Decommissioning Insight 2016 - Oil & Gas UK

DECOMMISSIONING INSIGHT REPORT 2016

Overall, Figure 36 shows that near-term expenditure (2016 to 2019) in the southern North Sea and Irish Sea is lower than was forecast a year ago. This can be attributed to the deferral of some activity to preserve cash-flow in the current business climate, larger campaigns spreading their activities across the decade, and lower unit costs for well P&A and removals. The marked increase in forecast expenditure in the latter part of the decade is due to the inclusion of new projects to this year’s report.

Figure 36: Comparison of Forecast Decommissioning Expenditure in the Southern North Sea and Irish Sea

500

2016 Survey 2015 Survey

Increased Uncertainty in Forecasts

450

400

350

300

250

200

150

100

50

Forecast Expenditure (£ Million - 2015 Money)

0

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Source: Oil & Gas UK

Forecast Expenditure by Decommissioning Component Decommissioning expenditure is categorised according to the components referenced in the Work Breakdown Structure (see section 3.1 on the survey methodology and the Appendix):

• Operator project management/facility running costs (owners’ costs) • Well P&A • Removal and other associated activity

The components that incur expenditure are determined by the project size and type. A large and complex decommissioning project, for example, may incur expenditure across all categories. Projects such as these will involve significant overhead costs for project management and operations, as well as requiring substantial engineering expertise, equipment and personnel. In contrast, decommissioning a small subsea tie-back may only involve single well P&A.

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