OGA sets aims to shave decom costs down to £39billion

Decommissioning the North Sea could cost an estimated £59.7billion but the Oil and Gas Authority (OGA) has set a goal of completing the work for less than £39billion.

Operations director Gunther Newcombe said “significant change” would be needed in the industry if the lower figure is to be achieved.

OGA’s new estimate is based on data from 34 operators and covers the cost of dismantling all current and proposed offshore facilities.

Mr Newcombe said: “In our Decommissioning Strategy, we said we needed to better understand the true cost of decommissioning and then work to reduce these costs by at least 35%.

“This report provides us with a starting point cost estimate of £59.7 billion to decommission UK oil and gas infrastructure.

“The challenge now is to save industry and the taxpayer money and achieve safe decommissioning for £39billion or less.”

OGA said there was a “shared desire” from both the industry and the UK government to achieve this.

Mr Newcombe said: “There will be a need for significant change in the way decommissioning is approached and behavioural change will be a critical component.

“The OGA will continue to work closely with operators and the supply chain to ensure key information and lessons are shared and new approaches to contracting are developed.

“There is a clear and sizeable opportunity for the supply chain to develop an efficient, low cost and exportable industry capability.”

Oil and Gas Technology Centre chief executive Colette Cohen said: “Technology will be a key contributor to improving decommissioning costs in areas such as well-plugging and abandonment, which represents around 50% of decommissioning costs, and the ideas generated by our recent wells technology competition will help realise this goal.”

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