Decommissioning: is the opportunity relevant for Brazil?

O decommissioning in oil installations consists of making the operating location as close as possible to its original state and in adequate safety conditions.

In other words, it ranges from a set of activities associated with the definitive interruption of the operation of facilities to the permanent abandonment and razing of wells – including the removal of facilities, the appropriate disposal of materials, residues and rejects and, most importantly, environmental recovery. of the area in question.

When the production of hydrocarbons becomes economically unviable, the process of controlled and monitored abandonment of facilities is inevitable. Indeed, this is an extremely important decision that involves the facility operator and its associates, as well as the state.

The regulatory agency for production activity and environmental protection bodies regulate and supervise the entire process, whose main concern is to ensure preservation and operational safety. In this process, financial guarantees, numerous studies and several steps are necessary to mitigate the risks of accidents.

It is important to highlight that a decommissioning project can take place over several years and, as already mentioned, requires the mobilization of quite significant logistical, financial and administrative resources.

The project begins with prospective studies to consider various solutions that could lead to the eventual recovery and/or recycling of the site. In some cases, platforms can be reused as artificial reefs, meteorological stations, research centers, energy production sites, CO2 storage sites, among other uses.

In Brazil, the National Agency of Petroleum, Natural Gas and Biofuels (ANP), through resolution No. 817, of April 24, 2020, regulates and supervises the decommissioning activities of installations together with environmental bodies, such as IBAMA, state and municipal environmental departments.

Furthermore, the ANP regulates the procedures for presenting financial guarantees through resolution No. 854, of September 24, 2021. According to a recent report by the ANP, there are around 101 installation decommissioning programs (PDIs) underway in the country – being that around 44 of these are at sea and the rest in land areas.

Decommissioning activities are receiving increasing attention from operators and regulatory bodies depending on the maturity stage of these facilities.

The expansion of the activity of decommissioning production facilities is recent in the country, as most Brazilian fields began operating in the 1980s/1990s. Therefore, the first production units began their activities in the last five years and intensified after improvements in regulation.

According to the ANP, the investments planned for decommissioning activities between 2022 and 2026 are estimated at around R$ 51.5 billion, that is, an average of R$ 10.3 billion per year. The majority of these investments, around R$ 42.1 billion, are concentrated in the maritime environment, with 612 wells.

In the terrestrial environment, R$ 9.4 billion is expected, with 9,280 wells to be decommissioned. The basins that concentrate most of these activities are: Campos (R$ 30.2 billion), followed by Sergipe (R$ 8.1 billion), Santos (R$ 3.1 billion), Potiguar (R$2.6 billion) and Recôncavo (R$ 2.5 billion).

Some challenges must be considered when preparing the project. The first concerns geographic location. Most of the most relevant Brazilian fields are located in deep or ultra-deep waters, between water depths between 300 and 3000 meters.

In this way, Brazilian infrastructure is focused on floating installations instead of fixed installations, which requires specialized and more complex infrastructure.

In addition to geographic aspects, the decommissioning industry in Brazil is still in a development phase, especially compared to regions such as the North Sea and the Gulf of Mexico.

The country's experience using national services is still limited in carrying out large-scale programs, therefore, this activity still requires the help of specialized foreign companies.

Another challenge, perhaps even more important, concerns legislation which, despite great advances in the regulatory framework in recent years, still involves many public agents with their own rules. Therefore, conducting an efficient decommissioning process, with the least possible impact on agents, the environment and society, is still a major challenge.

In fact, the complexity of the activity, as well as the rules of environmental agencies, still lack greater objectivity, simplicity and speed – which can be major inhibitors in attracting new investments.

At this point, one of the biggest concerns arises, which is the requirement to remove part or all of the installations, especially in deep and ultra-deep waters (subsea installations).

The possibility of permanence of certain installations is a critical issue, as the environmental impact of removing them may be greater than that of maintaining them – the rules and/or analyzes of the bodies that regulate the activity do not always coincide with those responsible operation and environmental protection.

In the case of a maritime environment, regardless of the total or partial permanence of the installations, authorization must be expressly given by the Brazilian Institute of the Environment and Renewable Natural Resources (IBAMA), so that this permanence represents a residual exposure of the operator due to eventual damage, even after the closure of activities.

Therefore, there is always a concern about the time limit for post-decommissioning liability. Without defining a reasonable limit, operators could be penalized decades after the end of the field's useful life, which would certainly impact their financial planning and associated costs for society.

Responsible and efficient decommissioning with the aim of properly disposing of production units, as well as subsea structures, tends to increase significantly in the coming years.

The international market is already signaling, mainly from shipyards that follow environmental and labor standards, a very significant and progressive demand, which can cause bottlenecks and delays in projects.

Therefore, as the useful life of fields and platforms in Brazil approaches its end, the number of production units and other items that require adequate purpose tends to grow, requiring greater planning and allocation of financial resources from companies.

Brazil has an incredible opportunity and conditions to assume a prominent position, as long as it builds a long-term strategic vision for the sector and promotes broad coordination of public agents, with special attention to environmental issues, where regulatory and legal aspects are properly pacified, promoting an environment where legal security, predictability and stability prevail with the aim of attracting new investments.

The opinions and information expressed are the sole responsibility of the author and do not necessarily represent the official position of Canal Solar.