Opportunity North East and Scottish Enterprise

Decommissioning Opportunity

Modular Well P&A

Integrated Support And Operation Services Concepts

ON BEHALF OF SPIRIT ENERGY

Introduction

Opportunity North East (ONE) and Scottish Enterprise (SE) have jointly developed a Programme to assist the oil and gas supply chain maximise emerging opportunities in offshore decommissioning. The Programme has identified several decommissioning opportunities with oil and gas operators. Supply chain companies across Scotland are invited to propose innovative and creative solutions based on existing technology in response to specific opportunities in order to improve efficiency and reduce cost and safety risk in an environmentally responsible manner.

Note – other organisations can potentially support funding of technology research and development.

In line with the UK Government’s Maximising Economic Recovery Strategy (MER UK)1, there is a need to significantly reduce decommissioning costs by at least 35% through increased efficiency and through industry transformation. According to the Oil and Gas UK Decommissioning Insight 2019 2, 2,624 wells are expected to be decommissioned in the North Sea Basin over the next decade (1,630 in UKCS), and over 6,000km pipelines are slated for decommissioning in the UKCS in that same timeframe. A workload of 12 topsides per year up to 2025 is forecast to be decommissioned in the UKCS.

A strong UK offshore decommissioning sector capability is therefore important for delivering MER UK, and offers growth potential for small and medium sized enterprises (SMEs) 3. Anchoring high-value supply chain businesses long-term is a regional and national priority.

Overall, decommissioning presents significant opportunities for innovation, cost reduction and development of skills and capability, providing a major opportunity for North East Scotland and other Scottish supply chain companies to position themselves to bid for and secure decommissioning work in the UK and, by extension, internationally. The Scottish Enterprise Oil & Gas Decommissioning Action Plan4 describes the potential of the market in further detail.

Background and Phase 1 Abandonment1 Maximising Economic Recovery Strategy for the UK - https://www.ogauthority.co.uk/media/3229/mer-uk-strategy.pdf 2 Decommissioning Insight 2019, Oil and Gas UK - https://oilandgasuk.co.uk/product/decommissioning-insight-report/3 An SME is defined as an enterprise with less than 250 staff and turnover in the region of £10-50 million4 Scottish Enterprise Oil & Gas Decommissioning Action Plan -

Shallow gas reservoirs drilled at a 60-degree angle from the surface in the 1980s have posed a unique decommissioning challenge – resulting in a new design modular plug and abandonment (P&A) unit which can be deployed across Spirit Energy’s decommissioning portfolio (see Appendix B).

When it comes to decommissioning, many operators face the challenge of how to decommission their wells. Several platforms either never had a derrick or drilling facilities have not been maintained, resulting in expensive reinstatement programmes, or contracting a jack-up rig or MODU.

For the DP3 and DP4 facilities in Spirit Energy’s Morecambe Bay, in the East Irish Sea, none of these options were available. There was no rig either onboard or available from elsewhere that could access the platforms wells – because they contain slant wells, drilled at a 60-degree angle from the platform. They had been drilled from two rigs designed and built just for this field – the Morecambe Bay Driller and Flame – whose unique drilling packages no longer exist.

These slant wells were constructed in the 1980s by previous owner British Gas when directional drilling technology wasn’t as advanced as it is today. Drilling at this 60-degree angle from the platform meant a significantly greater outreach was possible compared with conventional drilling at the time. By opting for slant drilling, the Stage I development required only three drilling platforms as opposed to the seven required if vertical drilling rigs were used.

Although these types of well are uncommon, Spirit Energy has a large number in Morecambe Bay. There are 48 platform-based wells in total in the field, split across six of its eight platforms. Of the platform wells, 28 are slant wells with five on DP3 and four on DP4 facilities, which are the first platforms in the field to reach the end of their productive lives (while others are being redeveloped).

Faced with this challenge, Spirit Energy went to the market for solutions. The selected vendor Herrenknecht, a German technology firm leveraged their existing onshore slant well drilling packages. Instead of redesigning offshore drilling technology, the project team designed and modified a bespoke unit which we can tilt the hydraulic mast between vertical and slant wells. The technology required significant modifications for offshore, including the ability to skid around the drill deck and rotate the mast to align at the correct angle for each well.

