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What does the decommissioning boom mean for the Oil and Gas industry?


More than £10billion is expected to be spent on decommissioning offshore oil and gas facilities in UK waters throughout the next decade, according to a recent report.

Decommissioning Insight 2013, published by trade body Oil and Gas UK, highlighted that £10.4bn would be spent on removing assets from service between now and 2022.

This is particularly significant as it will see the decommissioning of at least 70 subsea projects and more than 2,300km of pipeline in 74 oil or gas fields.

Meanwhile, more than £30bn is expected to be spent on decommissioning existing oil and gas assets until 2040.

Focus on the North Sea

The North Sea will be the location for a much of the work, with 44% of total decommissioning occurring there.

As a result the area will see 32% of the investment, with the rest being spent in the southern North Sea and the Irish Sea.

The key task will revolve around plugging and abandoning wells, with around 800 requiring work which will cost in the region of £4.5bn.

Meanwhile the removal of oil and gas platforms and other related infrastructure is expected to be worth £2.2bn across the next decade.

Getting an idea of scale

The report notes that almost 470,000 tonnes of material will be removed from UK waters – a remarkable undertaking given the sheer scale of proceedings.

“The report highlights the growth of the industry in coming years and offers the opportunity for both operators and contractors to collaborate to maximise efficiency and reduce cost,” said Oil & Gas UK operations director Oonagh Werngren.

Around £1bn per year of decommissioning work will be carried out, but this is dwarfed by investment into new facilities – expected to reach £13.5bn in 2013.

Therefore the race is on to find skilled labour that is capable of completing the required tasks, as a high volume of work is expected.

Guidance is to be made available to ensure that costs do not spiral during the decommissioning process, as Oil and Gas UK believes the sector’s supply chain has never been tested to the extent expected in the coming years.

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