OGUK Decom Insight Report 2021

Well decommissioning forecasts increase – Figure 8 shows that 1,782 wells are to be decommissioned on the UKCS over the next decade. This is an increase from the 1,616 forecast in Decommissioning Insight 2020 . The data also show a fluctuating workload over the next decade with spikes occurring in 2023, 2026, and 2028 and 2030. The sporadic nature of this activity demonstrates the challenging business environment the industry faced in 2020, when the pandemic and price fluctuations hit the labour- intensive well decommissioning area particularly hard. Activity peaks are anticipated to level out – All thewells earmarked for decommissioning in 2020 but not completed were moved into later periods of the dataset. The data is compiled by each operator in isolation, therefore while individual operators will plan their portfolios of work to effectively manage their own workload and budget, they do not usually consider their peers’ plans when forecasting their own workload. This explains the spikes in activity. The reality is that, while the UKCS supply chain can adapt, each year there will only be the capacity to liquidate a certain amount of scope, so it is likely that we will see a steadier and more sustainable workload. NNS less impacted – The data shows a slight reduction in thewell numbers in the NNS and WoS regions, with 515 wells to be decommissioned in the next decade compared with 552 in last year’s dataset. This is because most of the well activity in the NNS earmarked for 2020 went ahead. The main differences come in the CNS, where 695 wells are now set to be decommissioned, compared with 615; and in the SNS & IS where 572 wells are forecast compared with 449 over the next decade as stated in Decommissioning Insight 2020.

E&A well forecasts increase – This year’s report states that 117 suspended exploration and appraisal wells are forecast for decommissioning in the next decade compared with 80 in last year’s dataset. This increase of almost 50 per cent is likely due to new guidance from the OGA on timelines for decommissioning suspended E&A wells, which recommends that operators have plans in place to decommission this well stock within two to five years, unless otherwise justified. 1 There is a collective drive by industry to collaborate to achieve multi-operator, multi-well decommissioning campaigns, and suspended E&A wells is one area where success could influence other well decommissioning areas. £509 million is currently to be spent on decommissioning suspended E&A wells over the next decade. Well decommissioning costs remain consistent – The cost of decommissioning wells in the CNS, NNS and WoS remains consistent for all well types. Platform wells cost about £2.98 million each, very close to the £2.95 million figure in last year’s report. Subsea well costs are also lower at just under £8 million which is not expected to change; and E&A well costs are also roughly the same in 2021 and 2020 at £4.77 million, although the range has reduced in this year’s report. There is similar softening of costs in the SNS and IS. In these regions platform wells are expected to cost £2.34 million, subsea wells £6.06 million and E&A wells £3.34 million, on average, over the next decade. Well decommissioning forecast costs are consistent with OGA actual benchmarks – When compiling cost estimates, it is important to note that the figures reported in the Decommissioning Insight are based on an average of operator estimates for the activity. The OGA produces its “ Decommissioning Benchmarking Report ” 2 which reports actual performance annually. In 2020, the industry reported that platform wells in the NNS and CNS cost £3.0 million apiece, subsea well cost £7.8 million and E&A wells cost £3.3 million to decommission. In the SNS and IS, platform wells cost £2.8 million, subsea £6.3 million and E&A wells £4.2 million (again, all at P50). 1 https://www.ogauthority.co.uk/media/5108/oga-suspended-wells-guidance.pdf 2 https://www.ogauthority.co.uk/media/7864/decom_benchmarking-report-2021_final111121.pdf

DECOMMISSIONING INSIGHT 2021

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