Offshore industry chiefs have disclosed that more than 2,000 North Sea oil and gas wells are expected to be decommissioned over the next decade at a cost of approximately £20billion.
Several decommissioning projects have been brought forward, provoking an increase in the total costs from an estimated £16.6billion last year.
Offshore Energies has published its annual Decommissioning Insight report, saying an upsurge in decommissioning activity has begun this year, 2022 and is expected to continue over the next three or four years.
It Is estimated roughly 2,100 North Sea wells will be decommissioned over the next decade and about 200 per year at an average cost of £7.8million per well.
Ricky Thomson, Offshore Energy Decommissioning Manager, noted that much of the notable increase in expected spending is due to work being brought forward.
In a briefing to journalists, he said the industry has achieved fantastic savings of 25 percent on its expected decommissioning bill, which UK as a world leader in the sector.
The regulator, the North Sea Transition Authority (NSTA), has challenged offshore energy companies to bring down costs by a further 10 per cent by carrying out projects more efficiently.
Decommissioning Sector to Continue Growing for Years
Meanwhile, Mr Thomson, the UK’s chapter of Offshore Energy stated that the decommissioning sector is snowballing and will continue growing for years to come.
“But this poses a challenge as well as an opportunity. The growth of renewables and demand for decommissioning services and expertise will create increasing pressure for resources.
“This is a great problem to have and it’s vital this opportunity is properly managed across the sector so that UK firms can capture the lion’s share of this £20billion opportunity. With the right support from Government and action from the industry, the UK could make major gains from decommissioning, as well as retain thousands of jobs for this growing sector.”Mr Thomson
However, decommissioning work is required by law and work to remove oil and gas infrastructure from the North Sea is expected to continue until about 2070.
The NSTA indicated that the Industry should expand on its progress in lowering the cost estimates for decommissioning work. It wants to see the total bill for all decommissioning work reduced to £33.3billion.
Pauline Innes, the NSTA’s Head of Decommissioning, said, “We have rightly praised industry for the work it has already done to save billions of pounds on decommissioning, but now is the time to press home the advantage”.
“This new target will help keep up momentum and strengthen our industry’s reputation for safe, efficient and economical offshore project execution.”
To date, 7% of existing North Sea installations have been decommissioned including: three gravity-based structures (GBS), one large steel jacket, 19 other steel jackets, eight floating production systems, six subsea production systems, 19 pipelines and 11 other facilities.