‘Bottleneck’ warning as decommissioning surges
A surge in decommissioning of oil and gas platforms will clash with the rise in renewable energy work and could cause a ‘bottleneck’ in demand for services.
Offshore Energies UK (OEUK) estimates that decommissioning will generate £20 billion of work over the next decade and could particularly benefit industrial communities in Aberdeen, Inverness, Teesside and Humberside.
But in a new report it says the oil & gas sector and the renewables business must be transparent about planned projects to make sure the opportunities presented are “properly managed”.
OEUK decommissioning manager Ricky Thomson said: “The UK’s decommissioning sector is snowballing and will continue growing for years to come.
“But this poses a challenge as well as an opportunity. The growth of renewables and demand for decommissioning services and expertise will create increasing pressure for resources.
“This is a great problem to have and it’s vital this opportunity is properly managed across the sector so that UK firms can capture the lion’s share of this £20bn opportunity.
“With the right support from government and action from the industry, the UK could make major gains from decommissioning, as well as retain thousands of jobs for this growing sector.”
OEUK believes 2,100 wells need to be decommissioned over the next ten years. It suggests the average cost for each well is about £7.8m.
In 2021 a tenth of UKCS oil and gas expenditure went on decommissioning. This proportion has risen to 14% in 2022 and is set to rise to 19% by 2031.
Over the next ten years, expenditure on decommissioning is predicted to total £19.7 billion, with well decommissioning comprising nearly half of this spend.
Over 75% of total decommissioning spend will be within the central North Sea, (stretching from Yorkshire to the northern tip of Scotland), and the northern North Sea, (covering an area north of Scotland and east of Shetland and Orkney).