UK: Decommissioning sector shows growth

The UK oil and gas industry’s decommissioning sector is growing at a steady pace according to Oil & Gas UK’s 2015 Decommissioning Insight, launched on Wednesday.

The publication forecasts that total decommissioning expenditure on the UK Continental Shelf (UKCS) will reach £16.9 billion ($25.7B) over the next decade (2015-2024).

The trade organisation shared the results of its annual decommissioning survey at the Offshore Decommissioning Conference in St Andrews, an event organised jointly with Decom North Sea and sponsored by Babcock International Group.

Oonagh Werngren, Oil & Gas UK’s operations director, said: “This year 28 operator companies responded to the survey. While they forecast an increase in expenditure compared with the £14.6 billion recorded in 2014, the increase is primarily due to new projects entering the 10-year survey timeframe rather than increased cost estimates from existing projects. Over the next decade, 79 platforms are forecast for removal across the UKCS representing around 17 per cent of some 470 installations that will require decommissioning over the next 30 to 40 years.

“The survey confirms there are a small number of major decommissioning projects under way with well plugging and abandonment activities representing the largest category of expenditure with over 1,200 wells scheduled for work over the next decade.

“While the industry recognises decommissioning activities are steadily growing, its focus is to maintain offshore production in the North Sea for as long as it’s safe and economically possible to do. The key to sustaining the health of the sector is to take the initiative now to help an efficient decommissioning market emerge as part of, and alongside the industry’s continued and sustained programme of capital investment in new developments.

“Oil & Gas UK is doing all it can to help the sector work collectively to realise the potential of this opportunity by ensuring knowledge and expertise is shared. Accordingly, this year’s survey has been expanded to include analysis of the oil price impact on decommissioning and information about the cost per tonne for activities involved in making sure facilities are safe for removal such as cleaning, freeing equipment of hydrocarbons, disconnection and physical isolation. This edition also includes a deeper analysis of Floating, Production, Storage and Offloading vessels (FPSO) decommissioning projects.”

The Decommissioning Insight follows the publication last week of guidance to improve the efficiency of inspection and maintenance activities in late-life asset management and decommissioning, as well as, a report Oil & Gas UK and Decom North Sea published jointly to outline good practice in bringing into the UK market new solutions which have the potential to deliver cost reductions and manage activity more effectively.

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