North Sea shutdown ‘to bring £17bn bonanza’
SPENDING on decommissioning in the UK sector of the North Sea could total £17billion over the next eight years, an industry expert has said.
Mike Tholen, of Oil & Gas UK, said that was the figure expected to be spent on such work in the UK Continental Shelf (UKCS) between now and 2025.
He spoke as a report from the industry body said that decommissioning expenditure could make up almost a fifth of all spending in the North Sea in less than a decade.
Only 2 per cent of all spending in the UKCS went on decommissioning in 2010, but the report said that could reach 17 per cent by 2025 as production comes to an end in more oil fields.
And with 349 fields in the North Sea forecast to enter this stage between 2017 and 2025, the organisation believes the UK could become a global leader in decommissioning.
The process is forecast to take place in 214 fields across the UKCS, as well as 106 fields in the Dutch Continental Shelf, 23 in the Norwegian Continental Shelf and six fields in the Danish Continental Shelf over the eight years.
Across those four regions, more than 200 platforms are forecast for complete or partial removal, while nearly 2,500 wells are expected to be plugged and abandoned, with almost 4,846 miles of pipeline also forecast to be decommissioned.
Spending on decommissioning amounted to £1.2billion in 2016, 7 per cent of total UKCS expenditure.
The latest Oil & Gas UK Decommissioning Insight report said this could rise to 11 per cent – or £1.8billion – this year, with annual expenditure expected to remain stable at about £1.7billion to £2billion a year.
So far, only 10 per cent of platforms and less than 5 per cent of pipelines in the North Sea have been decommissioned.
The report said: ‘The UK supply chain is therefore in a good position to develop the requisite skillset and experience to form an international centre of excellence in decommissioning.’
It is the first time the report, which is now in its eighth year, has included decommissioning work in other areas of the North Sea, apart from the UKCS.
Mr Tholen said: ‘This additional information will help the supply chain better understand the demand for their service and expertise. We face an exciting future. What we do now in the UK will reap rewards for years to come.’
‘UK will reap rewards for years’