OIL and gas operators in the North Sea have been warned by industry regulators that they must “step up” on well decommissioning to support the UK’s supply chain and to stop spiralling costs.
In the latest Decommissioning Cost and Performance Update from the North Sea Transition Authority (NSTA) it states they are “getting tough” on operators who do not meet their regulatory obligations.
The NSTA have said that repeated delays to well plugging and abandonment have increased the estimated costs for decommissioning.
The decommission process is where wells are plugged with concrete to protect groundwater resources and prevent surface pollution and methane emissions.
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Pauline Innes, the NSTA’s supply chain and decommissioning director, wrote to licensees in November 2023 to warn industry operators that they must make headway on the plugging and abandonment of wells.
She said that those failing to comply will be held to account.
Innes said: “With spending forecast to peak at £2.5bn per year in the current decade, decommissioning can ensure that the UK’s world-leading supply chain is equipped to help operators clean up their oil and gas infrastructure over the next 50 years and support the carbon storage sector, which will rely on many of the same resources.
“I am concerned that this huge opportunity to safeguard highly-skilled jobs and support the transition will be wasted if operators fail to tackle their well decommissioning backlogs.
“The supply chain wants to do this work, but it is not physically tied to the UK. Its skills and resources are in demand in other regions, and we are starting to see companies marketing their rigs elsewhere. Operators need to use the supply chain, now, or risk losing it.”
The regulator have commenced investigations into alleged failures to complete timely plugging and abandonment in line with approved plans.
Oil and gas operators must leave the marine environment clean and safe once they stop production.
They are legally required to decommission their platforms, pipelines and wells, which is a complex and expensive process and needs thorough preparation and planning.
By prolonging the decommissioning process, overall costs increase and mean that platforms continue to use power and release emissions even though they are no longer processing oil and gas.
Operators are expected to spend around £24bn on decommissioning between 2023 and 2032, this is already up by £3bn on the forecast from last year’s report.
Operators only achieved 70% of planned well decommissioning activities last year with hundreds of wells needing to be decommissioned every year to reach the proposed targets.
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