Decommissioning Insight 2016 - Oil & Gas UK

DECOMMISSIONING INSIGHT REPORT 2016

3. Introduction 3.1 Survey Development and Methodology

The Decommissioning Insight 2016 provides the first joint decommissioning activity forecast for the UK and Norwegian Continental Shelves for the period 2016 to 2025 so that operators and the supply chain have a more comprehensive picture across the North Sea and can effectively plan for decommissioning in the most cost efficient way 8 . The report also provides detailed expenditure forecasts for activity on the UK Continental Shelf (UKCS) and some key expenditure metrics for the Norwegian Continental Shelf. Complete expenditure information was not available for Norway. The report is compiled through primary data collection from 25 operators on the UKCS and 6 operators on the Norwegian Continental Shelf between June and September 2016. This provides over 95 per cent coverage in both regions. There are more operators on the UKCS with forecast decommissioning activity, reflecting the relative maturity of the two shelves. The survey was structured around the components of the decommissioning Work Breakdown Structure described in Oil & Gas UK’s Decommissioning Cost Estimation Guidelines 9 . Following feedback received from the industry and the joint industry-Oil and Gas Authority (OGA) MER UK Decommissioning Board, the report has also been expanded to include additional insight into topside and substructure removal activity on the UKCS, splitting the activity into work already contracted out and work that is still to be contracted. The information collected is presented in a non-attributable and aggregated format. Analysis has been carried out on a regional basis and split into groups – the central (CNS) and northern North Sea (NNS) and west of Shetland (W o S); the southern North Sea (SNS) and Irish Sea; and the Norwegian Continental Shelf. Almost all of the activity on the Norwegian Continental Shelf is concentrated in the Norwegian North Sea area. Wherever possible, information has been split further into more specific regions. Where particular projects are referred to, this information has been gathered from publicly available data. 3.2 Decommissioning Forecasting Planning for decommissioning can be a long and challenging process that operators start well before cessation of production (CoP). Over time, the scope of each project is refined as engineering studies and comparative assessments are carried out to determine the optimum approach. Forecasting the precise schedule of decommissioning activity and the associated expenditure at the outset of a project is therefore challenging. There are many uncertainties and factors influencing these, such as the duration of well plugging and abandonment (P&A) or the availability of heavy lift vessels. Forecasts contained in this report are therefore based on operators’ best available estimates at the time of surveying. The majority are not sanctioned decommissioning projects and are subject to change as work scopes are further developed and refined. This is particularly true of activity forecast for the second half of the survey timeframe (2021 to 2025). See section 6 for more on estimate types.

8 This survey covers data from end-of-field-life decommissioning projects and does not include expenditure of activity associated with mid-life decommissioning. 9 The Guideline on Decommissioning Cost Estimation is available to download at www.oilandgasuk.co.uk/product/op061

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