The constraint: regulations and uncertainty in planning

The Norwegian system has regulations and requirements for decommissioning, involving safety and environmental aspects, in place. However, with increasing knowledge and experience gain, changes to this as for example related to better alignment and updated rules for reuse and recycling practices are likely to be expected. Thus, an increased need for standardisation and stronger cross-industry collaboration will be seen in the years to come to mitigate the risk of costly delays and uncertainty in the planning process.

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Not only regulatory evolution is both needed and challenging, but also how we operate on the NCS licenses today. We are facing a structural mismatch: value creation increasingly depends on fast, low-cost marginal developments, while governance, commercial models and decision processes are still designed for large, long-cycle projects.

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In my daily work in Equinor, I see several examples of this. Keeping production levels and thus, our deliveries and income high, is increasingly dependent on marginal volumes. Those small new fields need to be tied-back to existing infrastructures, that are themselves at the other side of the field life curve, reaching end of lifetime. In addition, license structures are often complex with different owner structures in the host and tie-in licenses. All parties share the common goal of increasing volumes on the NCS. However, we face a big dilemma due to the complexity of commercial agreements, restricted information sharing, various owner interests, technical challenges on aging facilities, and particularly the uncertainty around the lifetime of host structures.

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As a result, there is the risk of not being able to find an economical solution to develop those volumes. So, in the end, everyone loses, if we do not manage to find new ways to collaborate and create a win-win situation.

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Simpler models, faster decisions and trust-based collaboration

How can we achieve this? The easy answer seems to be by simplification and more pragmatic and efficient decision-making processes. However, this requires courage and openness from all actors on the NCS. Marginal volumes cannot be fetched with long decision and negotiation processes, and unflexible tie-in agreements that have worked in the past but are not ready for the new phase we are entering.

Changes will need to be based on trust and willingness to collaborate in a new way. This might also include solutions that focus on an area optimisation rather than maximisation gain for each partner involved, meaning that making some sacrificing decisions for the greater good might be essential. Incorporation of new processes, change processes, and implementing learning of first attempts from one license area to another will require a common effort and resources to make this work. But I believe that in the long term, we have a chance of being more efficient due to simplified structures which then will allow us to free up resources and better utilise existing infrastructure, and thus, increasing value together.

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Equinor is undergoing the biggest organisational change probably since the Norsk Hydro and Statoil merger, reacting to the new situation on the NCS and implementing an organisational structure ready to open for new and more streamlined processes.

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It gives me confidence that we will find smart solutions for the future, however, this transition can only succeed if all actors are willing to work closely together. For that, organizational change is necessary, but not sufficient. Without parallel changes in commercial models, regulatory flexibility and incentive structures, the risk is that we reorganize ourselves into the same outcomes. Both, authorities and industry need to collaborate to find simpler and more flexible frameworks to promote faster decision-making. Without this, we all risk not being able to develop further resources in a profitable way – but together, we have the chance of overall value creation.

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Ivy Becker

Project Manager Area Development, Equinor