Aker Solutions and AF Gruppen have joined forces to provide offshore decommissioning and recycling services worldwide
They have signed a letter of intent (LOI) to merge the two companies’ existing offshore decommissioning operations into a 50/50 owned company. Together, they aim to create a leading global player to recycle offshore assets in an environmentally friendly way, making a significant contribution towards the sustainable, green transition of the offshore sector with dedicated facilities and assets for decommissioning.
AF Gruppen chief executive Amund Tøftum said the two parties have complementary strengths and capabilities “with potential to build a global offshore recycling powerhouse”. He added, their “ambition is to establish a unique recycling player, positioned to offer a total decommissioning solution for the global offshore recycling market.”
Aker Solutions chief executive Kjetel Digre said the company will combine offshore, engineering and project execution capabilities with decommissioning and construction facilities. “We aim to increase customer efficiency throughout the decommissioning process and maximise the total recycling potential,” Mr Digre said.
“The company will be uniquely positioned to offer integrated end-to-end services from well plugging and abandonment to planning, removal, dismantling and recycling at its own environmental base.”
Mr Digre expects demand for sustainable offshore decommissioning to rise in the years ahead. “Sustainability and circular economy ambitions will be key focus areas for the new entity, and we see increased activity in the market for decommissioning and recycling moving forward,” he said.
The transaction is expected to be completed before the end of 2021 and is subject to due diligence and regulatory approvals by the Norwegian Competition Authorities.
The business concept is based on solving a significant societal challenge by removing and recycling decommissioned oil platforms. The joint venture aims to recycle as much of the materials from the decommissioned offshore platforms as possible. The joint company will have an order backlog of around Nkr2.5Bn (US$289M).
This includes reception, dismantling and recycling three offshore installations from the Heimdal and Veslefrikk fields by Aker Solutions and Heerema Marine Contractors (HMC), following an LOI gained in March 2021 from Equinor.
Also included is AF Gruppen’s work to remove the Brae Bravo platform in the UK sector for facilities operator Abu Dhabi National Energy Co. The Brae Bravo platform, first commissioned in 1988, is being removed over three separate phases in 2021 and 2022, using HMC’s Thialf and Sleipnir heavy lift semi-submersibles.
Recycling steel from decommissioned oil platforms represents a significant contribution to reducing greenhouse gas emissions compared with ordinary steel production.
In recent years, AF Offshore Decom has achieved a source separation rate of 94% from structures for recycling where the main component is metal.
Reusing steel results in 70% less CO2 emissions than ore-based production, which corresponds to an emission reduction of 1 kg CO2 per kilo of recycled steel.
In 2020, AF Offshore Decom demolished and facilitated the recycling of around 22,000 tonnes of steel, corresponding to a reduction of alternative CO2 emissions of 22,000 tonnes.
Decommissioning offshore structures represents a vast untapped potential market globally, with approximately 10,000 operational platforms. Some areas, such as the US Gulf and North Sea have become leading areas for offshore decommissioning and recycling.
The North Sea alone holds significant potential, with more than 900,000 tonnes of top deck expected to be removed from 2020 to 2029. This applies to the UK, Norwegian, Danish and Dutch sectors. Based on today’s current annual decommissioning spend, it implies it will take operators approximately 100 years to deplete liabilities for current assets, meaning an acceleration in decommissioning operations is required.
In Australia, Aker Solutions was selected to deliver a subsea gas compression system for the Jansz-Io project which will help supply gas to the Gorgon LNG plant in Western Australia. Aker Solutions said it was in ongoing discussions with Chevron Australia to finalise the contract, which is expected to be valued at about Nkr7Bn (US$800M).
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