Oil crisis will see 150 rigs scrapped within ten years
ALMOST 150 oil rigs in UK waters could be scrapped within a decade, warn industry analysts.
Energy consultancy Douglas Westwood said it anticipated ‘146 platforms of the current stock will be removed during 2019-26’.
The North Sea has been hit hard by plummeting oil prices, with industry body Oil & Gas UK estimating 65,000 jobs have been lost since 2014.
However, Douglas Westwood said decommissioning could provide an opportunity for specialist firms.
Later this month it will publish its decommissioning market forecast for the North Sea – covering Denmark, Germany, Norway and the UK – for the period 2016-40.
Ahead of that, a paper on its website predicted that ‘ the UK will dominate decommissioning expenditure’.
This is due to‘ the high number of ageing platforms in the UK, which have an average age of over 20 years and are uneconomic at current commodity prices, as a result of the high maintenance costs and expensive production techniques required for mature fields’.
Douglas Westwood said: ‘The oil price collapse has been bad news for nearly every company involved in the industry, but one group that could benefit from it are specialist decommissioning companies.
‘For these companies there is an opportunity to be part of removing the infrastructure in the North Sea.
‘With oil prices forecast to remain low, life extension work that has kept many North Sea platforms producing long past their design life no longer makes commercial sense.’
A Scottish Tory spokesman s ai d: ‘ These are deeply worrying times for Scotland’s oil industry, which is why we welcomed the recent city deal for Aberdeen and why we hope to see more support in the forthcoming UK Budget.
‘We are better able to take on these challenges as part of a wider UK. It is for the Nationalists to explain how splitting up the UK at the end of next month – as they hoped to do – would have hel ped t he i ndustry and the j obs it supports at this time.’
Scottish Green co-convener Patrick Harvie said: ‘This analysis shows we have no time to waste if we want our workers and our economy to benefit from the drive to decommission North Sea rigs.
‘Whether our Governments like it or not, the future of North Sea oil is more uncertain than ever and thousands of people will l ose t heir livelihoods unless we secure work in areas like decommissioning and renewables.’
Mr Harvie added: ‘Governments both in Westminster and here in Scotland like to pretend that by throwing subsidies into the North Sea we can make the oil industry last for ever. But while they hope for the best, valuable opportunities to take a leading position in the decommissioning sector are floating by.
‘It would be irresponsible, foolish and extremely shortsighted to let other countries seize the opportunities of decommissioning. The Scottish Government must urgently accelerate its efforts if we’re going to secure jobs in the sector and make sure Scotland is ready to bid for contracts.’
Douglas Westwood’s prediction comes days after another consultancy, Wood Mackenzie, said the UK is the country third most l i kely, behind Canada and Venezuela, to see oil fields permanently shut down as a result of low prices.
A Scottish Government spokesman said: ‘Given the age of some oil platforms, some decommissioning is to be expected over the next decade, but we must avoid unwarranted and premature decommissioning.
‘We are committed to helping the oil and gas industry invest in skills and improve competitiveness to deal with the fact the current oil price is level. ‘ The UK Government’s efforts to help need to go further in the forthcoming Budget to make the changes which will maintain competitiveness and address barriers facing the industry.’