Power struggle

Features - Specialty Demolition

The world’s energy portfolio shift is leading to opportunities, and a competitive landscape, for specialty demolition contractors.

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September 14, 2021

The demolition industry in the United States has become increasingly familiar with the opportunities connected to the decommissioning of coal-fired power plants over the past two decades.

Whether relating to large power plants or smaller boilers, most demo contractors across the country have likely bid on, or considered bidding on, power plant work in recent years thanks to the revenue these substantial projects can generate.

While coal may be the first energy source to become a casualty of a lower emissions future, oil refineries, wells and drilling platforms are also slowly getting phased out. And while nuclear power doesn’t come with the same emissions concerns, that sector’s older assets are reaching the end of their useful lives in considerable numbers.

Fewer nukes?

Nuclear energy has long had as many detractors as advocates, and in the coming decade, it seems likely there will be more decommissioning than startup activity in the sector.

Because of its proximity to New York City, one of the higher-profile nuclear plant decommissioning projects is underway at the Indian Point nuclear power facility in Buchanan, New York.

For that project to move forward, regulatory health and safety hurdles had to be cleared at both the federal and state levels.

The radiological cleanup and dismantling of a nuclear facility “is extremely demanding, both technically and financially,” stated a press release issued by the New York attorney general’s office in April of this year, as some of those hurdles were being addressed.

The New York State Public Service Commission was part of an oversight and negotiation process that also included the state of New York; environmental organizations; Entergy, the utility that owns Indian Point; and Camden, New Jersey-based Holtec International, the lead contractor.

For the contractor and any subcontractors involved, some $2.4 billion of aggregated decommissioning trust funds have been accrued to be spent on the project.

Indian Point is not the only project keeping Holtec busy, with its website also portraying involvement at the former Oyster Creek nuclear plant in New Jersey and the former Pilgrim nuclear power plant in Massachusetts.

Such work is unlikely to slow down, according to a 2020 study by India-based The Insight Partners available on ResearchAndMarkets.com.

The nuclear decommissioning services market was valued at slightly more than $5.8 billion in 2019 and is projected to reach more than $9.4 billion by 2027, growing in billings by 6.3 percent annually during that stretch.

“As large numbers of nuclear power plants are nearing the end of the operational timeline, the operators and the governments are planning to decommission the facilities, which is driving the growth of nuclear decommissioning services market,” the authors of the The Insight Partners report write. “In the recent scenario, the decommissioning of nuclear facilities is outpacing the construction of newer facilities across the major regions around the globe.”

As governments and companies around the world attempt to lower their greenhouse gas emissions or “decarbonize,” the pace of decommissioning and demolition activity may be even more hectic on the fossil fuel front. Some demo firms are already poised to be part of that activity while others are making moves to get more involved.

Breaking the carbon chain

This June, United Kingdom-based engineering consultancy RVA Group launched a new service designed to manage processes at “[a] number of industrial and process site closures globally.” RVA says the number of decommissioning opportunities in the global chemical, petrochemical, pharmaceutical, power, energy, oil, gas and heavy manufacturing industries “continues to rise.”

The sector is not new to RVA, with the firm saying it has “successfully delivered more than 850 decommissioning, decontamination, demolition and dismantling (DDDD) projects all over the world,” However, RVA Group says it had “identified a gap in the market when it comes to one of the earliest phases of preparing a site to be mothballed or removed.”

Asset owners commonly use internal resources to handle initial decommissioning work, but RVA says a “principal designer” should be involved to ensure the process is rigorously planned from the outset.

While the property owner can assume the role of principal contractor, “an experienced team with a decommissioning mindset should be charged with supporting or writing the decommissioning plan itself, as well as documenting the detailed processes to follow, and auditing works throughout,” according to RVA Group Managing Director Richard Vann.

“Nobody knows an asset or site better than the operator who has run it for several years,” says Vann. “So, when the owner calls ‘time’ on its operational life, it would be unwise to overlook the depth and value of process- and plant-specific knowledge that such individuals could bring to the table during a decommissioning project.”

He adds, “However, despite decommissioning often being considered an extension of site maintenance, it represents a specific engineering discipline that requires a distinct mindset. DDDD presents a number of opportunities that will not only make the process cost-effective, but also, in many instances, remove hazards and enable increased environmental, health and safety standards to be implemented.”

Regarding the financial argument for earlier involvement from decommissioning specialists, Vann remarks, “Sometimes operators go to such extremes that they undertake processes they don’t actually need to, as they could be handled more efficiently, and ultimately safely, during the dismantling phase.”

In the U.S., Louisiana-based Modern American Recycling Services Inc. (MARS) has spent more than 50 years providing demolition and recycling services to customers seeking oil rig decommissioning and dismantling, and large-scale recycling “of all types of vessels,” according to the company.

The firm had found steady work during the oil industry’s boom years and is poised to provide its services at sites that may wind down prematurely if the planet’s petroleum needs stabilize and recede in a potential decarbonization era.

The company has been recognized by Inc. magazine in five different years since 2009 as one of the fastest-growing privately held companies, “all while maintaining a safe working environment for our people,” says founder and owner Dwight “Butch” Caton Sr.

During its five decades in business, MARS says it has recycled nearly 10 million tons of offshore oil and gas structures and salvaged more than 10,000 barges, plus “hundreds of ships of various sizes.”

With the world’s wealthiest equity funds and largest corporations increasingly focused on investing in new energy sources while shifting away from others, specialty demolition contractors with pertinent experience seem poised to face a stable of opportunities that they can capitalize on.

The author is a senior editor with the Recycling Today Media Group, who can be contacted at btaylor@gie.net.