Offshore staff
LONDON — Offshore Energies UK (OEUK) expects 2,100 UK North Sea wells to be decommissioned during the next decade, with an average P&A cost per well of £7.8 million ($9.26 billion).
The association’s latest Decommissioning Insight report finds that UK offshore decommissioning is expanding with a surge in activity likely over the next three to four years.
Last year decommissioning accounted for one-tenth of oil and gas expenditure on the UK Continental Shelf, and the proportion will rise to 14% this year and to 19% by 2031.
Over the next 10 years, spending on decommissioning could total £19.7 billion ($23.38 billion), with well decommissioning comprising nearly half the figure.
OEUK expects more than 75% of the decommissioning spend to be allocated to fields in the central and northern UK North Sea, with spin-off benefits to industrial areas around Teesside, Humber, Aberdeen and Inverness.
Decommissioning in the Irish Sea will benefit locations such as Merseyside.
But the continued growth of offshore wind could create resource bottlenecks for offshore decommissioning services, so the wind, carbon capture and storage (CCS), and oil and gas sectors need to collaborate and inform each other on their planned projects to ensure the situation is properly managed.
New cost target
Britain’s North Sea Transition Authority (NSTA) has set a new cost target for decommissioning. Since the start of 2017, the UK North Sea industry has trimmed its overall estimated cost estimate for decommissioning by £15 billion ($17.8 billion).
Now the NSTA is challenging the sector to lower the total estimate for decommissioning redundant platforms, wells and pipelines by an additional 10% between 2023 and 2028, from £37 billion to £33.3 billion ($43.9 billion to 39.53 billion).
The savings, it points out, can be invested in new production and CCS and platform electrification projects to reduce emissions.
The 10% target, agreed following consultation with the industry, is based on the NSTA's decommissioning benchmarking and actual cost savings secured by the sector’s top quartile performers during recent years.
But there are challenges because of inflation and because much of the potential savings have already been achieved.
The new target will be applied to the actual cost of completed projects, in addition to the overall estimate. The NSTA said it would continue to encourage companies to plan early, adopt innovative commercial models such as well decommissioning campaigns, repurpose infrastructure and use new technology.
Ben Cannell, Aquaterra Energy's business development and innovation director, commented on the NSTA news: "The new targets set from the North Sea Transition Authority today is an accelerated step in the right for decommissioning in the North Sea. It gives an added laser focus to drive forward the most practical and efficient engineering solutions the sector requires to meet targets. With more than 2,000 North Sea oil and gas wells expected to be decommissioned over the next decade, there’s lots to be done, but with the right government support, action from the industry and abundance of engineering talent, we can showcase why the UK is a leader in this space.”
11.22.2022
