Economic Report 2018

Uncertainties Remain Whilst industry continues to work to increase the understanding of the scope and cost of decommissioning, there remains uncertainty around timing. This is recognised as an area of significant frustration for the supply chain as companies seek to support investment decisions based on clear visibility of workload. However, the decisions around cessation of production (CoP) and decommissioning are complex. The OGA requires owners to demonstrate that CoP is justified and that such work will take into account many factors, including (but not limited to) oil price, integrity and other technical issues, investment opportunities, re-use and divestment plans.

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The factors influencing CoP change over time and can influence CoP planning. The challenge for industry is to move the sector forward in this context.

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Another area of decommissioning attracting attention is the management of any post-decommissioning legacy liability ‘in perpetuity’. The law is well understood with regard to the asset owner’s obligations, but both owners and regulators are currently seeking to better understand how the regulations in this area can be applied. In particular, owners are keen to identify how remnant structures can be monitored cost effectively and regulators are mandated to ensure the public purse is protected in the long term, against all eventualities. Opportunities – Present and Future Along with its technology and experience, the North Sea is leading the way in terms of regulatory and fiscal planning, and other regions such as Australia and Brazil are now looking to the UK for guidance and expertise. The progress made by operators and the supply chain in efficiencies and cost reduction, within an aligned and supportive regulatory regime, has provided the UK with significant export potential. Much of the UK’s strength is in the planning and technical knowledge required to deliver late-life production and at the appropriate time, optimum decommissioning execution. A key finding has been that these two phases must be considered together. The focus on well decommissioning, as the scope area with the highest estimated cost, has led to significant technological developments which could radically change the way these operations are performed. This is just one of a number of areas of the decommissioning scope where significant export opportunities exist for UK companies.

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