criteria are Regulation, Safety, Environmental, Technical, Societal, and Economical. The sub-
criteria or matters to be considered are as follows:

Table 1—Comparative Assessment Criteria and Sub-Criteria

By the implementation of Gross Split PSC and with current oil price instability, PHE ONWJ has been
determined to sustain safe and reliable operation with reduced costs and increased efficiencies. Therefore,
the most critical driver for PHE ONWJ is the decommissioning cost.
A qualitative assessment is conducted to deliver quick but clear and transparent ranking of the
decommissioning options. This assessment uses a red-yellow-green coding (a red code means the least
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favorable case and the green one is the most favorable case) and description to explain the difference in
performance between the options.

Total Removal for Onshore Disposal Option

The total platform removal activities consist of conductor casings removal, topside removal, and jacket
structure removal. Platform materials are transported and then disposed of in specified onshore locations.
Site clearance procedure concludes the decommissioning activities.
As shown in the tabulated result of the comparative assessment (Table 2), the cost of complete platform
removal activities for onshore disposal is estimated to be the highest among the methods under evaluation.
The biggest cost drivers of this decommissioning method are the platform removal, material storage and
disposal at onshore site, and mobilization/demobilization of derrick barges and heavy lifting spread.

Table 2—Comparative Assessment Result

The high cost for platform removal and material disposal along with the unavailability of onshore
decontamination yard in the region for proper hazardous waste management cause Total Removal for
Onshore Disposal option to the least favorable decommissioning method.

Total Removal for Rig-to-Reef Option

This Rig-to-Reef option involves total platform removal activities and the platform materials are transported
to the designated reefing area. The cost of Total Removal for Rig-to-Reef option is estimated to be lower
than the onshore disposal option as it reuses the platform post-decommissioning for artificial reefing or Rig
to Reefs program. This avoids the expensive onshore material storage and disposal costs.
One of the designated reefing sites for decommissioned platforms in offshore northwest Java (ONWJ)
waters is located nearby Biawak Island, offshore Indramayu, West Java province (Figure 2). This potential
reefing site was one of the recommendations by a joint study on rig-to-reef by the Indonesian Ministry of
Maritime Affair and Fisheries and Korean Maritime and Ocean University Consortium (KMOUC) in which
PHE ONWJ was actively involved (Naibaho and Permana 2015). The joint study also concluded that rig-
to-reef option also has the ecological benefit of increasing the biodiversity of the reefing area as well as
potentially increasing fisheries and coastal community.
SPE-193963-MS 5

Figure 2—Location of Biawak Island, Indramayu, West Java, Indonesia (Source: Google Map)

The upsides on cost and societal impact make the Rig-to Reef option more attractive than the Onshore
Disposal option.

Leave-in-Situ for Mariculture Option

The basic idea of Leave-in-Situ for Mariculture option is re-using retired offshore platforms for marine fish
culture sites. The leave-in-situ for mariculture option is estimated to cost the lowest among the options under
evaluation. This method abolishes the need to remove the platform and to properly dispose the material at
onshore location. This avoids the expensive platform removal costs and onshore disposal cost.
The challenge for this option is the lack of exposure and references considering the fact that there is
limited information on offshore cage systems fish farming using retired offshore platform in Indonesian
waters or even Southeast area. A previous study by Keiser and Chamber (2017) identified only two (2)
mariculture sites which use dedicated offshore platform for fish production, one in the Mediterranean and
the other in Japan.
The suitability of the offshore northwest Java (ONWJ) waters for sitting of offshore mariculture project is
evaluated further. Location is the most important factor for any offshore cage culture project as it will dictate
the type of cage system utilized; the fish species being farmed; transportation and logistical requirements;
and economic viability of the mariculture project (Keiser and Chamber, 2017).
The following is the overview of environmental characteristic of ONWJ field as summarized in PHE
ONWJ Metocean Data for Design and Analysis (2015):
Bathymetry – The Java Sea is shallow water body lies on the Sunda Shelf with an average depth of about
40 meters and is a semi-closed sea located between Sumatra in the west, Kalimantan in the north, and Java
in the south.
Wave, Wind, and Current – The significant wave height (Hs) in the Java Sea is between 2 m and 5
m. The Java Sea is situated within the monsoon regime and is thereby strongly influenced by the semi-
annual reversing between the northwest (NW) and the southeast (SE) monsoon. During the NW monsoon
(December – March), the sea surface current flows eastward with the mean current velocity of about 0.5-0.75
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m/s. Reversely, during the SE monsoon (June – September), the sea surface current flows westward with
the mean velocity of about 0.25 m/s. Vertically, the current in each layer is almost homogenous because
of the shallow waters.
Using the site selection and classification criteria proposed by the Food and Agriculture Organization of
the United Nations (FAO) in 2009 and the Norwegian Standard (NS-9415:2009 Standard), ONWJ area is
considered as an open-ocean offshore site. The ONWJ is a shallow tropical saltwater environment which
hosts more than 200 offshore structures related to oil and gas production. Considering the benign offshore
environment, relatively convenient distance from shoreline, and already-developed coastal infrastructures,
the mariculture in ONWJ has a positive potential.
The mariculture proposal for ONWJ is influenced by two previous studies i.e. single point mooring (SPM)
system to secure submersible fish cages by Goudey (2008) and the mariculture projects utilizing offshore
platform by Keiser and Chamber (2017). The proposal itself is to turn the abandoned offshore platforms in
ONWJ waters into fish farming sites. Being fixed firmly to the seabed by piled foundations, the abandoned
well platform structures can function as the main anchor in the single-point mooring (SPM) system for
the submersible fish cages (Figure 3). For the larger platforms, the plan is to turn them into SPM anchor
with for multiple fish cages. Further planning for these larger platforms, which are equipped with multiple
decks, accommodation module, utility system, power supply, and crane, is to convert them into mariculture
operational bases from which the fish production and cages maintenance are controlled and monitored.

Figure 3—Abandoned Platform as Single Point Mooring Anchor to Secure Offshore Fish Cage

Although there is lack of experience in re-purposing retired offshore platforms for marine fish culture
sites, the upsides on the decommissioning cost and the social impact of mariculture project on fisheries
industry and coastal community make the leave-in-situ for mariculture option to be most favorable option
for offshore decommissioning in PHE ONWJ.
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Summary and Conclusion

The implementation of Gross-Split PSC term and the new Regulation on post-operation activities requires
PHE ONWJ to properly plan the decommissioning activities for its mature asset. Comparative Assessment
on three potential decommissioning options i.e. Total Removal for Onshore Disposal, Total Removal for
Rig-to-Reef and Leave-in-Situ for Mariculture is exercised to obtain the most effective and cost-efficient
method under gross-split environment. The following are the salient points from the assessment:

• Total Removal for Onshore Disposal option is the base case for offshore decommissioning activities
and estimated to have the highest cost as it involves platform removal and onshore disposal. The
unavailability of onshore decontamination yard in the South East Asia region, for proper hazardous
waste management, is a major concern.
• Total Removal for Rig to Reef or Converting the fixed offshore structures into artificial reefs can
be an attractive method of decommissioning. There are potential designated reefing sites nearby
PHE ONWJ area.
• Leave-in-Situ for Offshore Mariculture option or re-using retired offshore platforms for marine
fish culture sites can be the most effective means of optimizing decommissioning cost:
– No Removal Cost
– No Transportation Cost
– No Disposal Cost

• Offshore Mariculture is also providing additional benefits to the fisheries communities and future
food supplies.
• Further studies and discussions (Safety, Technical, Liability issues, etc.) with other stakeholders
are required for implementing both rig-to reef and mariculture options.

References
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