More than 2,000 North Sea wells involved in oil and gas extraction are to be decommissioned at a cost of around £20bn ($23.7bn) over the next decade, according to industry forecasts.
The findings come from a new insight into petroleum decommissioning activities, produced by industry body Offshore Energies UK (OEUK), formerly Oil & Gas UK.
OEUK said it estimated around 2,100 North Sea wells would be decommissioned over the next decade, or around 200 per year, at an average cost of £7.8m per well.
In 2021, a tenth of UKCS oil and gas expenditure went on decommissioning – a proportion that has since risen to 14% in 2022 and is set to rise to 19% by 2031. Over the next ten years, expenditure on decommissioning is predicted to total £19.7bn, with well decommissioning comprising nearly half of this spend. Over 75% of the total decommissioning spend will be in the central and northern parts of the North Sea.
The report, however, warned that the growth in other renewable energies, such as offshore wind, could cause bottlenecks in demand for decommissioning services. It said that it means the offshore wind, carbon capture and storage, and oil and gas sectors will need to work together and be transparent about planned projects to make sure the opportunity is properly managed.
OEUK decommissioning manager Ricky Thomson said: “The UK’s decommissioning sector is snowballing and will continue growing for years to come. But this poses a challenge as well as an opportunity. The growth of renewables and demand for decommissioning services and expertise will create increasing pressure for resources.
“This is a great problem to have and it’s vital this opportunity is properly managed across the sector so that UK firms can capture the lion’s share of this £20bn opportunity. With the right support from government and action from the industry, the UK could make major gains from decommissioning, as well as retain thousands of jobs for this growing sector,” he added.