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City A.M

City A.M

CityAM.com is the online presence of City A.M., London's first free daily business newspaper. Both platforms cover financial and business news as well as sport and…

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UK Oil Sector To Spend $19 Billion On North Sea Decommissioning

The UK oil and gas industry is set to spend more than £15bn on decommissioning activity in the North Sea over the next decade, as thousands of wells are expected to be withdrawn from service by 2030.

According to a new report from industry body Oil and Gas UK (OGUK), 2,379 wells will be decommissioned in the North Sea over the next ten years.

The data finds that decommissioning now accounts for 10 percent of all industry expenditure, as operators take up the opportunity to develop new capabilities.

According to the report, the skills that the industry has developed in order to meet the local challenge will stand it in good stead to tackle global opportunities.

The worldwide market is estimated at $85bn (£67m).

So far the sector has managed to reduce the cost of decommissioning by 17 percent, considerable progress towards the Oil and Gas Authority’s target of a 35 percent reduction by 2035.

Related: Gulf Of Mexico Oil Output Set For Another Record Year

Michael Tholen, upstream policy director at OGUK, said: “Decommissioning is not the end of our industry; it offers a new beginning.”

“Decommissioning with the net-zero agenda at the forefront of our minds will be the next big step; where we lead, others will follow.”

Commenting on the report, Julia Derrick, oil and gas partner at law firm Ashurst, said:

“The fact that decommissioning costs are going down, through innovation and efficiency, and the fact that alternatives to decommissioning are also being explored, are very positive developments and should give companies investing in the UKCS greater confidence about the outlook for future decommissioning liabilities associated with mature assets.”

By CityAM

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