It’s a modular system, about 12 metres x 12 metres in footprint and 30 metres high, able to enter wells at angles from 90-45 degrees for all Well P&A operations, from wireline to milling operations and from pulling tubing to pulling conductors. No single part weighs more than 30 metric tons, to ensure it is easy to install using a crane, and the total package weighs under 200 metric tons. It has a self-propelled skidding base, powered by a hydraulic power unit, which means it can move around the skid deck, while its rotary table can rotate through a full 360 degrees, so it can access each well with the help of a laser alignment tool mounted at the top drive on the top of the mast. During the design, a 3D laser scan of each platform was performed to make sure the rig would be able to access each well. The mast itself is lowered or raised with a hydraulic cylinder which is then locked in position. The unit comes with a drilling control cabin with automated handling systems to minimize risk to personnel. A bespoke blowout preventer with a loading cradle was built so that it could handle 60-degree installation to the wellheads.

https://www.gov.scot/binaries/content/documents/govscot/publications/corporate-report/2018/11/oil-and-gas-decommissioning-action-plan/documents/oil-and-gas-decommissioning-action-plan/oil-and-gas-decommissioning-action-plan/govscot%3Adocument/Oil%2Band%2Bgas%2Bdecommissioning%2Baction%2Bplan.pdf

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Solving the first phase of this problem was nearly three-year challenge. But, following factory acceptance testing in June 2019, the system was built and installed on the DP4 platform where in it has safely and successfully abandoned all 6 wells before moving onto DP3 to abandon a further 6 wells to repeat the operations.

Phase 2 Development – Concepts for Optimising Phase 2 Abandonment

During Phase-1 of the well abandonment programme the Modular Rig was deployed from a Jack-up Drill Rig which provided services and interfaces to support operation of the modular rig on DP3 and DP4. This was useful in completing a wider campaign in the East Irish Sea including subsea well abandonments

What We Are Looking For

1. In enhancing concepts for phase 2 for the abandonment of the 36 remaining live wells at DP1, DP6, DP8 and DPPA, on behalf of Spirit Energy, we invite ideas from the supply chain on:

How deployment of the modular well P&A unit could be enhanced and evolved to drive further innovation and efficiencies for Phase 2 abandonments, commencing with DP1?

Some examples could include:

Innovative integrated service contracts with single interface to Spirit. DP1 walk to work from AP1 eliminating / minimising marine spread

requirements.

2. As a secondary prospective alternative, on behalf of Spirit Energy, we would also be seeking:

accommodation/crew support services, in conjunction with the above, for the abandonment of NUIs DP6 and DP8.

This could be by deployment of the unit from a standard work barge or well intervention barge removing the requirement for a Jack-up Drill Rig.

See Appendix B for additional specific information.

Some propositions may require partners to provide a comprehensive solution. This dialogue will be encouraged and, if required, facilitated by ONE to create potential strategic alliances.

This opportunity is open to all innovative solutions, whether based on commercial/scale or technical proposals.

Opportunity

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The opportunity seeks to give successful applicants a range of benefits including access to, and feedback from, end-user operators, improved understanding of operator needs, improved business cases and business development support. Operator sponsors will gain access to targeted solutions focused on their operational challenges and may potentially pursue further dialogue with applicants.

Propositions received will be reviewed in confidence by an industry panel, with successful applicants being selected to pitch to a number of operator companies. Support will be provided to selected organisations throughout the process, including one-to-one support to build the business case and to develop the operator pitch as well as targeted business support. If a proposition highlights a requirement for a partner(s) in order to provide a comprehensive solution, this dialogue will be encouraged and, if required, facilitated by ONE.

Proposition Review

Submitted propositions will be evaluated by a selection panel against the criteria contained within the attached application form. Successful propositions will receive further support to help align their proposition with the sponsors’ challenges before the operator pitch session.

Who Can Apply

Applications are welcomed from all industry sectors across Scotland5. Entrants need not be currently engaged in the decommissioning sector or oil and gas

industry. Propositions must be based on existing technology. Further information can be found later in this proposition submission form.

How to Apply

Interested companies can apply via the proposition submission form from page 6.

Send any questions or requests for clarification to decom@opportunitynortheast.com by 17:00 17 November 2020, and a response will then be emailed back to the sender within three working days.

The deadline for applications is 17:00 19 November 2020, and an email will confirm submission receipt. Information received will be treated in confidence and used exclusively for the purpose of assessing the proposition.

This is not an invitation to tender for a specific piece of work, but instead is to identify potential solutions with future possible work packages in mind.

Process Step Information

5 Please read the Eligibility information in the Proposition Details section (page 7)

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Due to the situation with respect to the COVID-19 pandemic at the time of this Opportunity release, this Opportunity is likely to be conducted on an entirely remote basis in order to remove the need for any face to face interaction.

