North Sea decommissioning costs could hit £17 billion by 2025, expert says

Removing redundant oil infrastructure will be costly but can offer opportunities, writes Chris Mccall

Spending on decommissioning in the UK sector of the North Sea could total £17 billion over the next eight years, an industry expert has said. Mike Tholen, of Oil and Gas UK, said that was the figure which was expected to be spent on such work in the UK Continental Shelf (UKCS) between now and 2025. He spoke as a new 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. Just 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. Decommissioning 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 7,800 kilometres of pipeline also forecast to be decommissioned. Meanwhile, the first awards from the Decommissioning Challenge Fund has seen seven projects across Scotland offered a share of £1.1 million. This will provide opportunities for the oil and gas supply chain to benefit from the decommissioning of North Sea infrastructure. Grant offers have been made to projects in Dundee, Methil, Montrose, Ardersier, Stornoway and Hunterston. The projects will support work towards infrastructure improvements for decommissioning at ports and yards, including the installation of the UK’S largest permanent quayside crane in Dundee. The second round of funding is now underway and a number of innovative and exciting projects are being considered for a grant offer, subject to the completion of due diligence. A further six projects from the second round remain under consideration, with a total value of £1.4 million.

0 Rigs laid up in the Cromarty Firth