Decommissioning Insight 2018

On top of this, an increasing number of UKCS decommissioning projects have now been carried out, enabling operators and contractors to gain considerable experience in all elements of the scope. The repetition of specific tasks (also referred to as repetitive gains) is driving performance and enabling new efficiencies and improvements in delivery. This in turn helps to develop a greater understanding of the decommissioning process and, when combined with the sharing of lessons learnt, contributes to declining expenditure. This increasing understanding of the decommissioning scope, as well as continuous improvements to the Asset Stewardship Survey, allows more detail and accuracy to be put into operator forecasts. This can be seen in the dataset, with many projects which had been previously reported as single-year campaigns now spread over several years, representing a more realistic approach. The experience means that decommissioning cost estimates are becoming better informed and forecasts now reflect realistic efficiency gains.

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2

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Figure 2: Forecast Yearly Decommissioning Expenditure, 2018 to 2027

4

2,500

2017 Actuals

Post-decommissioning Monitoring

Site Remediation

Subsea Infrastructure

Topsides & Substructure Onshore Recycling

Substructure Removal

5

Topsides Removal

Topsides Preparation

Facilities / Pipeline De-energising

2,000

Well Decommissioning

Post-CoP Facility Running / Owner Costs

Operator Project Management

6

1,500

7

1,000

500

8

Annual Expenditure (£ Million - 2017 Money)

0

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

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Source: Oil & Gas UK, OGA

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Evidence of performance improvement is provided by the reduction in actual reported expenditure for 2017. Last year’s Decommissioning Insight report anticipated expenditure of £1.8 billion in 2017; however, actual expenditure came in at £1.15 billion underlining the drive for efficiency, coupled with cost control and limited re-phasing of work. A similar trend was evident in reports for 2016, suggesting that even in the near term, work scopes are being re-phased to match the market. This may be reflective of the market’s ability to liquidate work, coupled with operators’ desire to control the rate of decommissioning expenditure. Nevertheless, it also reiterates the message that there is no rush to decommission late-life assets.

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