Cost of UK oil and gas decommissioning continues to fall

The estimated cost of decommissioning the UKCS’s remaining oil and gas infrastructure is continuing to reduce, according to the Oil and Gas Authority (OGA). The latest analysis in the forthcoming UKCS Decommissioning Cost Estimate 2019 Report shows strong progress towards the shared objective of industry and government to reduce decommissioning costs by at least 35%.

Estimated (P50) decommissioning costs (2019 inventory, 2018 prices) have reduced to £51bn in 2019, compared to £59.7bn in 2017, despite including more assets and infrastructure than in the 2017 inventory, the study finds. Comparing the same inventory as 2017, estimated costs have reduced significantly by 17% to £49bn.

The reduction has been primarily driven by continued improvement in planning and execution practices, leading to reductions in the estimated cost of:

• Well plug and abandonment (P&A) in the Northern North Sea (NNS) and Central North Sea (CNS).
• Platform running costs in the NNS.
• Platform and subsea infrastructure removals in the NNS and CNS.
• Reduced contingency associated with improved estimating definition.

Nils Cohrs, OGA’s Head of Decommissioning, says: ‘It’s really good news that industry is now half way towards the collective target in just two years. Better capability and experience is providing greater certainty of actual UK decommissioning costs, with several operators already achieving significant cost savings through adopting different approaches, learning and sharing with others, and challenging previous norms. The supply chain is also bringing new solutions to the market in terms of pricing structures, business models and technology.’

The UKCS Decommissioning Cost Estimate 2019 Report will be published later in July 2019.