Report indicates record UK decommissioning costs this year

Offshore staff

ABERDEEN, UK – Industry association Oil & Gas UK has unveiled its latest annual forecast for decommissioning activity and expenditure on the UK continental shelf (UKCS).

This year’s “Decommissioning Insight” focuses on the activity of 28 UKCS operators and their decommissioning plans over the next 10 years.

Data was compiled from operators’ responses to a survey conducted this summer on their decommissioning activity and expenditure last year and respective forecasts for 2014-2023.

Oonagh Werngren, operations director, suggested operators might need to collaborate on programs to reduce cost and improve efficiency.

“For the broader supply chain it is essential the UKCS is geared up to take on this new challenge, ensuring the right technologies are developed and we have the resources in place to handle the  work.”

This year’s Wood Review also recommended a decommissioning strategy that helps the sector benefit from sufficient early planning and coordination.

Some of the main findings from the 2014 “Decommissioning Insight” are as follows:

  • In 2013, the UK industry spent £470 million ($753 million) on decommissioning.
  • Total forecast expenditure on decommissioning from 2014 to 2023 is £14.6 billion ($23.4 billion).
  • Forecast expenditure has increased since 2013, partly due to higher anticipated outlays for existing projects.
  • 43% of the total forecast spend will be on facilities in the UK central North Sea at £6.3 billion ($10.1 billion). Many projects included in the 2014 survey for the first time are in this region.
  • Since last year’s report, six projects have been deferred with their expenditure now occurring partly out of the survey time frame.
  • Most of the decommissioning programs are in the early scoping stages, so forecasts may change as the scope becomes more defined.
  • Well P&A accounts for 44% of the total forecast at £6.4 billion ($10.26 billion).
  • Operators expect UK decommissioning expenditure to reach £1 billion ($1.6 billion) for the first time in a single year in 2013, to be followed by an outlay averaging £1.5 billion ($2.4 billion) annually through 2023.

10/10/2014

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