UKCS Decommissioning Expenditure to Hit £1 Billion For First Time in 2014

Expenditure on decommissioning on the UK Continental Shelf is seen on a upward trend, with total forecast expenditure on decommissioning from 2014 to 2023 at £14.6 billion, according to a report released by Oil & Gas UK on Thursday.

In 2013, £470 million was spent on decommissioning. If the expense was set to remain on the same level, the total expenditure would be around £4.7 billion. But this is not the case, and decommissioning expenditures are expected to triple with respect to 2013 levels. 

“For operators, this might be a case of collaborating on work programmes to reduce cost and gain greater efficiency, and for the broader supply chain it is ensuring 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,” Oonagh Werngren, operations director at Oil & Gas UK, commented.

The majority of the decommissioning is expected to take place in the central North Sea.

‘Forty-three per cent of total forecast expenditure will be concentrated in the central North Sea (£6.3 billion),’ explains the note.  

According to the report, most of the expenditures are related to well plugging and abandonment. 

The rising expenditure represents a new opportunity for new entrants.  

“It also highlighted the need to shift procurement strategies away from focusing solely on providers with long-term experience within the industry and to include new entrants to the supply chain who can introduce innovative methods, reduce costs, and broaden the supply chain market,” Clare Lavelle, Arup’s Scottish Energy Consulting Lead, commented in a separate statement.