North Sea decommissioning a multi-billion-pound opportunity

Decommissioning is a massive opportunity for the North Sea supply chain.  

The North Sea Transition Authority’s (NSTA) latest estimate for the total cost of decommissioning infrastructure is £44.5 billion, the estimate has been cut by around 25% since 2017 and we are pushing industry to find further savings, but it still offers significant opportunities for a wide range of businesses in the supply chain.

In 2021 decom spend was £1.2bn, a sizeable figure but lower than expected partially due to covid-related deferrals.

Nonetheless decom activity is intensifying in the North Sea and spend is expected to increase significantly to around £2.5bn per year over the next two decades as licensees look to decommission infrastructure, including decommissioning up to 150 wells a year.

This is not only a long-term opportunity domestically but, as the supply chain develops increasingly cost-efficient services, a chance to win more work overseas.

Owners of offshore oil and gas infrastructure, including wells have a statutory duty to decommission in a timely and cost-efficient way, and the NSTA works with industry to help them meet this obligation using four principal areas of focus:

• Planning for Decommissioning: Driving cost efficiency through effective late-life stewardship, creating a platform for timely delivery
• Commercial transformation: Improving market efficiency, establishing a competitive, sustainable market.
• Supporting energy transition from late life into decommissioning: Reducing greenhouse gas emissions from decommissioning and capitalising on opportunities to reuse or re-purpose infrastructure.
• Technology, processes and guidance: The development and deployment of technology, appropriate regulatory processes and clear guidance underpin delivery of the Strategy.  

A recently-launched screening tool helps operators to plan for decommissioning or repurposing of infrastructure.

Repurposing infrastructure can play a significant role in the ongoing Energy Transition, and Operators with fields that are six years from the end of production are encouraged to use the screening tool to assess whether the infrastructure can be repurposed for other uses, such as within carbon storage sites, or need to be prepared for decommissioning.

Initial analysis suggests that pipelines present the greatest opportunity for repurposing with more than 100 which may be suitable for carbon storage or hydrogen projects, therefore lowering overall costs and helping with economic viability.

The NSTA has revamped our Pathfinder site to host even more information about a range of North Sea projects, including decommissioning opportunities, and to encourage licensees and the supply chain to come together early to discuss work.

Collaboration between licensees who may be looking at decommissioning work in similar areas or similar times and between licensees and the supply chain can be a significant factor in completing work efficiently and lowering costs.

As we promote increased visibility of work that needs to be done, we expect decommissioning campaigns to become standard practice.

Currently, more than 1,300 subscribers receive monthly emails listing the recent updates on Pathfinder. Register here.

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