OGUK Decom Insight Report 2021

Figure 6 – UKCS Regional Expenditure Breakdown by year (2021-30)

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Decommissioning is 12.1 per cent of UK offshore expenditure – In 2021 the UKCS oil and gas industry is forecast to spend just over £12.1 billion across all activities, as shown in Figure 4. Around £1.46 billion of this is on decommissioning, representing around 12.1 per cent of the total expenditure. Deferral of well decommissioning increases forecast expenditure – This year’s dataset shows that over £8.241 billion (50 per cent of the total) will be spent on decommissioning 1,782 wells over the next decade, up from £7.390 billion (1,616 wells) in last year’s report. Looking at the 2019 Decommissioning Insight report, the industry forecasts that around £6.8 billion will be spent on decommissioning 1,630 wells over the ten-year period. This is £1.4 billion more and will include 152 additional wells over the decade. Well decommissioning was a key focus area in 2020, sparking initiatives within industry associations and regulators as industry looked to support the industry’s recovery by stimulating activity throughout the basin. Last year’s asset stewardship survey was conducted before the COVID pandemic took hold, and since then almost half the wells have had to be postponed for a year or more.

Decommissioning expenditure is dominated by central and northern North Sea – Almost £7.2 billion (43 per cent of the total) will be spent on projects in the central North Sea (CNS) over the next decade, with almost £4 billion going on well decommissioning. Figure 6 shows that decommissioning projects in the CNS account for almost 30 percent of the expenditure in 2021 but this rises to above 50 per cent by 2030. Expenditure in the Southern North Sea (SNS) accounts for almost 30 per cent in 2021 but this proportion falls in the middle of the decade, as some major projects come to an end. Then the focus shifts to the Irish Sea (IS) and West of Shetland (WoS). Expenditure profiles differ in regions throughout the North Sea - Figure 7 shows the total expenditure in each region, broken down into the different elements of the decommissioning WBS. This chart shows the nuances experienced in different regions. For example, post cessation of production (CoP) running costs play a larger role in the NNS and CNS compared with the SNS. This is because the assets are much larger, housing more people and being more complex. A greater share of decommissioning projects has been conducted in the SNS where tail-end decommissioning activities, such as site remediation, play a larger role.

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CNS NNS SNS WoS IS

Source: OGA & OGUK

Figure 7 – Breakdown of Expenditure by WBS element by Region (2021-30)

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CNS

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Post-DecommissioningMonitoring

Site Remediation

Subsea Infrastructure Substructure Removal Topsides Preparation Well Decommissioning Project Management

Topsides and Sub-structure Onshore Disposal

Topsides Removal

Facilities & Pipelines Permanent Isolation & Cleaning

Post CoP Running Costs

Source: OGA& OGUK

DECOMMISSIONING INSIGHT 2021

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