Page 5 - EurOil Week 47

EurOil COMMENTARY EurOil
UK examines North Sea decommissioning progress
The UK still has a long way to go with the decommissioning of its oil and gas infrastructure in the North Sea
UK
WHAT:
The UK has made considerable
progress with the decommissioning of its offshore infrastructure but has a lot more to do.
WHY:
Only around 9% of all platforms installed on the UK Continental Shelf have been decommissioned today.
WHAT NEXT:
The industry is working to meet regulator targets on bringing decommissioning costs down.
THE UK oil and gas industry is set to spend over GBP15bn ($19bn) on decommissioning in the North Sea over the next 10 years, according to a new report from industry body Oil and Gas UK (OGUK). The report projects that 2,379 wells will be decommissioned in the North Sea over the same period.
The industry body’s findings show that the pace of decommissioning expenditure will be steady at GBP1.5bn ($1.9bn) per year, and that decommissioning now accounts for 10% of all industry spending.
Leading the way
The North Sea is among the leading regions for decommissioning, given its maturity. According to OGUK, 9% of all the platforms installed on the UK Continental Shelf (UKCS) have been decommissioned – or 38 out of 401. In line with broader industry trends, those responsible for decommissioning have worked to cut the costs involved. So far, the UK industry has managed to bring down the cost of decommissioning by 17%, making progress towards the target of a 35% reduction by 2035 as set by the Oil and
Gas Authority (OGA), the country’s industry regulator.
However, speaking at the Offshore Decom- missioning Conference in St Andrews, Scotland, this week, the OGA’s outgoing operations direc- tor, Gunther Newcombe, said more needed to be done to reduce spending.
Nonetheless, progress being made on cost-cutting and other advances is seen as a pos- itive for operators in the North Sea.
“The fact that decommissioning costs are going down, through innovation and efficiency, and the fact that alternatives to decommis- sioning are also being explored, are very posi- tive developments and should give companies investing in the UKCS greater confidence about the outlook for future decommissioning liabil- ities associated with mature assets,” an Ashurst oil and gas partner, Julia Derrick, was quoted by CityAM as saying.
“Decommissioning is not the end of our industry; it offers a new beginning,” OGUK’s upstream policy director, Michael Tholen, said. “Decommissioning with the net-zero agenda at the forefront of our minds will be
Week 47 28•November•2019 w w w . N E W S B A S E . c o m P5