Decommissioning, as we have seen in the case of recent North Sea projects, is set to be increasingly technically challenging, and with that, costly. From initial planning to the site clean-up, a decommissioning project can also take a significant period — potentially years to complete.
The costs of decommissioning have become a serious issue for operators in the North Sea. In December 2016, Oil & Gas UK predicted that £17.6 billion will be spent on decommissioning between 2016 and 2025.
With oil prices failing to rise back to 2010 levels, it has fallen to the industry and key operators to look for streamlining solutions to protect their revenue streams. Subsequently, regulatory bodies and agencies have kicked into action to try and help the region understand the challenges that the decommissioning sector brings. This includes providing insight and advice into approaches to drive efficiency savings.
Deloitte’s John England hit the nail on the head in his latest report, 2017 outlook on oil and gas, when he described his views on the global economy in 2016, 2017 and beyond. “While I called 2016 the ‘year of tough decisions,’ I’d characterise 2017 as ’the slow road back.’”
2017 is however already seeing some positive economical improvements. The oil and gas industry is showing some progress with OPEC’s decision to cut production, for example, accelerating the drawdown of global oil inventories. This will help over time create a sustainable, efficient and profitable industry once more.
Who would have predicted what would proceed the results of the EU Referendum on the 23rd June 2016?
As political and cultural differences have come to the fore over the past six months, the one area that UK businesses have been able to agree on is by calling for the Government to make a ‘smooth transition’ from the European Union.
For the North Sea, in particular, facilitating this transition has never been so needed – especially as the maturing UK Continental Shelf (UKCS) continues to need investment at this critical juncture in its history.
Decommissioning is an emerging sector in UK and Norwegian waters. Accounting for 2% of total expenditure in the industry back in 2010, decommissioning now accounts for over 5% in the latest statistics released by Oil & Gas UK.
Over the next decade, Oil & Gas UK expect more than 100 platforms to be partially or completely removed, over 1,800 wells are forecast to be plugged and abandoned, and close to 7,500 kilometres of pipeline are set to be decommissioned.