The UK, whose offshore waters hold some of the most mature oil and gas fields, has the chance to become a pioneer in oil decommissioning, and should develop the expertise and sell it globally, Andrew Jones, Exchequer Secretary to the Treasury, said on Tuesday, ahead of his speech at the 'Offshore Europe' oil and gas conference starting in Aberdeen today.
The North Sea will be one of the first regions in the world to begin decommissioning-clean-up and dismantling old oil rigs and pipelines-on a large scale.
"The UK oil and gas industry supports 300,000 jobs, and with up to 20 billion barrels of oil yet to recover, has many productive years ahead. As the need for decommissioning grows, we must seize the opportunity to cement the UK as a world-leader in this field and export this knowledge globally," Jones said in a statement issued by the UK's Treasury today.
"Efficient decommissioning means big changes to the oil and gas industry - requiring new technology, skills and innovative approaches. This will ensure that decommissioning is safe and cost-effective while also protecting the environment," Mr Jones went on to add.
According to Andy Samuel, Chief Executive of the Oil and Gas Authority (OGA):
"We are working closely with operators and service providers and are already seeing some great performance in cost efficient decommissioning, new collaborations and technology trials. This bodes well for the shared target of 35% cost reductions and the considerable domestic and export value that can be realised."
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UK oil and gas operators are expected to spend nearly US$77.56 billion (60 billion British pounds) on decommissioning between now and the 2050s, the OGA has estimated. Under the tax regime, the UK provides UK companies with tax relief that covers some 40 percent of their total decommissioning costs.
According to a September 2017 report by Wood Mackenzie, a total of 247 fields are expected to cease and US$20 billion is forecast to be spent on decommissioning in the North Sea between 2018 and 2022. Shell, ExxonMobil, and Total (including Maersk) have the most to do, and are expected to spend some US$2 billion each in this period. But North Sea decommissioning is relatively immaterial for Big Oil, as it represents just 2 percent of global capex, according to WoodMac.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More