Following the news that Fairfield Decom will cease trading, Graeme Fergusson, Managing Director, shares his thoughts on the sector and the immediate risks that it faces.
We established Fairfield Decom in 2019 with Heerema Marine Contractors and AF Offshore Decom, bringing together an unrivalled track record and expertise to create a unique solution for ultra-late life and decommissioning operations in the North Sea.
This week, we made the very difficult decision to cease trading. This was especially tough given the talented team that has worked tirelessly to bring this unique solution to the market, bolstered by significant support and encouragement from our shareholders, the supply chain, regulators, financiers and industry bodies.
There is widespread recognition of the need for a different approach to decommissioning, and the associated commercial practices in the sector, to mitigate higher costs. This was again highlighted recently in the Oil and Gas Authority’s (OGA) 2021 Decommissioning Estimate. Although our model was received positively by both operators and the wider industry, it has proven to be difficult for the operators to translate this enthusiasm into action.
Despite the industry calling for innovative decommissioning propositions, there is a discernible gap between the rhetoric and the reality. The Fairfield Decom team developed something entirely different – an innovative decommissioning model with integration at its core and a never-seen before commercial proposition. Nonetheless, without a firm commitment from an operator, numerous material offers fell at the final hurdle.
At an early stage, the Fairfield Decom team recognised the need for fit-for-purpose funding models in a new era of innovative and collaborative financial instruments, designed to deliver on energy transition and decommissioning goals. We believed this model was game-changing and differentiated our proposition from any other on the market. We remain confident that it is a model which will reduce costs across the basin for the benefit of asset owners and the Exchequer.
There must now be a sense of urgency in the decommissioning sector. Without the appetite for true commercial innovation and the willingness to move away from conservative working practices, we not only run the risk of higher decommissioning costs but of losing valuable skills and a sustainable supply chain. This, in turn will challenge the OGA’s decommissioning cost reduction target of 35% by 2022.
The next 20 years is poised to see an unprecedented increase in decommissioning activity. While we are naturally disappointed that Fairfield Decom will not be a part of that journey, we urge the industry to step up to unlock the huge potential of the global decommissioning market, thus providing much-needed opportunities for UK businesses and the highly-skilled energy workforce. The time for talk may not be entirely over, but in our experience, the time to act is now.