Deloitte and Douglas-Westwood Study Forecasts Decomissioning Costs of UK North Sea Oil and Gas Platforms Could Exceed $30B
05 October 2010
New research released by Deloitte and Douglas-Westwood finds that the total cost of decommissioning the more than 260 offshore oil and gas platforms—including the associated wells, manifolds, pipelines and umbilicals—on the UK Continental Shelf (UKCS) could be in excess of $30 billion over the next 30 years.
The projected workload is expected to exceed the capacities of the existing heavy lift vessel fleet and onshore deconstruction facilities. The report highlights that the majority of decommissioning activity and related spend will occur between 2017 and 2027.
Delivery of new vessels is urgent and four more onshore yards may be needed in order to meet increased onshore demand. Our research clearly demonstrates that decommissioning activity in the UKCS region is happening right now and that it will ramp up even further over the next decade. On average, this represents a $1 billion per year prize over the next thirty years. The anticipated level of decommissioning will provide a major business opportunity for the oil services industry – especially vessel operators and well service companies and could be a significant boost to regional economies.
—Oliver Sanderson, Analyst and Lead Author of the report at Douglas-Westwood
Graham Sadler, Managing Director, Petroleum Services, Deloitte said that while decommissioning itself is not a new phenomenon, the challenges posed by the North Sea structures because of their scale and the local climate are significant.
The UKCS Offshore Decommissioning Market Report 2010-2040 presents two scenarios that take account of changing onshore lift technologies and the associated onshore costs. The first scenario presents a ‘business as usual’ situation whereby existing heavy lift vessels are used to carry out decommissioning projects. The second scenario assumes a step change in offshore lifting technology using Super Heavy Lift Vessels (SLVs) capable of lifting upwards of 15,000 tonnes at a time.
The cost forecast is generated using these scenarios and covers all aspects of the decommissioning from the plugging and abandonment of subsea wells to onshore deconstruction and recycling.
The new report also examines the extent to which the UK’s offshore wind market could impact on the availability and pricing of Heavy Lift Vessels—and other supply chain components—for North Sea decommissioning projects.
One of the oldest oil field in the world (in Baku) was exploited by the Noble Brothers and others ran dry many decades ago. The rigs and associated equipment + rusty pipelines are still in place. Nobody accepts the responsibility to clean up the mess. Nothing grows on many Km2 due to multiple spills etc. Clean up cost would probably be a few $$B. There are many other similar places around the globe.
Will the same thing happen in the North Sea?
The probability is very high.
Posted by: HarveyD | 05 October 2010 at 06:22 PM
Well as long as the well ran dry you dont need to do anything as the entire mess with rust away into nothing but a coral framework. ts the ones that still ooze oil that are the threat.
Posted by: wintermane2000 | 05 October 2010 at 07:02 PM
"The anticipated level of decommissioning will provide a major business opportunity for the oil services industry – especially vessel operators and well service companies and could be a significant boost to regional economies."
Of course this is a business opportunity for a small group of companies but it should be viewed as a totally unproductive activity that adds yet another hidden cost to our addiction to carbon fuels.
Posted by: johne | 06 October 2010 at 02:13 AM
The US can include the three trillion dollar 'War on Terrorism' to its oil costs while Bin Laden releases audio tapes for decades.
It must be hard to find the only six foot four inch Arab with a dialysis machine in tow. Imagine the utter fiction of the book "1984" having an unending war to maintain a hierarchal society mired in poverty, ignorance, and surveillance.
At least, "The anticipated level of decommissioning will provide a major business opportunity for the oil services industry – especially vessel operators and well service companies and could be a significant boost to regional economies.".. and Halliburton.
Posted by: kelly | 06 October 2010 at 05:26 AM
Before they get drill permits, they post bond in escrow for the decommissioning and clean up. The money accumulates interest and when it is time, the job gets done. It is non productive effort something like repairing hurricane damage, but it needs to be done.
Posted by: SJC | 07 October 2010 at 10:55 AM