Case study: Decommissioning cost liability estimation

Client: due to commercial interests the client has requested to remain anonymous
Location: Southern North Sea
Asset Type: Offshore Assets

Business challenge for the customer

LR was requested by our client to estimate its decommissioning cost liability for a large number of non-operated SNS offshore assets. The assets varied significantly in complexity and type, with various different platform, subsea and well infrastructures.

How LR helped

We were tasked with determining the scale and proposing a feasible methodology for the decommissioning activities per asset. Up-to-date asset & infrastructure information had to be sourced.

It was determined that the scale of decommissioning would be significant with over 30 platforms, over 160 wells (both platform and subsea) and 32 infield and export pipelines all within the scope. Due consideration of cessation of production (CoP) date and the resulting implications of decommissioning key production hubs had to be considered.

Historical decommissioning project cost data for the region showed that the final cost versus the initial cost estimations exhibited a significant variance. An understanding of the cost estimate shortcomings for previous projects was essential in determining a robust estimate even at this early stage in the decommissioning planning.

  • We were quickly able to determine the focus areas in order to form an appropriate decommissioning work breakdown structure (WBS).
  • Public domain and in-house data, as well as significant prior knowledge of the SNS, were drawn on to inform the estimates.
  • We identified the elements that were the greatest contributors to decommissioning costs and therefore estimating effort was appropriately targeted. Significant effort was spent on creating a feasible decommissioning methodology and sequence as a basis for constructing bottom up cost estimates for topsides, jacket and pipelines removal activities.
  • A benchmarking against industry norms was performed in order to give the client further assurance of the validity of the estimates.


We completed the task in a short time-frame, producing a detailed decommissioning technical report with a concise asset by asset decommissioning datasheet containing:

  • key asset infrastructure
  • viable decommissioning methodology
  • class five cost estimate with spend profile

We completed the project with a client handover session, providing clarifications of the study assumptions, awareness of the risks and advising of synergy opportunities for significant future cost savings.