Tuesday 26 November 2019 5:03 pm

Oil industry to spend £15bn on North Sea decommissioning

The UK oil and gas industry is set to spend more than £15bn on decommissioning activity in the North Sea over the next decade, as thousands of wells are expected to be withdrawn from service by 2030.

According to a new report from industry body Oil and Gas UK (OGUK), 2,379 wells will be decommissioned in the North Sea over the next ten years.

Read more: Oil industry reacts to Labours new £11bn tax pledge

The data finds that decommissioning now accounts for 10 per cent of all industry expenditure, as operators take up the opportunity to develop new capabilities.

According to the report, the skills that the industry has developed in order to meet the local challenge will stand it in good stead to tackle global opportunities.

The worldwide market is estimated at $85bn (£67m).

So far the sector has managed to reduce the cost of decommissioning by 17 per cent, considerable progress towards the Oil and Gas Authority’s target of a 35 per cent reduction by 2035.

Michael Tholen, upstream policy director at OGUK, said: “Decommissioning is not the end of our industry; it offers a new beginning.

“Decommissioning with the net zero agenda at the forefront of our minds will be the next big step; where we lead, others will follow.”

Read more: Chevron latest US major to quit North Sea with $2bn asset sale

Commenting on the report, Julia Derrick, oil and gas partner at law firm Ashurst, said:

“The fact that decommissioning costs are going down, through innovation and efficiency, and the fact that alternatives to decommissioning are also being explored, are very positive developments and should give companies investing in the UKCS greater confidence about the outlook for future decommissioning liabilities associated with mature assets.”

Share:
Tags: