Decommissioning Insight 2019

have shown a much wider gap between actual expenditure in a given year, versus forecasts made in the previous year. This narrowing gap shows less work is being 'pushed to the right' and that operators are sticking to stated schedules, undertaking more of their expected work and benefiting from efficiencies in a more capable and experienced decommissioning market. Figure 4 shows the UK’s forecast cumulative expenditure on decommissioning and illustrates the consistency in the expenditure profile between the 2018 and 2019 Decommissioning Insight reports. While in the past we have seen estimates trending towards a burn rate of around £1.8 billion per year, the past two years have shown a 17 per cent reduction, inferring that around £1.5 billion of spend per year is now the new norm.

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Figure 4: Forecast Comparisons for Cumulative Decommissioning Expenditure

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2015 Forecast

2016 Forecast

2017 Forecast

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2018 Forecast

2019 Forecast

Actual Expenditure

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20

5

15

6

10

(£ Billion - 2018 Money)

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5

Cumulative Decommissioning Expenditure

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8

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Source: OGUK, OGA

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This step-change reduction in cumulative expenditure since 2017 may be attributable to:

MER UK in action — The action taken by industry, the government and regulators, to create a more attractive investment proposition in the UKCS in support of the aim of Maximising Economic Recovery (MER UK) is working and is shaping how the decommissioning industry operates. Late life intelligence — Current owners are becoming more knowledgeable in how they operate their late life assets and decommission at the right time. New investment — The continued wave of new companies attracted to the basin which is extending the life of individual producing assets on the UKCS.

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