Decommissioning Insight 2016 - Oil & Gas UK

Figure 44: Historical Variation in the Removal Cost per Tonne Forecasts for Topsides and Substructures in the Central and Northern North Sea and West of Shetland

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Average Forecast Topside Removal Cost per Tonne Average Forecast Substructure Removal Cost per Tonne

Range in Cost Forecasts

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14,000

12,000

3

10,000

8,000

6,000

4

4,000

2,000

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Estimated Cost per Tonne (£ - 2015 Money)

0

2011 2012 2013 2014 2015 2016

2011 2012 2013 2014 2015 2016

Topside

Substructure

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Source: Oil & Gas UK

Removal Cost per Tonne

2015 Survey Average

2016 Survey Average

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Topsides

£3,300 per tonne £4,800 per tonne

£3,000 per tonne £4,400 per tonne

Substructures

8

Southern North Sea and Irish Sea

• The average cost per tonne forecasts for both topside and substructure removal have both fallen by over 40 per cent to £2,600 per tonne compared with 2015 forecasts. This is because the new projects fall at the low end of the range and there are lower forecast unit costs for topside and substructure removal reflected in the majority of estimates. • This could be due to different assumptions about removal vessel day-rates. The supply of removal vessels in these regions is greater than other areas of the UKCS because of the smaller size platforms enabling removal by much smaller barges, driving down vessel rates more than those for large heavy-lift vessels required in the other areas. • The large range in cost per tonne for both topside and substructure removal seen in the southern North Sea and Irish Sea (see Figure 45 overleaf) is primarily due to varying approaches to platform removals. In these regions, most operators plan to remove multiple platforms in one campaign, allowing mobilisation and other fixed costs to be spread across the structures being removed. Projects at the bottom of the range are typically those included in a batched approach, while those at the top of the range are largely planned as individual removals.

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