Re-use & Decommissioning in The Netherlands: A Joint Effort

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EUOAG Meeting Re-use & Decommissioning in The Netherlands: A Joint Effort 20 September 2017

Content Introduction EBN & NOGEPA Netherlands re-use & decommissioning landscape Netherlands Masterplan for Decommissioning & Re-use Joint industry project Summary 2

EBN: Dutch State participant (Data: NLOG, July 2015) Industry partner & co-investor in E&P of natural gas and oil Non-operating partner (40-50%) for oil & gas companies Shares held by the Dutch State 2015 results: 21 bln Nm3 (incl. Groningen) 2,6 mln bbl 2,1 bln State revenues Exploration >> Production >> Gas storage >> Distribution (wholesale) Distribution (private) EBN's influence and responsibilities 3

Represents the interests of the companies licensed to explore for and produce oil and gas in the Netherlands Vision: Contribute to an open and transparent energy transition towards a fully sustainable energy supply in 2050 Current projects: Code of Conduct, Decommissioning, NOx, NOGEPA Standards, Onsaardgas.nl, North Sea Integration 4

EBN interest in re-use & decommissioning The Netherlands Ministry of Economic Affairs have requested EBN to take the lead in organising the Dutch decommissioning challenge: EBN is 40% owner of the Dutch oil & gas production infrastructure Wells Facilities Pipelines Tax payers pay 73% of the total cost of decommissioning 7 Bn = cost estimate of decommissioning in the Netherlands offshore: 5 Bn, onshore: 2 Bn 5

The Netherlands offshore O&G infrastructure Shallow water depths: < 50 meters Similar platform types: 151 steel jackets and monopiles 2 steel gravity bases 2 concrete gravity bases Well depth: 2000 4000 meters Pipelines: buried Berkel L10-A complex L10-G 6

Netherlands decommissioning regulations Described in the Dutch Mining Act, Decree & Regulations Mining installations are to be removed after use, including materials near location Timing of removal may be set by Ministry of Economic Affairs Removal of offshore installation parts to 6 m below seabed Onshore disposal (NORM, asbestos) Site restoration Pipelines can be left in place - (possibly) in future to be removed after use Cleaning, protecting & regular surveying required Wells are to be permanently abandoned Kill fluid (corrosion inhibited) Sealing to be absolute & sustainable (cement or equivalent alternative) Casing to be removed 3 m below ground level or 6 m below seabed 7

Staying in control of our costs 1. Based on reservation of ~ 3 mln per well based on 27 wells decommissioned to date as at January 2017 Source: Operator and EBN estimates total Netherlands (onshore + offshore) 8

North Sea Offshore O&G infrastructure UK N NL DK Total 4,000 323 370 20,000 67 50 1.2 2,400 199 350 >10,000 25 1.3 700 156 25 3,500 5 0.1 500 62 5 1,800 5.5 0 7,600 740 750 >35,000 86 2.6 Wells (#) Platforms (#) Subsea (#) Pipelines (km) Total future decom costs ( Bn) Decom expenditures 2015 ( Bn) Source: WEC NL 2017 9

Our energy transition will change the North Sea Rotterdam planning for Offshore Center Maasvlakte 2 Accommodating offshore wind and O&G decommissioning industry 10

Infographic

Electrification Objective: Reduce near future CO2 and other emissions on platforms What is needed: Connectors between windparks and platforms Brown field modifications on platforms Working ETS Regulatory framework 12

Nature as it once was 13

Return to nature Should we dismantle the platforms or investigate ways of continue using the lower part i.e. the steel jackets to preserve and restore the North Sea s marine habitat? Platforms Naturally is a temporary (15 years) research and demonstration pilot project with which we aim to discover if, and how, jackets can contribute to improving nature. 14

CCS: Back on the radar Source: Port of Rotterdam 15

Many 2030-2050 visions on CCS Q16 MPP3 16

Urgency: COP approaching rapidly 12 ct with reserves only 12 ct/m3 25 ct/m3 25 ct with all resources Source: Operator data and EBN Infrasim, Netherlands offshore gas installations only 17

NL Masterplan Decommissioning & Re-use Objective: to provide clarity what needs to be done (by whom) to jointly and successfully re-use and decommission the Dutch E&P infrastructure: Safe Sustainable Cost effective Within regulations Continually striving for zero safety incidents and minimum environmental impact Developing NL capabilities will have positive impact on the international Decom market 18

NL Masterplan Roadmaps developed in Sep-Oct 2016 1 3 5 7 9 Quantification of work scope Formation of a National Platform International experiences Regulation Innovation 11 Implementation plan 2 4 6 8 10 Industry collaboration Stakeholder mapping Shared learnings Standardisation Transparent communication https://www.ebn.nl/publicatie/masterplan-decommissioning-and-re-use/ 19

JIP H1 2017 focussed on developing initial priorities and lay the groundwork for execution levers Focus H1 2017 Initial priorities Mid-term objectives Establish a National Platform Establish a National Decommissioning Database Promote effective and efficient regulation Establish mechanisms to share learnings Foster effective collaboration Execution levers Support Quality, Cost-effective Standardisation Stimulate innovative decommissioning Build on International experiences Identify key stakeholders Launch a Tailored Communications Plan 20

