Decommissioning Insight 2019

5.2 Insight and Cost Trends in Decommissioning

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Throughout the decade of Decommissioning Insight reports, OGUK has sought, with the support of the operator community, to provide visibility on predicted activity and cost trends. The first Decommissioning Insight in 2010 forecast an annual spend on decommissioning of £500million, predicting a rise to £1 billion in 2015. At the same time, OGUK’s estimated total cost of decommissioning in the UKCS was a cumulative £27 billion through to 2050. The actual decommissioning spend reported in 2015 was in fact £1.2 billion while the OGA in 2017 estimated a total cost of £59.7 billion. Interestingly, the pace of decommissioning has endured at around £1–2 billion per year in recent years, with the estimated overall cost beginning to fall as a result of industry’s cost-saving initiatives.

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Figure 12: Total Decommissioning Expenditure – Insight Forecasts versus Actuals 2013, to 2018

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1,800

Average Forecast

1,600

Actual Expenditure

5

1,400

1,200

6

1,000

800

600

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Expenditure (£ Millions)

400

200

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0

2013

2014

2015

2016

2017

2018

Source: OGUK, OGA

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In terms of the accuracy of the Insight forecasts over the years, the five- and ten-year annual decommissioning spend forecasts compiled over the decade are shown in Figure 12. This shows the average of all the forecasts prepared for years 2012–18, alongside actual spend. For the years from 2014–16, the spend closely matched the average forecasts, although this is not true for more recent years when actual spend has been significantly less than previous forecasts. Although it will take some years to detect a true trend, this could be a measure of the cost savings realised during implementation, which were not forecast. In terms of activity, each year the Insight report develops an estimate of the number of wells to be decommissioned in each year of the forecast. Figure 13 uses the same approach of averaging the previous forecasts and comparing this to the actual wells decommissioned in each year. This shows that the number of wells actually decommissioned in each year were consistently less than forecast values until 2018, when the actual wells decommissioned were more than the average forecast.

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11

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