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DECOMMISSIONING INSIGHT REPORT
2016
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The higher proportion of expenditure in the central and northern North Sea regions reflects the number, size and
degree of complexity of projects in these regions. While the number of platforms to be removed is greater in the
southern North Sea and Irish Sea, these are typically much smaller installations that are simpler and therefore
cheaper to decommission.
Operators start planning for decommissioning far ahead of CoP. The complex decisions on the timing of CoP and
the subsequent schedule of decommissioning activity are made by the operator in conversation with industry
regulators and take many factors into account, including future recovery potential, tie-back opportunities to
existing infrastructure, oil price and the wider business environment.
Analysis has been carried out on the key changes that have taken place on the UKCS since publication of the 2015
report, looking at shifts in both CoP and forecast expenditure. This analysis has been split into two regions – the
central and northern North Sea and west of Shetland, and the southern North Sea and Irish Sea.
Central and Northern North Sea and West of Shetland
Seventy-five per cent (114) of the projects on the UKCS are located in these regions. At an individual project
level, there have been significant shifts in the anticipated cost and timing of decommissioning projects since
forecasts were made a year ago, with the number of projects that have been delayed replaced by those that have
accelerated decommissioning.
There has been an increase of £500million fromexisting projects that nowhave a greater proportion of expenditure
within the survey timeframe, plus 24 new projects are now expected to be decommissioned earlier bringing a
further £1.5 billion of expenditure into the survey timeframe. However, this £2 billion increase has been partially
offset by an expected fall in decommissioning costs by £500 million since last year and 14 project deferrals moving
an additional £1 billion outside of the survey timeframe. Overall expenditure has increased by a net £500 million
to £14.6 billion.
Fourteen projects have been deferred where operators have succeeded in extending field life in line with the
statutory obligation to achieve MER UK. These projects range from small subsea tie-backs to larger fields with
platforms and multiple subsea tie-backs.
By contrast, 24 new projects are included because CoP and decommissioning dates have moved forward in light
of the low oil price environment and a shift in survey timeframe. Many of these are small-scale projects involving
single suspended subsea E&A wells or small subsea tie-backs. There are, however, some large new projects
involving multiple platform removals.
The associated expenditure has led to an increase in the annual expenditure forecast from 2016 to 2020 in
comparison to last year (shown in Figure 35 opposite). By contrast, as several projects have deferred
decommissioning activity, the peak year of expenditure has shifted from 2022 to 2024.
For projects included in both this year’s and last year’s surveys, the majority (87) of assets report no change in
planned CoP, while 57 have brought their expected date forward. Operators have cited the low oil price and the
knock-on effect of host facilities shutting down earlier than anticipated as the principal reasons for accelerated
CoP dates. By contrast, for 19 assets, CoP dates have been postponed due to improved economic outlook or
decommissioning being delayed to align with other assets
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The number of assets is higher than the number of projects as operators can assign different
CoP dates for assets within a project.