Decommissioning Insight 2017

Figure 12 shows how cumulative expenditure estimates of decommissioning have varied over the last five years. As recently as 2013, the ten-year forecast was £10.8 billion due to fewer projects with cost estimates available and forecasts were rising by up to 30 per cent per year from 2013-15. Although the outlook is ever-changing, there has been a relatively consistent trend since 2015. Some of the drivers behind the anticipated growth in expenditure since 2013 include:

• More decommissioning activity as the UKCS matures – as the ten-year window moves forward each year, decommissioning activity grows in line with the UKCS’ maturity.

• The change in economic environment – the current lower oil price environment has encouraged companies to develop more robust estimates for decommissioning. In 2013, the UKCS was in a phase of growing capital investment and operators were more focused on where they could invest in new developments. For this reason, decommissioning expenditure and activity forecasts tended to tail off in the second half of the ten-year outlook. Now companies are planning further ahead for decommissioning as a key part of their overall business expenditure.

• Cost estimates becoming more detailed – as any decommissioning activity draws closer, cost estimates become better defined and often increase as the scope becomes clearer.

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Figure 12: Historical Comparison of Cumulative Forecast Expenditure

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2013 Survey

2014 Survey

2015 Survey

2016 Survey

2017 Survey

20

15

10

5

Cumulative Expenditure (£ Billion - 2016 Money)

0

2013

2015

2017

2019

2021

2023

2025

Source: Oil & Gas UK, Asset Stewardship Survey

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