In Wood Mackenzie’s December 2000 UK Upstream Report, the current situatio ...

In Wood Mackenzie’s December 2000 UK Upstream Report, the current situation regarding the disposal of oil and gas installations has been assessed. In addition the consultant reviewed the current status of the OSPAR Agreement and outlined the recent changes to UK Government legislation. The key points are outlined below: * Those platforms that under the pre-OSPAR guidelines were candidates for partial removal or toppling, ie large steel structures weighing more than 10,000 tonnes in air excluding topsides, must now be completely removed. * The total cost of decommissioning fields in the UK Continental Shelf (UKCS) that are currently onstream, under development or are expected to be developed in the short to medium term, is estimated to be some £8.7bn in real terms (or £11.8bn in nominal terms). * A large proportion of the decommissioning expenditure is expected to occur between 2004 and 2021, when it is anticipated that a total of some 298 fields will be decommissioned. Of these, 118 are located in the central North Sea, 107 in the Southern Gas Basin, 55 in the northern North Sea, 15 in the Irish Sea and three in the Atlantic Margin. * The peak decommissioning expenditure is anticipated to occur in 2011 when 12 northern North Sea fields are expected to be decommissioned. These include Brent, Ninian, Dunlin and Heather at a combined estimated cost of £1.1bn in real terms. The changes by the UK Government to the Petroleum Act 1998 and subsequent decommissioning legislation has moved to address some of the issues surrounding decommissioning in the light of the OSPAR Decision in 1998. However, there remain a number of uncertainties that require clarification in the UK, including how legislation will address the recycling and/or the re-use of facilities, and also the possible impact of the removal of drill cuttings for particular developments. Whilst the resale of materials and facilities may go someway to offsetting the total decommissioning cost, operators are looking for the government to help enable the same total financial incentive as that in place for the full removal and disposal of facilities when assessing more ‘environmentally friendly’ alternatives. This clarification is necessary to enable decisions such as the actual phasing and total cost of full decommissioning to be made for many facilities and to enable the commercial optimisation of these plans. For more information please contact Wood Mackenzie on: Tel: +44 (0)131 243 4400 Fax: +44 (0)131 243 4495 E: info@woodmac.com