The cost of decommissioning oil and gas infrastructure from the UK Continental Shelf has fallen by almost £2 billion, according to a report published today.
Companies gaining decom experience has been highlighted as one of the main reasons costs are falling.
The new Oil and Gas Authority (OGA) report shows the estimated cost of decommissioning oil and gas infrastructure on the UK Continental Shelf has reduced from 2017’s baseline.
Last year it was estimated it would cost £59.7bn to remove the UK’s North Sea assets, but this has fallen to £58bn.
Government and industry are targeting the safe decommissioning of offshore oil and gas infrastructure for less than £39bn (in 2016 prices).
Director of operations Gunther Newcombe at the OGA said the drop demonstrated the relationship between the government, the OGA and industry was working well. “It’s very pleasing to see industry make real progress towards the decommissioning cost reduction target set with them,” he said.
“However, costs still need to reduce further and industry must keep focused.
“The OGA is sharing some of the great examples we’re seeing of individual companies thinking differently to save time and cost.”
The report shows the decom cost estimate is despite there being more assets and infrastructure.
On a like-for-like basis estimated costs have reduced by 7% compared to 2016.
A key contributor to this reduction is companies’ gaining valuable real practical experience in what is still a relatively immature activity.
The OGA has also launched an interactive learning platform to continue to promote late life and decommissioning learnings.
Mr Newcombe added: “Companies executing decommissioning programmes have made significant efficiencies in well plug and abandonment costs.
“In the northern North Sea, platform running costs have substantially reduced through better optimisation of late-life and warm and cold phases.
“Our interactive learning platform provides a great snapshot of some of this innovative thinking.”
Terri King, president of ConocoPhillips UK and chairwoman of the MER UK decommissioning taskforce, said the report showed the clear downward trend in expenditure.
She added: “This gives us greater certainty of our actual UK decommissioning costs. Over the past year, we have seen a significant amount of transparency, collaboration and sharing of lessons learned across the industry.”