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Report on decommissioning plans

140 North Sea fields to close over five years

Oil rig vidAt least 140 oilfields in the North Sea will cease production over the next five years, according to a new report.

A total of £55 billion  to be spent on decommissioning the UK Continental Shelf with as many as 50 fields forecast to cease in 2016 alone, says the report by analysts at Wood Mackenzie.

It says decommissioning in the North Sea has been an impending reality for some time.

“The low oil price environment compounded by the maturity of the basin means that continuing production at a lot of mature fields is no longer viable.”

The report says the UK Budget does not provide assurances on future plans.  “Budget 2016 did little to improve company cash flows with so few currently in a tax paying position, but it does improve asset valuations,” it says.

“This may encourage new investment or at the very least, the continuation of loss-making operations over the short-term, rather than early cessation of fields.

It argues that investment in ageing facilities will prevent a domino effect of fields ceasing in this mature sector.

“If no further investment materialises, the future of the North Sea could hang in the balance,” it warns.

 



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