The 6 key steps of the process are outlined below:

Step Number Date Description

1 20 October – 19 November 2020 Opportunity open, clarifications by 17 November 2020.

2 19 November 2020, 17:00 Deadline for submissions.

3 20 November 2020 Propositions reviewed and selected, and all companies informed of outcome.

4 23 November – 4 December 2020 1-1 pre-pitch support sessions with ONE for successful companies.

5 Mid December 2020 Pitch meeting (exact date to be confirmed)

6 From Mid-December 2020 ONE feedback for pitching companies.

ONE and its Partners take appropriate measures to ensure that the personal information disclosed to us is kept secure, accurate and up to date and kept only for so long as is necessary for the purposes for which it is used – please read Appendix A carefully before returning a signed copy alongside your submission.

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Please complete the following General Details form in full

GENERAL DETAILS

Application Title Modular Well P&A Integrated Support and Operation Services Concepts

Contact Name Click or tap here to enter text.

Company Name Click or tap here to enter text.

Company Number Click or tap here to enter text.

Address Click or tap here to enter text.

Postcode Click or tap here to enter text.

Telephone Click or tap here to enter text.

Email Click or tap here to enter text.

Date Click or tap here to enter text.

Note – the above part of the form (General Details) will only be shared between ONE and non-operator partners

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Please complete the following Proposition Details form in full

PROPOSITION DETAILS

Company Name Click or tap here to enter text.

Value Proposition and Impact

Provide a description of the value proposition and the impact it will bring to the challenge in the UKCS and globally. Address the specific challenge, providing an overview of the technical solution, service, commercial offering etc. (maximum 500 words)

Click or tap here to enter text.

Maturity

Have you applied this type of proposition elsewhere or similar applications? Address what are the key differences. (maximum 250 words)

Click or tap here to enter text.

Commercialisation

If the solution requires development to commercialise into the marketplace, highlight the costs and delivery period. Note: Proposition must be based on existing technology. (maximum 250 words).

Click or tap here to enter text.

Gaps

Identify any gaps in the proposition and/or where assistance may be required i.e. in the solution itself or in the application of that solution. Highlight any need for match-making with other companies to provide a complete offering and any track record of working collaboratively. (maximum 250 words)

Click or tap here to enter text.

Eligibility

Advise the location where the proposition will be managed and delivered from. If not from Scotland, advise if the intention is to develop a location in Scotland, outlining the intended facility size, location and services.

Click or tap here to enter text.

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Company General Market Offering

Describe the company general offering and its background. (maximum 250 words)

Click or tap here to enter text.

Company Strengths

What are the key strengths of the company? (maximum 250 words)

Click or tap here to enter text.

Company Size and Business Trends

What is the current size of the company (in terms of annual turnover and employee numbers) and trend over the last 7 years? Detail if it is part of a larger organisation. (maximum 250 words)

Click or tap here to enter text.

Business Support

Is the company currently receiving, or has previously received, business support or funding from other public authorities such as Scottish Enterprise? If so, please provide details and point of contact.

Click or tap here to enter text.

Source

Please indicate where you heard about this opportunity – please be specific

Click or tap here to enter text.

Please submit completed applications to decom@opportunitynortheast.com The deadline for applications is 17:00 19 November 2020. An email will confirm submission receipt.

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Appendix A.

Acknowledgement of Data Sharing

BACKGROUND

This Notice governs the disclosure by ONE of certain data (as defined below) with its partners. The data may include Personal Data (as defined below) and this means that both ONE and its partners will become controllers of that Personal Data pursuant to the Data Protection Legislation.

Data Protection Legislation includes the General Data Protection Regulation (Regulation (EU) 2016/679) and any successor legislation to the GDPR and the Data Protection Act 2018, the Regulation of Investigatory Powers Act 2000, the Telecommunications (Lawful Business Practice) (Interception of Communications) Regulations 2000 (SI 2000/2699), the Electronic Communications Data Protection Directive 2002/58/EC, the Privacy and Electronic Communications (EC Directive) Regulations 2003 (PECR) and all applicable laws and regulations relating to processing of personal data and privacy, including where applicable the guidance and codes of practice issued by the Information Commissioner.

1. PURPOSE

1.1 ONE and Scottish Enterprise (SE) have jointly developed a programme to assist the oil and gas supply chain maximise emerging opportunities in offshore decommissioning. The programme has identified several decommissioning project opportunities with a range of oil and gas operators. Supply chain companies across Scotland are invited to propose innovative and creative solutions in response to these challenges to improve efficiency and reduce cost and safety risk in an environmentally responsible manner.

