£10.4bn to be spent on UK decommissioning in next decade:
More than 800 wells are scheduled for plugging and abandonment on the UK Continental Shelf in the next 10 years and total decommissioning spend will be £10.4bn, a survey of operators has found.
Over 2,300km of pipeline, infrastructure from 74 fields, more than 70 subsea projects and over 130 installations are scheduled for decommissioning over the next decade.
Well plugging and abandonment is the largest category of expenditure, totalling £4.5bn, while nearly half (44%) of the expenditure – £4.6bn – is to be made in the northern North Sea.
Many of the decommissioning programmes captured in the survey, published by Oil & Gas UK (OGUK), are considered to be in the early scoping stages, and OGUK said cost uncertainty goes up beyond 2019 “due to the changing nature of decommissioning programmes”.
OGUK probed the plans of 27 operators in its membership and the survey indicates that spending on decommissioning all assets will be in excess of £31.5bn between now and 2040.
Infrastructure includes floating, production, storage and offloading vessels (FPSOs), small normally unmanned platforms in the southern North Sea, and large integrated facilities in the central and northern North Sea.
Of the 800 wells scheduled for plugging and abandonment, nearly 480 are in the central and northern North Sea of which nearly 60% are platform wells. In the central and northern North Sea, the average cost forecast for plugging and abandonment is £4.8m per platform well, £10.1m per subsea development well and £8m per subsea exploration and appraisal well. In the southern North Sea and Irish Sea, the average forecast for wells plugging and abandonment expenditure is £3.5m per platform well and £6.6m per subsea well.
Removal of topsides, substructure and subsea infrastructure totals £2.2bn, or 21% of the overall decommissioning expenditure. Nearly 470,000 tonnes of material are expected to be removed between 2013 and 2022, with activity peaking at more than 60,000 tonnes in 2017 in the central and northern North Sea. Topside removal accounts for 13% of the total forecast market expenditure, at over £1.3bn.
In the central and northern North Sea, the average forecast expenditure of removing topsides is £4,100 per tonne and for substructures (jackets) £4,300 per tonne. In the southern North Sea and Irish Sea, the forecasts average £3,600 and £5,700 for topsides and substructures, respectively, the report says. Nearly £1.2bn of the total decommissioning expenditure (11%) is forecast to be spent on facility running and owners’ costs.
Assets need to be well maintained for a prolonged period to enable effective decommissioning, OGUK says. Over 405,000 tonnes of material are expected to be transported onshore for dismantling and processing between 2013 and 2022, with demand for UK disposal yards peaking in 2018 when over 80,000 tonnes of material are forecast to come onshore from the central and northern North Sea.
OGUK concluded from the survey that decommissioning expertise “is considered to be available within the UK supply chain”, but warned that without significant activity to date the supply chain has not been fully tested.
