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Industry prepares for £10.4bn offshore decommissioning boom

Report highlights work to dismantle oil and gas installations and infrastructure.

Offshore dawn: More than £30bn is expected to be spent on offshore decommissioning by 2040, says the report

Offshore dawn: More than £30bn is expected to be spent on offshore decommissioning by 2040, says the report

More than £10bn is to be spent decommissioning offshore oil and gas facilities in UK waters over the next decade, a report revealed last week.

Decommissioning Insight 2013, published by trade body Oil & Gas UK says that £10.4bn is to be spent on taking assets out of service between now and 2022.

This includes decommissioning more than 2,300km of pipeline in 74 oil or gas fields, and at least 70 subsea projects.

Work in the northern North Sea is predicted to account for 44% of the total.

The central North Sea will see 32% of the investment, with the remainder in the southern North Sea and the Irish Sea.

Plugging and abandoning wells accounts for the most work, covering around 800 wells and worth a forecast £4.5bn.

Removal oil and gas platforms, and subsea infrastructure is expected to be worth £2.2bn over the next decade.

Almost 470,000t of material will be removed from UK waters, according to the report. 

In the longer-term, more than £30bn is forecast to be spent on decommissioning existing oil and gas assets to 2040.

“The [report] represents the latest view of decommissioning plans for the UK continental shelf,” said Oil & Gas UK operations director Oonagh Werngren.

“It highlights the growth of the industry in coming years and offers the opportunity for both operators and contractors to collaborate to maximise efficiency and reduce cost.”

The report says the expertise needed for the mammoth decommissioning programme is available in the UK. But it says challenges remain.

The average £1bn per year of decommissioning work will be dwarfed by the investment in new facilities, which will reach £13.5bn this year, the report points out.

“There may therefore be competition for resources within the supply chain, such as for rigs, vessels and skilled labour,” says the report.

“The challenge of finding sufficient skilled personnel is already well documented.”

Oil & Gas UK said the supply chain has not been tested with such a high volume of work.

“This is most likely to result in spreading activity over time to allow for appropriate adjustment,” says the report, which drew on the plans of 27 operators.

Oil & Gas UK also published guidelines on cost estimating for decommissioning.

“As the decommissioning sector matures, it is important that the industry has an accurate and consistent basis on which to estimate costs,” said Werngren.

“Oil & Gas UK’s new decommissioning cost estimation guidelines build on the industry’s latest experience in the practice and will be used extensively to plan future projects.”

 

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