UK offshore decommissioning costs drop as industry gains practical knowledge

The estimated costs of decommissioning of offshore oil and gas installation in the UK have fallen, the UK Oil and Gas Authority has said. 

OGA has explained that the reduction comes from the fact that the decommissioning industry, still immature, is learning as it goes.

According to the OGA, the updated assessment tracks progress since the OGA last year estimated total UKCS decommissioning costs from 2017 onwards would be £59.7 billion (in 2016 prices.)

Comparing the same portfolio as last year, estimated costs from 2017 onwards have reduced significantly – by 7% to £55.7 billion in 2016 prices, OGA said.

A key contributor to this reduction is companies’ gaining valuable real practical experience in what is still a relatively immature activity, OGA said.

Director of Operations Gunther Newcombe at the OGA said: “The tripartite relationship between government, the OGA and industry is working well together. It’s very pleasing to see industry make real progress towards the decommissioning cost reduction target set with them. However, costs still need to reduce further and industry must keep focused. The OGA is sharing some of the great examples we’re seeing of individual companies thinking differently to save time and cost.

“Companies executing decommissioning programmes have made significant efficiencies in well plug and abandonment costs. In the Northern North Sea, platform running costs have substantially reduced through better optimisation of late-life and warm and cold phases. Our interactive learning platform provides a great snapshot of some of this innovative thinking.”

Terri King, President of ConocoPhillips UK and Chairwoman of the MER UK Decommissioning Task Force, said the OGA reported demonstrated “a clear downward trend in expenditure and gives us greater certainty of our actual UK decommissioning costs.”

Source: Offshore Energy Today