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Decommissioning in the Middle East – market challenges and opportunities

Our Managing Director, Richard Vann recently spoke with the editor of
Tanks and Terminals to explore the challenges and opportunities associated with decommissioning in the Middle East .

If you missed the article, you can view it in full here:

As the oil and gas market advances in parts of the world such as the Middle East, all eyes are on what the future could hold for this developing sector. But to move forward safely, economically and with maximum respect for the environment, operators must also think carefully about how to proficiently manage their older assets.

Drawing on more than 30 years’ industrial experience, Richard Vann – managing director of RVA Group and past president of the Institute of Demolition Engineers – explores the challenges and opportunities associated with the clearance of tanks and terminals, and advises how to proficiently move forward with any decommissioning projects that arise…

On a global scale, oil and gas production has a rich and diverse history, and even on more local levels, the sector has evolved differently, from one country to the next.

The story in the Middle East, for instance, dates back to the turn of the 20th century, with oil reportedly first discovered in Iran in the early 1900s. Resource supply from countries such as Saudi Arabia began much later, with commercial quantities not unearthed until the late 1930s. But many would argue that the market became most interesting for this part of the world in the 1960s and 1970s, when the peaking of production in industrialised – and largely Western – countries, presented opportunities for Middle Eastern operators, particularly during the worldwide crises of 1973 and 1976.

There was a major investment in oil and gas during this era. But fast forward to 2020, and the consequence is that an unprecedented number of assets are now rapidly nearing the end of their natural design life, efficiency and environmental compliance. So, the question is how to clear tanks, terminals and other site infrastructures safely, cost-effectively and with minimal environmental impact.

The Middle East is not unique in demonstrating this trend of course, but many countries here now find themselves faced with a fairly notable challenge. Before the aforementioned upsurge in oil and gas activity, the landscape was largely undeveloped. There were no other heavy industries present, which means no industrial demolition history and consequently an absence of a supply chain proficient in this niche engineering discipline. This is therefore the start of a new decommissioning cycle, which has kickstarted a global hunt for expertise.

A global supply chain?

In many respects, despite the maturity of the demolition industry in countries such as the UK and USA – and consequently the level of specialist expertise which ought to be available – this worldwide search for a suitably skilled supply chain will not always be straightforward.

There are several capable contractors in the market. However, I have previously spoken at many international events about their unfortunate yet apparent reluctance to take on jobs outside their own borders, despite the opportunities this could present for the growth of their businesses. Assignments closer to home feel far more comfortable, for many.

This therefore narrows down the number of potential demolition teams able – or willing – to tender for work in Middle Eastern countries, among others.

Consultancy support and advice is undoubtedly even harder for asset owners to procure, as independent, strategic partners are rare. This has little to do with geography and is more a reflection of the makeup of the industry. Compare decommissioning to the world of building and construction, for example, where clients have a wealth of guidance at their fingertips, plus a variety of industry specialists to choose from when assembling their project team, and it is and always has been starkly different.

 

That is not to say, however, that it is impossible to form a proficient supply chain for Middle Eastern decommissioning projects.

Tank demolition

RVA Group has recently been appointed to help a Middle Eastern oil and gas company demolish a large floating roof storage tank.

The 106m diameter, 22m tall carbon steel fabrication – with a shell up to 50mm in thickness – has long been used to contain crude oil. But the tank was recently subject to an operational failure which resulted in a major fire, leaving it both structurally distressed and contaminated with residual hydrocarbons and other products of combustion.

This inherently high-hazard environment has therefore emphasised the need to plan for the adoption of cold-cutting demolition techniques only, to help ensure the strict control of sparks and any other possible sources of ignition generation. The continued monitoring of this potentially explosive atmosphere is also, perhaps unsurprisingly, paramount.

The project is of added complexity as all works are being carried out within a live crude oil stabilisation plant and long-distance pipeline pump station, with an operational ‘sister’ tank also lying adjacent.

Identified as a result of informal word of mouth recommendation, validated by initial remote research, RVA was then engaged by the client following several months of more detailed dialogue. The team’s first task was the development of a pre-tender safety plan to act as the backbone of all ensuing works. RVA has subsequently  been retained to provide specialist project management and HSE advice for the remainder of the project, and will assist the local contractor – an oil and gas engineering services supplier who has procured resources and equipment from the established global decommissioning sector – in the works execution. RVA has also supported the contractor in sourcing specialist UK personnel and equipment, for shipment to the Middle East.

At the time of writing, the team is three months into a six-month schedule.

Mounting demand from the Middle East

Having completed almost 800 decommissioning projects globally, RVA is no stranger to working on complex international assignments on virtually every continent worldwide. But enquiries from the Middle East are certainly at an all-time-high.

The team has recently worked with another organisation, for instance, to write a detailed specification of works to facilitate the tendering for the decommissioning and eventual demolition of a 1960s-built oil refinery in the region. Having supported the client with the devising of various corporate environmental, health and safety procedures, plus the procurement and management of a hazardous insulation materials survey specialist, before the next-step decommissioning activity can begin.

A stretched supply chain?

Sometimes, when a project team is formed of personnel from varying locations, a level of anxiety – or at least a degree of caution – exists surrounding the management of cultural differences. To a certain extent, this air of apprehension is understandable, as additional project considerations may of course present themselves. However, the thing for all parties to remember – because sometimes the appointed engineering teams also share such concerns – is that no two decommissioning assignments are ever the same, irrespective of their geography. To attempt to approach any works with uniform methodologies in mind, or rigid attitudes towards others for example, would not only be extremely foolish, but incredibly risky too – as far as decommissioning goes, there is no ‘one size fits all’.

Responsible partners in the supply chain on the other hand – RVA included – acknowledge the need to carefully and flexibly consider all project parameters on their own merit, so that a best-fit team, approach and schedule can be formulated on a case-by-case basis. As a result, such organisations and specialists are unlikely to be fazed by a demolition brief in the Middle East. Admittedly, it has the potential to create some additional criteria for consideration, but often a complex assignment in the consultant or contractor’s own country of origin generates unique challenges too.

Factors to consider

When assembling a multi-cultural project team, there are language barriers to navigate, as well as variances in everything from cultural beliefs to working hours and days. The time difference must be accommodated when planning dialogue between RVA’s personnel in the Middle East and resource at the UK HQ, for example, and with the weekend starting on Thursday evening and Sunday being a normal working day in this part of the world, further thought is required to ensure this does not ever cause any on-site disruption or delay. There is a need to adapt to and embrace local customs.

Some decommissioning teams less familiar with working abroad may even need to think carefully about the climate, as both hot and cold extremes can also influence on-site behaviour. The procuring client should ensure discussions take place around all of these factors, for utmost peace of mind that they will not cause any unexpected problems.

Legislation also varies significantly from country to country, which can set the tone regarding project expectations, unless carefully managed from the outset. A scrupulous decommissioning specialist will never knowingly put the wellbeing of an individual at risk, nor will they wish to jeopardise the commercial or environmental integrity of the project by taking an action which – in their eyes – could be seen to be cutting corners.

However, there should be one common law irrespective of culture, geography or the scope of works – respect. Respect for the client, colleagues, the environment, wider stakeholders and of course the engineering discipline itself, will help set the project barometer.

Establishing this respect naturally takes effort, but this is usually easier to attain with strong levels of communication, consultation and clarity. The corporate minimum standards for the project – however large or small – should be outlined and agreed from day one. Globally-respected European standards are often the starting point, but where higher levels of quality are known, they should always be the benchmark.

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