2016 is set to become an interesting time for the North Sea, and indeed the oil and gas industry around the world. Fluctuations in oil prices and political instability, mixed with technological improvements and a growing collaborative industry means the opinion on the future of the industry is continually changing.
Despite this, operators in the North Sea are forging ahead with plans to decommission platforms, giving them the capacity to focus on other oil producing assets. In 2015, the UK Government alone approved nine decommissioning projects in the North Sea, which includes the Thames Area project and the removal of three fixed platforms – proof alone that decommissioning plans are in motion in 2016.
North Sea and Central North Sea
The North Sea is set to see a vast increase in decommissioning activity in 2016 according to a report by Oil&GasUK. The North Sea and Central North Sea regions are forecasted to complete 45 plug and abandonment of wells in the next 12 months, with 32 of these being platforms.
Despite this substantial figure, and the fact that the approved projects by the UK Government were more than double in 2015 than they were the previous year, 2016 has been forecasted as one of the lowest decommissioning periods compared with the next four years.
Southern North Sea and Irish Sea
The outlook for the Southern North Sea and Irish Sea regions, however, tells a different story. 2016 will see 50 wells abandoned, 28 of these being platforms, but the next 12 months will be one of the most productive in the region. As well as easily beating 2014’s (12 wells) and 2015’s (27 wells) productivity levels, the spike in 2016 is set to beat forecasted figures for the next three years too.
‘Making safe’ in 2016
‘Making safe’ is the phrase coined by Oil & Gas UK to prepare platforms ready for decommissioning. Typically in the Central and North Sea, ‘making safe’, which includes the cleaning, disconnection and freeing equipment of hydrocarbons, is carried out two years prior to total decommissioning. Following these stages, the preparation of topsides is carried out 12 months before removal.
It is estimated that the Central and North Sea regions will remove over 40 topside modules in 2016 – a considerable amount of activity that will kick start the region’s £1 billion project to take away almost 160,000 tonnes of topsides over the next seven years.
2016 and beyond
After a period of 10 major decommissioning projects on the UKCS over the past twenty years, 2016 looks like the year that activity begins to ramp up. The North Sea’s oldest producing field that has supplied four billion barrels of oil from four platforms, the Brent oilfield, is already underway - just one of 21 live decommissioning projects.
Combined with the UK Government approved projects from 2015, and the four additional projects that have been submitted this year already, clearly no oil price fluctuation or political instability is going to disrupt the North Sea’s plans too much.
Decom North Sea have reported that as much as £1.5 billion will be spent this year on decommissioning projects, almost £250 million more than 2015. This upward trend is set to continue until 2019 when costs will peak at over £2.5 billion in the North Sea.
Likewise, activity in the region is set to surpass 2016’s figures over the next five years with well P&As averaging 62 projects per year – two statistics that prove that activity in the North Sea, and the decommissioning industry, are well and truly alive. Whether the market conditions will allow for the decommissioning industry to achieve these statistics - only time will tell.
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