SPENDING of £17 billion on decommissioning in the North Sea offers the chance for Scotland’s yards to become world leaders in the field, an industry expert said.
Mike Tholen, of Oil and Gas UK, said that was the figure expected to be spent on clearing the UK Continental Shelf (UKCS) of oil platforms between now and 2025.
Tholen spoke as a new report from the industry body said decommissioning expenditure could make up almost one fifth of all spending in the North Sea within a decade.
Just two per cent of all spending in the UKCS went on decommissioning in 2010, but the report said that proportion could reach 17 per cent by 2025 as production comes to an end in more oil fields.
And with 349 fields in the North Sea forecast to enter this stage between 2017 and 2025, the industry body believes the UK could become a global leader in decommissioning.
Decommissioning is forecast to take place in 214 fields across the UKCS, as well as 106 fields in the Dutch Continental Shelf, 23 in the Norwegian Continental Shelf and six fields in the Danish Continental Shelf over the next eight years.
Across those four regions more than 200 platforms are in line for complete or partial removal, while nearly 2500 wells are expected to be plugged and abandoned, with almost 7800km of pipeline also forecast to be decommissioned.
Spending on decommissioning amounted to £1.2bn in 2016, seven per cent of total UKCS expenditure.
The latest Oil and Gas UK Decommissioning Insight report said this could rise to 11 per cent – or £1.8bn – this year, with annual expenditure expected to remain at around £1.7bn-£2bn a year.
To date, only 10 per cent of platforms and less than 5 per cent of pipelines in the North Sea have been decommissioned.
The report said: “The UK supply chain is [...] in a good position to develop the requisite skillset and experience to form an international centre of excellence in decommissioning, with the opportunity to export its expertise.”
It is the first time the report, which is now in its eighth year, has included decommissioning work in other areas of the North Sea apart from the UKCS.
Mr Tholen said: “This additional information will help the supply chain better understand the demand for their service and expertise from now until 2025.”
He added that there was “not a rush to decommission despite the downturn” in the oil and gas sector.
He added: “Decommissioning will represent around 11 per cent of total expenditure in the basin this year, compared to two per cent in 2010. Looking ahead, £17bn is forecast to be spent on UKCS decommissioning between now and 2025.
“If we continue to build on current achievements the UK will, in time, earn its place as a global leader in late-life asset management and decommissioning.
“We face an exciting future, what we do now to build a decommissioning capability in the UK will reap rewards for years to come.
“The provision of an increasingly open and broad perspective on decommissioning activity will arm the industry with the information it requires to become more efficient and competitive.
“There is a very real opportunity for the UK’s decommissioning sector to become a champion of decommissioning excellence within the global arena.”
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