North Sea has ‘pivotal’ decade ahead for decommissioning, says report

The North Sea Transition Authority said £21 billion could be spent in the area in the next 10 years.

Decommissioning could provide the North Sea oil and gas sector with a “massive £21 billion opportunity” over the course of the next “pivotal” decade, a new report has revealed.

Over the period 2017 to 2022, the industry spent around £8 billion on decommissioning work in the UK Continental Shelf (UKCS), with sector body the North Sea Transition Authority saying this had helped “establish a solid foundation of decommissioning expertise”.

But with an estimated £40 billion to be spent on decommissioning in the North Sea, and about £21 billion of this expected to be in the next decade, Pauline Innes of the NSTA described it as a “massive” opportunity.

Decommissioning involves the removal of oil and gas infrastructure from the North Sea at the end of projects, with redundant wells being plugged or resealed.

Spending on this amounted to £1.6 billion in 2022, more than in any of the five previous years, a new NSTA report revealed.

It said: “Decommissioning will span the next four decades but around 90% of spend will complete in the next 20 years, with the decade up to 2032 forecast to deliver peak activity.

“The next 10 years (current decade 2023–2032) are regarded as pivotal for decommissioning across the UKCS basin.”

UK suppliers are also in line to secure about 70% of the work associated with North Sea decommissioning projects, it added.

Ms Innes, the NSTA’s director of supply chain and decommissioning, however stressed the importance of the industry working together if it is to “overcome challenging market conditions and remain competitive on cost”.

Speaking as the organisation published its latest decommissioning cost and performance report, she said: “The North Sea decommissioning sector is highly active and productive, and the industry is ideally placed to realise the massive £21 billion opportunity which will come its way over the next 10 years.

“However, operators must redouble their commitment to collaborate with the supply chain and plan even more effectively if they are to overcome challenging market conditions and remain competitive on cost.”

Bob Fennell, co-chair of the Decommissioning and Repurposing Taskforce (Dart) and North Sea executive vice-president at Harbour Energy, also spoke of the importance of operators working together.

He said: “It is critical that North Sea operators work together to ensure that oil and gas assets which, at the end of their production life, cannot be repurposed to support new technologies like carbon capture and storage, are decommissioned safely and in the most cost-effective manner.

Sam Long, chief executive of the decommissioning trade association Decom Mission, said: “As the report highlights, there remains a considerable volume of work to be executed, the majority of which is within the immediate decade.”

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