Oil & Gas UK Economic Report 2015

7.8 Decommissioning

2015 and to over £2 billion per annum by 2018. Last year, 14 fields on the UKCS incurred spend in excess of £10 million on decommissioning activity. That number is likely to rise to over 50 fields at different phases of decommissioning by the end of the decade. The scale of some of the decommissioning projects to be undertaken on the UKCS over the next decade has not been seen before anywhere in the world. Where the UK leads, other countries will inevitably follow and demand for expertise will continue to grow both domestically and globally. The experience gained over the next decade will offer a competitive advantage to the UK’s domestic supply chain, providing the opportunity to become world leaders in this field as long as companies are able to adapt their businesses to offer support on decommissioning projects. See Section 8 for a case study on the Brent decommissioning project.

The industry is determined to avoid premature decommissioning and retain the infrastructure required to achieve MER UK. However, there will always come a time when the costs of further recovery can no longer be sustained by income from the field and when the surrounding region is considered to have insufficient prospectivity to support future operations. The UKCS’ maturity means that decommissioning is one of the OGA’s priorities. It is aligned with industry strategy to ensure decommissioning is carried out as cost effectively and safely as possible, but not prematurely. While decommissioning on the UKCS is still in its infancy, expenditure in this area passed £1 billion for the first time in 2014. It is likely to rise to around £1.5 billion in

Figure 48: Decommissioning Forecast by Field

2.5

2

1.5

1

0.5

Decommissioning Expenditure (£ Billion)

0

2014

2015

2016

2017

2018

Source: Oil & Gas UK

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ECONOMIC REPORT 2015