UK North Sea Oil and Gas Sector to Cut Decommissioning Costs by Additional £3.7 Billion

The North Sea Transition Authority on Nov. 22 announced a new cost efficiency target for redundant oil and gas infrastructure. The authority is reducing the total projection for decommissioning redundant platforms, wells, and pipelines by an extra 10 percent, from £37 billion to £33.3 billion, between 2023 and the end of 2028.

The 10 percent target was agreed after consultation with the North Sea industry and is established by the authorities decommissioning benchmark and expenditure savings obtained by the sector’s top quartile performers in recent years. As it stands, the industry has made significant progress by reducing the overall cost estimate for decommission by 25 percent or £15 billion, since the beginning of January 2017. The industry aims to keep expenditure low, so that the saved income can be spent on new clean generation and carbon emission reduction projects, such as carbon capture and storage.

The new efficiency cost target will increase the UK’s energy security and assist the government in reaching its goal of net zero emissions. Moreover, the taxes related to decommissioning have also been reduced, which means costs are now lower, further incentivising decommissioning projects. Previously, the significant strides made in decommissioning can be attributed to the industry’s ability to learn from experience and implement projects more efficiently, amid usage of new technologies. To go one step further, new, clear and defined targets are required to drive the next phase of learning, continuous enhancement and focus on cost competitiveness.

In the UK a high number of fields are projected to indefinitely stop producing over the next 10 years, the decommissioning of these assets is expected to cost £22 billion. This provides the industry with a chance to work on more efficient methods and gives an opportunity to the supply chain for more jobs.

The authority will continue to ensure that all companies strive towards decommissioning. Accordingly, the authority urges companies to plan early, implement innovative commercial models such as well decommission campaigns. Moreover, the authority suggests repurposing infrastructure and using new technology as outlined by the NSTA Decommissioning Strategy.