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DECOMMISSIONING INSIGHT REPORT
2016
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2. Executive Summary
Decommissioning Overview
•
This report captures data from186 decommissioning projects
1
across theUK (153) andNorwegian (33) Continental
Shelves. Fifty-two of these projects are new to this year’s report due to the survey timeframe shifting to 2016
to 2025
2
; some projects being brought forward in response to the low oil price environment; or estimates only
now becoming available.
• Seventeen projects have been postponed since last year’s survey to outside the timeframe as operators have
successfully extended field life.
•
Of the 134 existing projects included in both this year’s and last year’s survey, there have been some movements
in the timing of specific decommissioning activities within project scopes. For example, one company might
accelerate a well plugging and abandonment (P&A) campaign to take advantage of falling rig rates during the
current downturn, while another defers this activity due to cash-flow constraints.
•
Looking across the breadth of activity, there is more evidence of projects being brought forward in the
central and northern North Sea than in the southern North Sea, Irish Sea and Norwegian Continental Shelf.
•
On the UK Continental Shelf (UKCS), 94 per cent of the 153 projects in this region do not yet have firm timings
and are still in the early planning stages. This involves outlining the scope of the activities to be undertaken and
carrying out feasibility studies that will ultimately be influenced by changing market conditions over time.
•
Sustained efficiency improvements and cost reductions could defer cessation of production (CoP) and therefore
push back decommissioning in some cases, while the low oil price environment and access to infrastructure
issues might expedite it in other cases. For example, over the last 12 months, 33 assets within the timeframe on
the UKCS have deferred CoP, 72 have brought forward CoP, while for 135 CoP remains unchanged.
Current Activity
•
The decommissioning market is an emerging sector across the UK and Norwegian Continental Shelves.
•
Twelve operators carried out decommissioning activity across these regions in 2015.
•
In 2015, £1 billion was spent on decommissioning on the Norwegian Continental Shelf and £1.1 billion on the
UKCS, compared with £770 million and £800 million
3
in 2014, respectively
4
.
•
The decommissioning market has expanded from 2 per cent of total industry expenditure in 2010 in both the UK
and Norwegian Continental Shelves to 5 per cent of total expenditure in 2015.
•
Annual expenditure on decommissioning is expected to reach around £2 billion on the UKCS by 2017 making up
12 per cent of total expenditure, but it is likely to remain close to £1 billion on the Norwegian Continental Shelf
and 5 per cent of total expenditure.
1
Project is defined by the operator and can range from a single well for P&A to multi-platforms.
2
The 2015 survey covers the timeframe 2015 to 2024 and the 2016 survey covers the timeframe 2016 to 2025.
3
This survey covers data from end-of-field-life decommissioning projects and does not include expenditure of activity
associated with mid-life decommissioning.
4
Figures for Norway are taken from the Norwegian Petroleum Directorate. See
www.npd.no/en