1.2 ONE and SE are seeking propositions from companies with business and technical solutions applicable to Modular Well P&A Integrated Support and Operation Services Concepts on behalf of operator sponsors, including Spirit Energy. Specifically, ONE and SE are looking for solutions to support efficient decommissioning activity.

1.3 Submitted propositions will be received and reviewed in confidence against key criteria by a panel with successful applicants going on to pitch their solutions to the operator sponsors. These propositions will also inform ONE and SE on what companies will be eligible for business support packages.

1.4 Operator sponsors will gain access to targeted solutions focused on their operational challenges and potentially pursue further dialogue with selected applicants. It is acknowledged that the sponsors may subsequently enter more detailed technical or commercial discussion with these companies.

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1.5 Support will be provided to selected organisations throughout the process, including one-to-one support to build the business case, develop the operator pitch and provide targeted business support. Applicants will obtain access to and feedback from end-user operators, improved understanding of operator needs, improved business cases and business development support.

1.6 ONE therefore is required to have access to and on occasion to share, certain Personal Data with key partners in the region for the purposes described in clauses 1.2-1.5 (the “Agreed Purposes”). It is recognised that there are significant benefits to both Parties of having this representation. This Agreement is required to ensure that where Personal Data may be shared or accessed, such activities will at all times, comply with the requirements of the DPA and the GDPR.

1.7 For this project, ONE’s partners, who will be involved with the panel and operator pitch sessions, include the following companies:

(a) Scottish Enterprise;

(b) Oil and Gas Operators

1.8 Additional partners may participate over the course of the project, and are each required to confirm that they will keep all information provided to them confidential. Personal data provided in the ‘General Details’ section of the application will not be shared with partners other than Scottish Enterprise. It is the company’s responsibility to ensure that that personal data is not included in the ‘Proposition Details’ section. ONE does not accept any responsibility for any personal data included in the ‘Proposition Details’ section as this information will be shared with Operator partners.

2. SHARED DATA

2.1 The following types of data may be shared with non-operator partners: first name; surname; email address; telephone number; company address and location; other information such as proposed technical and commercial solutions to platform deck space solutions, company size, turnover and number of employees; business trends and plans; ownership structure and location; business support and funding information; projects or initiatives which may include data that, particularly in the case of very small datasets, could reveal Personal Data though as far as is reasonably practical, anonymised data would be encouraged.

3. DATA PROTECTION

3.1 ONE’s partners as listed in Section 1.7a, acknowledge and agree that, upon receipt of any Personal Data they will become controllers of that data in terms of the Data Protection Legislation and shall comply at all times with their individual obligations under the Data Protection Legislation.

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For the avoidance of doubt, this includes the appropriate technical and organisational security measures to guard against unauthorised or unlawful processing of personal data and against accidental loss or destruction of, or damage to, personal data.

4. DATA SUBJECT RIGHTS

4.1 Data Subjects (as defined in the DPA or as applicable in the GDPR) have the right to obtain certain information about the processing of their Personal Data through a Subject Access Request to either ONE or its partners. Data Subjects may also request rectification, erasure or blocking of their Personal Data.

By signing, I acknowledge that the information provided on the Decommissioning Business Proposition Submission and during any pitch session, will be shared with ONE’s partners as detailed above.

Company:

Name:

Position:

Date:

Signature:

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Appendix B.

AP1 – Accommodation Platform CPP1 - Central Processing Platform DP – Drilling Platform

Included below is a summary of the services required to support and operate the unit:

Bulks (and storage of) Cranage Well Services Drill Crew Mud returns Well Control Equipment (excluding BOP) Mud pumps / Standpipe Manifold Cement Unit Mud mixing / storage BHA / tubular make up

Key Capability of Existing Modular Rig (this can be assumed as free issue from Spirit Energy)

Purpose made modular well P&A unit. Capable of slickline, completion & cementing, milling and perf. & wash.

5000PSI 60kNm Top Drive. 150mT R&P Super Single Mast (Push / Pull) 13 5/8’’ BOP Set-up with Handling Frame Automated Pipe Rack / Pipe Handler Self-Erecting Mast X-Y Hydraulic Skidding Base Multifunction Palfinger Crane 3mT Tool Winch Drillers Control Cabin with Company Man Office Hydraulic power unit plus spare

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Typical DP6 / DP8 layout:

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Typical DP1 / DP3 / DP4 layout:

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