Decommissioning Insight 2019

– Facts and Figures – Facts and Figures

DECOMMISSIONING INSIGHT 2019

3. Decommissioning in 2019

In Summary This report is the tenth annual Decommissioning Insight report published by OGUK since 2010. It provides a fresh overview of the emerging and rapidly maturing decommissioning market on the UK Continental Shelf (UKCS) and highlights progress in this growing market. Decommissioning needs to be seen in context; it is part of the natural lifecycle of an oil and gas asset and now represents just under 10 per cent of the overall expenditure in the UK oil and gas industry. The overall proportion of spend committed to decommissioning has risen steadily since 2004, but investment in new infrastructure still far outweighs decommissioning, showing there is still a lot of potential in the UKCS. Cumulative decommissioning expenditure on the UKCS is anticipated to reach £15.2 billion over the next decade— consistent with 2018’s Decommissioning Insight forecast of £15.3 billion. However, despite similar findings, forecast activity across each of the regions in the North Sea has fluctuated this year. Increased merger and acquisition (M&A) activity in the central North Sea has led to a reduction in the expected workload over the ten-year period; in contrast, workloads in the northern and southern North Sea are predicted to increase. Moreover, the 2019 report reveals more work is being carried out for similar rates of expenditure, suggesting efficiency improvements are the source of some of the gains of the past few years. This progress will be instrumental as the industry, supported by regulators and government, strives to reduce future decommissioning expenditure by 35 per cent over the next few years – a fundamental element supporting the policy of Maximising Economic Recovery (MER UK). Decommissioning is an ever-growing market for the UK, and with around £1.5 billion to be spent each year, this represents a significant and enduring opportunity for the UK supply chain. 2,379 wells are expected to be decommissioned in the North Sea over the next ten years 6,234k of pipeline to be decommissioned in UKCS over next decade 2,624 w lls to be decommission d in the North Sea Basin 1,630 of which are in the UKCS nit well costs con�nue to fall across all areas of the North Sea M&A deferring ac�vity in the CNS while NNS and SNS regi ns see an increase in expenditure The UK is the largest global market for decommissioning spend over the next decade 2,379 wells are expected to be decommissioned in the North Sea over the next ten years 6,234km of pipeline to be decommissioned in UKCS over next decade 2,624 wells to be decommissioned in the North Sea Basin 1,630 of which are in the UKCS Unit well costs con�nue to fall across all areas of the North Sea M&A deferring ac�vity in the CNS while NNS and SNS regions see an increase in expenditure The UK is the largest global market for decom issioning spend over the next decade The UK is the largest global market for decommissioning spend over the next decade

billion is forecast to be spent on decommissioning in the UKCS by 2028 billion is forecast to be spent on decommissioning in the UKCS by 2028

10% 10% Decommissioning Insig – Facts and Figures

Decommissioning now represents just under 10 per cent of the overall expenditure in the UK oil and gas industry Decommissioning now represents just under 10 per cent of the overall expenditure in the UK oil and gas industry

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