Economic Report 2018

3.9 Decommissioning Activity The only element of expenditure which has increased throughout the downturn is decommissioning, reflecting the increased maturity of the basin and depletion of many older fields. Despite this, industry is demonstrating that it can keep decommissioning costs under control effectively, with expenditure forecast to remain in the region of £1.5-2 billion per year through to 2025. 15 Steady progress also continues to be made in relation to the target of reducing decommissioning expenditure by one-third compared to 2016 estimates, aiming for an out-turn cost of £39 billion (in 2016 money). The OGA has reported that estimated costs have fallen by 7 per cent in the last 12 months, from almost £60 billion to £55.7 billion. 16 This reduction is welcome and is attributed to several factors, including performance improvement, proactive knowledge sharing, a greater understanding of the scope of decommissioning and the development of new techniques and technology.

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2

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Figure 14: UKCS Decommissioning Expenditure

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2.5

Actual Decommissioning Expenditure

Forecast Decommissioning Expenditure

2

5

1.5

6

1

(£ Billion - 2017 Money)

7

0.5

Annual Decommissioning Expenditure

0

8

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Oil & Gas UK, OGA

In Focus – UKCS Progress in Decommissioning In total around 475 fixed facilities, 10,000 kilometres of pipelines and 5,000 wells on the UKCS will need to be decommissioned at the end of their economic life. The majority of decommissioning expenditure through to 2025 (49 per cent) is expected to be spent on well decommissioning, with only a relatively small proportion of spend (2 per cent) expected to be spent on onshore activities such as disposal, remediation and monitoring.

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15 oilandgasuk.co.uk/decommissioninginsight/ 16 www.ogauthority.co.uk/media/4925/decommissioning-cost-report-2018.pdf

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