OGUK: Survey shows decommissioning expenditures on the rise

Decommissioning expenditures offshore the UK and Norway in 2015 totalled £2.1 billion, up from £1.6 billion in 2014.

Decommissioning expenditures offshore the UK and Norway in 2015 totalled £2.1 billion, up from £1.6 billion in 2014.

Last year’s decommissioning expenditures represented about 5% of total industry expenditures, compared with 2% in 2010.

Oil & Gas UK said its “Decommissioning Insight 2016” is the first survey of both the UK and Norwegian decommissioning markets.

During the next 10 years, more than 100 platforms are forecast for complete or partial removal from both the UK and Norwegian continental shelves. More than 1,800 wells are scheduled to be plugged and abandoned, while about 7,500 km of pipeline is forecast to be decommissioned.

Mike Tholen, OGUK’s upstream policy director, said some companies “may be expediting decommissioning to take advantage of falling costs in the current downturn.”

But, Tholen said, others are deferring cessation of production as field life has been extended by sustained efficiency improvements, and still others are delaying decommissioning activity due to cash-flow constraints (OGJ Online, Feb. 10, 2016).

“With low oil prices continuing, you might expect decommissioning to be a key focus for the sector in the years ahead,” Tholen said. “However, we are not witnessing a rush to decommission.”

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