• 3 minutes "Biden Is Running U.S. Energy Security Into The Ground" by Irina Slav
  • 6 minutes How Far Have We Really Gotten With Alternative Energy
  • 9 minutes "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 7 days 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 6 days Energy Armageddon
  • 4 days "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 1 day "Forget Oil, The Real Crisis Is Diesel Inventories: The US Has Just 25 Days Left" by Zero Hedge - 5 Stars *****
  • 2 days "The Global Digital ID Prison" by James Corbett of CorbettReport.com
  • 2 days "Europe’s Energy Crisis Has Ended Its Era Of Abundance" by Irina Slav
  • 14 hours Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 2 days The Federal Reserve and Money...Aspects which are not widely known
  • 3 days Is Europe heading for winter of discontent with extensive gas shortages?
  • 11 days Wind droughts
  • 3 days Goldman Betting on Cryptocurrencies
  • 11 days Putin and Xi Bet on the Global South
Nigeria’s Oil Industry Can Flourish Despite Oil Theft

Nigeria’s Oil Industry Can Flourish Despite Oil Theft

While Nigeria’s oil industry is…

The Diesel Crunch Is Finally Causing Demand Destruction

The Diesel Crunch Is Finally Causing Demand Destruction

Diesel inventories have been at…

Windfall Tax Puts Shell’s $30B UK Investment Plan At Risk

Windfall Tax Puts Shell’s $30B UK Investment Plan At Risk

Supermajor Shell will be re-evaluating…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

UK Oil Industry Faces Steep Decommissioning Bill

  • North Sea offshore decommissioning costs will cost the UK oil industry some $24 billion over the next decade.
  • The decommissioning sector will outlast oil and gas production and will continue growing for years to come.
  • Over the next decade, more than 2,100 North Sea wells are set to be decommissioned.

The UK North Sea, one of the world’s most mature oil and gas producing basins, will see spending on decommissioning of wells and infrastructure total nearly $24 billion (20 billion British pounds) over the next decade to 2031.   

The decommissioning sector will outlast oil and gas production and will continue growing for years to come, Offshore Energies UK (OEUK), the leading representative body for the UK’s offshore energy industry, said in a new report this week. 

Decommissioning of end-of-life oil and gas assets is a big opportunity for the supply chain operators, but new challenges have recently emerged in the sector due to extreme volatility in oil and gas prices and the UK’s windfall tax on North Sea operators, which could impact the pace and spending of decommissioning in the coming years, according to OEUK. 

Another challenge is the growing competition for services and equipment from the offshore wind energy sector, which could cause bottlenecks in demand for oil and gas decommissioning services, the report says.

Current estimates show that decommissioning expenditure rose by almost a fifth to $1.5 billion (£1.273 billion) in 2021. This year, the spending could cross the $2.4 billion (£2 billion) mark for the first time. Over the next four years, spending on decommissioning is set to surge and likely range between £1.7 billion and £2 billion each year, OEUK said. 

The industry body predicts an upsurge in activity as there are 612 wells, 59 topsides, 58 substructures, 1,820 kilometers (1,130 miles) of pipelines, and 14,029 tons of subsea infrastructure set to be decommissioned between now and 2024 alone. 

“The decommissioning opportunity is snowballing and could be worth around £20bn to the supply chain between now and 2031,” OEUK said in the report. 

Over the next decade, more than 2,100 North Sea wells are set to be decommissioned, it added, more than the 1,782 wells poised for decommissioning in last year’s forecast of OEUK. 

Wells continue to dominate the decommissioning market with an overall 48% share of the spending, with topsides and subsea infrastructure removal also accounting for a significant portion. 

Well decommissioning activity is set to grow until 2028 when it is expected to peak with 313 wells forecast, close to the 2019 total of 288, OEUK said. 

The average UKCS subsea well costs $9.3 million (£7.8 million) to decommission now, compared with $8.3 million (£7 million) over the last three years, likely reflecting rising inflation and more complex decommissioning operations yet to be completed, OEUK said. 

 As more and more wells, platforms, and subsea installations and pipelines are decommissioned, expenditure in this segment as a share of all spending in the UK oil and gas industry is rising and will continue to rise in the foreseeable future. Around 10% of UK oil and gas expenditure went on decommissioning in 2021. This share is set to rise to 13.7% this year and to 19% by 2031. Overall, decommissioning will account for 15% of UK offshore expenditure over the next ten years, the industry association said. 

“This signals an upturn in activities throughout the UKCS, which will pose a challenge for the UK supply chain. Continued pressure from new energies also adds to this challenge as the UKCS battles to meet increasing demand for labour and materials,” the OEUK noted in the report.   

“The growth of renewables and demand for decommissioning services and expertise will create increasing pressure for resources,” said OEUK Decommissioning Manager Ricky Thomson.   

“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 £20bn opportunity.”   

By Tsvetana Paraskova for Oilprice.com 

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News