The report, published by DecomWorld, says that decommissioning costs will double to £2 billion by 2018 as more producers begin shutting down their ageing assets.

Upwards of 500 platforms on the UK Continental Shelf (UKCS) are in need of decommissioning. They include roughly 300 subsea production systems, 31 large steel jackets, 220 other steel jackets and eight large concrete substructures.

19 decommissioning projects are currently under way or in development.

The last few months have seen the publication of new draft decommissioning programs, including Shell's Brent Delta topside removal, Perenco's Thames, Arthur and Gawain developments and Tullow's Horne, Wren, Orwell and Wissey developments; and Centrica's Stamford subsea development

The DecomWorld report projects that the total spend will increase by £41.3 billion - £46 billion by 2040 based on 2014 valuations. It predicts a further £3 billion will be spent on decommissioning projects yet to be developed on the UKCS. In 2014 £1 billion was spent on decommissioning in the UKCS.

The North Sea Decommissioning Strategy Report 2015 warns, however, that pressure on the supply chain could lead to cost increases on projects.

Well plugging and abandonment is the largest cost within decommissioning and, according to the report, the area where the biggest savings can be made. It forecasts £25.8 billion of expenditure from 2014 to 2050, but says that savings of 10-40 per cent can be made by planning collaboratively in advance.

Shell and Esso Exploration recently closed a deal to sell older North Sea assets to smaller producers Ping Petroleum and Hibiscus Petroleum. While Shell and Esso Exploration sought to exploit larger assets with bigger potential returns, the smaller companies said they were well placed to take advantage of the ageing assets.

Despite pressure put on the UKCS by a combination of the weak oil price and its older assets, however, Oil & Gas UK recently said that production in the region is up.

Source: www.relocatemagazine.com

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