Priority deliverable H1 2017 The National Platform (and website) design established. The National Platform will drive the agenda of the Masterplan forward: - New effective and efficient regulation - Cost effective standardization and innovation - Execution of pilot projects - Re-use and re-purposing - Joint decommissioning campaigns National Platform: NOGEPA members + EBN + MEA as observer (+ in due time affiliate members) 21

Our JIP has delivered tangible results National Platform Database Design and governance captured in the National Platform guide Platform name selected 6 objectives defined Outline report drafted with 24 specific analysis/charts v1.0 data collection ongoing Regulatory Identified and developed roadmaps for 4 key topics Initial engagements with key stakeholders (e.g. SodM) ongoing Shared Learnings Knowledge Management System and Who-is-who register built First workshop Wells P&A organized (20/6) Stakeholder engagement Initial stakeholder overview and approach in place Public website ready for review (incl. logo and housestyle) 22

Role of platform Goals and objectives of the national platform cover outcomes and the platform's role Outcomes Continue to strive for zero safety incidents and minimal environmental impact Reduce the costs for the general public and the industry of like-for-like decommissioning projects by 30% 1 Act as the public face of decommissioning 6 Stimulate collaboration amongst key stakeholders 2 Create demand transparency to support the development of a competitive service industry 3 Collect, compile and analyze info to enable benchmarking 4 Develop a dedicated innovation agenda 5 Propose amendments to existing regulations 7 Identify and share opportunities to re-use and/or re-purpose 8 Collect, develop and share lessons learned 9 Engage with relevant (inter)national bodies 10 Support and promote efforts to standardize 23

Annual NL Re-use & Decom Report: provides comprehensive picture of anticipated activity for all stakeholders Report will provide comprehensive picture of anticipated activity, thereby: Providing operators with valuable insights to assist in decom planning Pointing the supply chain to where demand for services is likely to lie Report will be made public and will contain anonymized data only Report will be published on an annual basis Main findings and conclusions in report may be presented at conferences and industry events Report will show similarities with Decommissioning Insight report that is published by Oil & Gas UK, but will include more: - Actuals of Decom activity and expenditure - Historically and currently installed base 24

National Platform launch 10 October 2017 Roadmaps Committees Platform staff Committees based on an objective Committees based on expertise Platform staff only Regulation Re-use/-purpose Database/Benchmark Innovation Collaboration Shared learning Standardization Public face International bodies General/ Admin 3) Wells committee 1) Regulatory committee 2) Re-use and re-purpose committee Supported by General Manager Quarterly meeting of operator community in charge of providing data 4) Facilities committee 5) Pipelines committee Supported by General Manager Dedicated platform staff Supported by General Manager Supported by General Manager Supported by Shared learnings leader Supported by Subject Matter Experts Supported by General Manager Communications manager Webmaster/IT lead General Manager General Manager Office Manager Legal support 25

Collaboration is key Wind operators Foster effective collaboration MEA 26

Summary Oct 2016: NL Masterplan for Decommissioning & Re-use developed H1 2017: Operators and EBN executed the Masterplan (JIP) priority topics + execution levers Design National Platform (and website) as main deliverable H2 2017: Lay-out & launch of the National Platform (JIP) 2018: add 4 mid term topics + re-use/re-purpose Execution of Masterplan through National Platform International alignment on re-use & decommissioning 27

Thank you! https://www.ebn.nl/publicatie/masterplan-decommissioning-and-re-use/ 28

EBN estimate of current NL Decom planning Source: Focus on Energy 2017, EBN 29

The National Platform will deliver added value in 6 areas by directly addressing pain points Six areas......where the platform will add value...... by addressing specific pain points Demand Transparency Regulation Cost Maintains a database complimented with publications on decommissioning progress, forecasts and timing which will improve our ability to plan and invest Creates a forum for informed dialogue to shape effective, efficient regulation Helps to clarify existing legislation and helps to draft guidelines Accelerates operational and cost improvements through performance benchmarking, standardization and sharing learnings Re-use and decom demand is not transparent, limiting the supply chain's ability to invest in assets and capabilities Dutch regulation can be open to interpretation, inconsistently applied, or doesn't always appropriately balance cost with risk Historic projects have had large cost overruns on top of an already undesirably high cost level, especially Well P&A Innovation Public Support Coordinates and drives an innovation agenda dedicated to distinctive Dutch issues Acts as the public face of decom, proactively engaging stakeholders Engage with relevant international bodies to further cooperation There are few innovation programmes specifically targeting the Netherlands' distinctive re-use and decom challenges The sensitivity of the public and some NGOs towards reuse and decom threatens our license to operate efficiently Collaboration A single forum will stimulate collaboration and enable campaign planning Identify and optimize opportunities to re-use or re-purpose infrastructure Explore the potential benefits of a dedicated decommissioning company Project approach (vs. campaign based) creates expensive, inflexible schedules and limits learning 30