UK regulator warns on soaring decom costs

The UK Oil and Gas Authority (OGA) has published its new decommissioning strategy stressing that the market could face higher decom costs if action is not taken to improve commercial practices.

The strategy explains that there is instability in the UK decommissioning market due to fragmented ownership and fluctuations in commodity prices.

Because of this instability, there is a risk of decommissioning becoming more costly to the operators, and thus to the UK government, the OGA asserted. It further said that if the development of a cost-efficient market is inhibited, opportunities for exporting UK expertise could also be missed.

Priorities outlined in the strategy which could help foster a competitive and sustainable market include a more collaborative culture between operators and supply chain including new procurement models.

The strategy emphasises the significance of decommissioning to deliver maritime restoration as part of the UK’s energy transition to net zero and it also highlights emerging opportunities to reuse or repurpose infrastructure and reservoirs.

Pauline Innes, head of decommissioning at the OGA, said: “Our focus on cost efficiency remains resolute and is still an integral part of our decommissioning strategy.

“What this revision does is reflects the current state of decommissioning in the basin and integrates energy transition as a key priority. Now, if redundant infrastructure has the potential for reuse, we will flag that to the operators, and if it is to be decommissioned then we see great win-win opportunity.

“Minimising cost is good news for operators, and the exchequer, but decommissioning also provides much needed investment for our world-class supply chain. As part of this, the OGA is continuing to encourage companies to get sizable well decommissioning campaigns going which could be hugely impactful in terms of cost savings and also offer stability and much-needed certainty to the supply chain.”

The revised strategy builds on the original decommissioning strategy which was published in 2016.

Adis Ajdin

Adis is an experienced news reporter with a background in finance, media and education. He has written across the spectrum of offshore energy and ocean industries for many years and is a member of International Federation of Journalists. Previously he had written for Navingo media group titles including Offshore Energy, Subsea World News and Marine Energy.
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