Activity Survey 2015

ACTIVITY SURVEY 2015

6.7 Decommissioning

At £1 billion, decommissioning accounted for nearly four per cent of total UKCS expenditure in 2014. This is set to rise significantly over the next five years and could surpass £2 billion in 2018.

Expected average annual spend over the second half of the decade has risen from£1.5 billion in 2014 to £1.8 billion. This increase is driven by a combination of cost escalation and acceleration of decommissioning activity caused by a reduction in future revenue estimates. In contrast, there have also been some examples where decommissioning expenditure has been pushed back, contributing to the increase over 2017 and 2018. The fast implementation of a decommissioning strategy will be a priority for the OGA as they seek to ensure maximum economic extension of field life whilst also achieving macro-level cost reductions in decommissioning.

Figure 39: Forecast Decommissioning Expenditure on the UK Continental Shelf

2.5

2014 2015

2

1.5

1

0.5

Decommissioning Spend (£ Billion - 2014 Money)

0

2014

2015

2016

2017

2018

2019

Source: Oil & Gas UK

Looking out to 2040, the forecast for total decommissioning spend has risen from £41.3 billion to £46 billion in 2014 money. £43 billion of this will be spent on decommissioning existing and sanctioned projects, and a further £3 billion will be spent on decommissioning projects that are yet to be developed. Although it is crucial to maintain the infrastructure of the UKCS for as long as economically possible, the undoubted future growth in the decommissioning market will present an excellent opportunity for the UK supply chain to establish world-class expertise in this area.

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