In 2014, decommissioning spending on the UK Continental Shelf (UKCS) will reach approximately US$1.6 billion (£1 billion) for the first time in a single year, according to data published 9 October.
The data, gathered from 28 UKCS operators and compiled in Oil & Gas UK's 2014 Decommissioning Insight, says spending will then average $2.4 billion (£1.5 billion) each year over the 10 years (2014 to 2023).
Image: CNR's North Sea Murchison platform, which ceased production this year.
Total forecast expenditure on decommissioning from 2014 to 2023 is $23.2 billion (£14.6 billion).
The figures compares to $749 million (£470 million) spent in 2013, according to the report.
Forecast spending has increased since 2013 due to the following factors; $4.7 billion (£3 billion) is attributed to new respondents to the survey, $1.9 billion (£1.2 billion) is attributed to higher forecasts from existing projects.
According to a separate report, also released today and compiled by engineering firm Arup on behalf of Scottish Enterprise and industry body Decom North Sea, total spending will reach $47.8 billion (£30 billion) by 2040.
Some 43% of the total forecast expenditure will be concentrated in the central North Sea ($10 billion). Many of the projects included in the 2014 survey for the first time are in this region, says Oil & Gas UK. However, a number of projects have also been deferred putting them outside the timeframe of the report.
The largest category of expenditure is well plugging and abandonment (P&A) at 44% ($10.2 billion) of the total forecast. However, when looking at just the Northern North Sea and central North Sea, operator costs - those for manning and maintaining installation, was actually more than P&A, at 34% of the total cost compared 33% for P&A, Don Orr, from BP, highlighted at the conference today.
According to Arup's report, there are supply chain constraints. These include:
Other considerations, which should be addressed, according to Arup, are attracting skilled workers, driving innovation, and contracting and procurement strategies.
Clare Lavelle, from Arup, told the conference: "The biggest is challenge around the mindset, which is very much around exploration and production. To move on you need to take the best from that but understand where you can remove barriers, allowing innovation in new technology, practices and even procurement and understanding how to get new suppliers into the market or visibility of putting more information out there about what the market is doing."
"Most of the decommissioning programs captured in this survey are considered to be in the early scoping stages," Karis Vieira, of Oil & Gas UK, told the conference. "Forecasts are therefore subject to change as projects become more defined."
Decommissioning Insight 2014 was launched at the Offshore Decommissioning Conference, jointly organised by Oil & Gas UK and Decom North Sea, and held today and yesterday.
This year the report focuses on the activity of 28 operators in the UK Continental Shelf, the largest number to date, and looks at their decommissioning plans for the next 10 years - 2014 to 2023.
Oonagh Werngren, Oil & Gas UK's operations director, said: “Decommissioning Insight 2014 will be of huge interest to both operators and contractors as they look to the future. Our report provides the industry with the facts and figures it requires in order to be as informed and prepared as possible for when opportunities arise in this growing sector. For operators, this might be a case of collaborating on work programs to reduce cost and gain greater efficiency, and for the broader supply chain it is ensuring the UKCS is geared up to take on this new challenge, ensuring the right technologies are developed and we have the resources in place to handle the work.”
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