North Sea Decommissioning Costs Over £47.5bn
Decommissioning North Sea oil and gas platforms is set to cost over £47.5bn according to a recent report.
The cost of decommissioning platforms, pipelines and other infrastructure involved in the industry is set to cost over £47.5 billion according to a report by Douglas-Westwood and Deloitte. Utility Exchange has reported in the past that North Sea oil and gas resources are coming to an end but decommissioning is set to create another huge industry.
The joint report suggested that most of the work in decommissioning was set to begin in 2016 and continue until 2031. It will be an enormous task involving the dismantling of 4 million metric tons of platforms. This will have to be carried out onshore and decommissioning jobs will be created in the UK, Denmark, the Netherlands, Norway and Ireland.
There are over 500 offshore platforms in the North Sea and it’s not just the equipment which needs dismantling – wells also have to be plugged. It means there’s huge potential for oil service businesses once decommissioning begins.
Lloyd’s head of oil and gas, Andrew Moorfield, said “The industry of decommissioning really will become almost a sub-sector of the oil and gas industry itself”.
The report said “The next 30 years will see enormous demand building for the services. Coincidentally the forecast peak period is also due to see a major increase in offshore wind projects, putting even more pressure upon the offshore industries supply chains”.
In an interview, the chairman of Douglas-Westwood, John Westwood said “All this activity will create a lot of jobs. The question is physically where will all these jobs be created”?
It now remains to be seen where the deconstruction yards are built as to where the jobs will be created. However, while the oil price is high the platforms in the North Sea may remain in place. There’s also the prospect of further deep sea drilling in the area as it becomes more viable for companies to spend more to reach oil at deeper depths. It’s important for the country to have its own supply of oil and gas to ensure energy security and keep business gas prices and electricity costs down.