Britain’s North Sea Transition Authority (NSTA) is asking offshore operators to address various issues related to their well decommissioning obligations in UK waters.
Delayed plug and abandonment (P&A) work, competition for suitable rigs and cost pressures are pushing up the estimated bill for decommissioning, the NSTA noted in its latest Decommissioning Cost and Performance Update.
Last November, Supply Chain and Decommissioning Director Pauline Innes wrote to licensees urging them to make headway on their commitments.
The NSTA’s Directorate of Regulation has now opened investigations into alleged failures to complete P&A work in line with approved plans.
Post-cessation of production, UK operators have a legal requirement to decommission their platforms, pipelines and wells.
Taking too long over the preparation process, or deferring the work, pushes up the costs, the NSTA said, and can lead to platforms continuing to consume power and releasing emissions even though they are no longer producing oil and gas.
While knowledge-sharing helped bring down the NSTA’s overall decommissioning estimate for the UKCS by £15 billion ($19.43 billion) between 2017 and 2022, further improvements have been difficult to achieve.
UK operators now expect to spend about £24 billion ($31.1 billion) on decommissioning between 2023 and 2032, up £3 billion ($3.88 billion) on the estimate for the same period in last year’s report.
While some operators continue to collaborate and deliver savings, the majority need to improve, the NSTA said. Although operators spent about £2 billion ($2.59 billion) on decommissioning in the UK sector last year, in line with forecasts, they completed less work than planned.
The NSTA also called for increased well P&A activity, which it said is the costliest aspect of decommissioning. Operators can control their costs while fulfilling their regulatory obligations, it added, through engagement with the UK’s supply chain.
That means providing details of their inactive wells and placing contracts to get the work done.
As more of the UK’s offshore oil and gas fields shut down for good, hundreds of wells will need to be decommissioned annually. But last year, the NSTA found, operators only achieved 70% of planned well decommissioning activities last year.
Some operators, it added, are deferring programs in the hope that prices will go down in the coming years. At the same time, specialist rig contractors are seeking elsewhere where operators offer longer, more secure contracts, which will have an upward impact on prices.
The NSTA is also leading a project to identify which UKCS wells will be ready for decommissioning between 2026 and 2030 and assess the supply chain capacity needed to perform the work.
It claims that well decommissioning campaigns involving multiple operators and fields is one approach that can save time and money.
