£20 billion in North Sea decommissioning work ahead. What does that actually involve?
Key takeaway: North Sea decommissioning is a £20bn decade-long marine market. 2,100 wells at an average £7.8m each. Ports from Teesside to Aberdeen will handle removal campaigns, and the work is accelerating.
OEUK forecasts £19.7 billion in decommissioning expenditure over the next decade. 2,100 wells, heavy-lift vessels, port campaigns and long-tail marine work stretching from Teesside to Aberdeen.
- OEUK forecasts £19.7bn in decommissioning expenditure over the next 10 years
- Approximately 2,100 North Sea wells to be decommissioned — around 200 per year
- Average well decommissioning cost: £7.8 million
- 75% of spend concentrated in central and northern North Sea
- Ricky Thomson, OEUK Decommissioning Manager: "The UK's decommissioning sector is snowballing and will continue growing for years to come"
The scale of the work
Offshore Energies UK published its latest Decommissioning Insight report on 22 November 2022, forecasting that over two thousand North Sea wells will be decommissioned at a cost of around £20 billion over the next decade.
The report finds UK decommissioning is expanding fast and predicts a surge in activity over the next 3-4 years. In 2021, a tenth of UKCS oil and gas expenditure went into decommissioning. This rose to 14% in 2022 and is set to reach 19% by 2031.
Well decommissioning alone comprises nearly half of the total predicted spend — £7.8 million per well across 2,100 wells.
Where the work happens
Over 75% of total decommissioning spend will be in the central North Sea (Yorkshire to northern Scotland) and the northern North Sea (north of Scotland, east of Shetland and Orkney).
The surge in work could particularly benefit industrial communities on adjacent coastlines: Teesside, Humber, Aberdeen and Inverness. Irish Sea decommissioning will generate economic benefits in places like Merseyside.
This is not abstract. Heavy-lift vessels, support vessels, subsea engineering, marine assurance, waste handling, port reception and specialist contractors all form part of the removal chain.
The bottleneck risk
Ricky Thomson, OEUK Decommissioning Manager, said: "The UK's decommissioning sector is snowballing and will continue growing for years to come. But this poses a challenge as well as an opportunity. The growth of renewables and demand for decommissioning services and expertise will create increasing pressure for resources."
The report warns that offshore wind, carbon capture and storage, and oil and gas sectors will need to coordinate to avoid bottlenecks. UK firms need government support and industry action to capture the lion's share of this £20bn opportunity.
Read the plain-English decommissioning guide for key terms and stages.
Sources
- OEUK Decommissioning Insight report https://oeuk.org.uk/
- Workboat365 report https://workboat365.com/20bn-to-be-spent-on-decommissioning-north-sea-oil-and-gas-installations-in-the-next-decade-predicts-offshore-energies-uk/
- NSTA decommissioning overview https://www.nstauthority.co.uk/regulatory-information/decommissioning/overview/
- GOV.UK decommissioning guidance https://www.gov.uk/guidance/oil-and-gas-decommissioning-of-offshore-installations-and-pipelines