Wednesday 28 November 2018

Oil & Gas UK’s 2018 Decommissioning Insight Report, which provides a fresh insight of the market over the next ten years (2018–27), reveals that decommissioning expenditure is expected to run at about £1.5 billion per annum over the next decade, 20 per cent lower than forecast in 2017.

The report shows:

- The UK is expected to spend £15.3 billion on decommissioning over the next decade

- The rate of decommissioning expenditure is forecast to stabilise at around £1.5 billion per year, this is about 20% lower than forecast in 2017

- 1465 wells are expected to be decommissioned over the next ten years, representing 1/5th of total UKCS well stock

- Over 950,000 tonnes of topsides are scheduled for removal across the North Sea – of which just over 605,000 tonnes will be from the UKCS

- UK is the largest market for decommissioning spend over next decade, representing one-third of expenditure across the top 12 markets [Wood Mackenzie];

- Decommissioning on the UKCS offers first-mover advantage, which the UK’s supply chain can capitalise on, with the correct help

The report also notes:

Over the next decade

- The spend over this next decade is almost 20% lower than forecasts made last year would have suggested. Reductions have been driven by improved productivity (including cost reduction, efficiency improvement and deflation) coupled with the movement of activity beyond 2027. This demonstrates that the decommissioning market is maturing and making significant inroads to deliver on its 35% cost reduction target

- Cumulative expenditure up until 2027 has reduced by £4 billion in comparison with previous estimates

- Some individual projects have seen the average amount of days spent on well decommissioning halve throughout the lifecycle of a project

- Forecast costs per tonne for the removal of topsides in the central and northern North Sea have fallen by 13%, while the cost of removal per tonne for a substructure in this area has fallen by just over 16%

The report can be found on Oil & Gas UK’s website.