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With many of the North Sea oil and gas fields now into their mature phase, making provision for the eventual decommissioning of offshore installations has assumed increasing importance for well operators.

Over the next two decades, billions of pounds will be spent removing infrastructure that has reached the end of its useful working life – something which the operators themselves have been fully aware of for some time.

In 2000, a study by the economic analysts Wood Mackenzie put the expected bill in excess of £11bn, estimating that around half of the North Sea’s 600 installations would be scheduled for decommissioning by 2021.

“The number of platforms dating from the 1970s and ’80s
eligible for decommissioning is growing.”

Eight years on, William Stevens, an oil and gas banker at the Royal Bank of Scotland puts the figure to deal with around 450 offshore structures by 2030, at between £15bn and £20bn.

Facing a fast-approaching need to decommission and ever-mindful of the extensive protests surrounding Shell’s 1995 proposals for the Brent Spar oil storage facility – and its eventual influence on the whole disposal issue – offshore companies face a complex challenge.

Inevitably, as the number of platforms dating from the 1970s and ’80s eligible for decommissioning grows, the need to get it right becomes more pressing. Over recent years, this has led to considerable debate regarding issues of the environment, worker safety, technology and cost, especially when it comes to considering the demands of dealing with the very large structures in the deep and inhospitable waters of the northern North Sea.

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By GlobalData

Although decommissioning redundant offshore facilities is governed by a strict legal framework encompassing international, regional and national legislation, in the end it falls to the industry to develop approaches which enable these often conflicting factors to be balanced.

The situation is not without its own irony. In the 1970s when many of these structures were initially constructed, they were widely recognised as signal triumphs of engineering; today, the industry’s technological challenge lies in removing them.


In the global context of the oil and gas industry, decommissioning is nothing new, but most of the experience to date has come from the relatively shallow waters of the Gulf of Mexico.

Although around 1,000 structures have already been removed, there is a world of difference between carrying out these operations in depths of 40m or 50m and waters approaching four times as deep, in the often wild conditions of the northern North Sea. There are also particular challenges presented from a technical perspective, one of the largest being the variety of structures and designs currently in place.

“Potential decommissioning of offshore installations has assumed increasing importance for well operators.”

Of the 600 or so offshore gas and oil installations, most were designed at different times and to suit the demands of specific developments and conditions in the field, making it impossible to establish a single method of removal.

From small steel lattice structures for the southern North Sea to the huge concrete and steel affairs made for the northerly waters, and between subsea systems and floating production, storage and offloading installations (FPSOs), decommissioning projects are destined to be complex.

Stanislav Patin, the Russian representative on the International Council for the Exploration of the Sea (ICES) Marine Environment Advisory Committee, argues that from a technical-economic perspective, it can often be more appropriate to leave larger structures, located in deep water at least partially intact. By contrast, in shallower waters, he concludes that it makes more sense to remove installations and take them to shore for disposal or reuse.

However, while the ‘rigs to reefs’ concept caught the imagination of mid-1980s America, there will be no similar fate for North Sea platforms. In the light of the effective precedent set by Brent Spar and the general ruling established under the OSPAR convention decision 98/3, in most cases decommissioning programmes will centre on reuse, recycling or final disposal of the infrastructure on land.


Some 470 of the North Sea’s 600 installations lie on the continental shelf (UKCS) and of these around half are small steel, an estimated 30% are subsea, the remainder being large steel or concrete (10%) and floating (10%).

The existing arrangements mandate that over 90% of this offshore infrastructure will be removed in its entirety and brought back to shore. As the UK’s update guidance notes make clear, any decommissioning programme must adhere to the established precepts of waste hierarchy and demonstrate the relative extent of reuse, recycling and disposal intended for the redundant installation.

However, despite the OSPAR general presumption of complete removal, there remains provision for very large and heavy steel or concrete installations to be viewed on a case-by-case basis. If taking them to shore is likely to be too difficult or dangerous, alternative options remain open.

“In the global context of the oil and gas industry, decommissioning of oil rigs is nothing new.”

Most of the options for reusing and recycling infrastructure remain essentially the same as when they were comprehensively explored in respect of the Brent Spar – ranging, as New Scientist magazine irreverently reported in 1996, from melting it down for scrap to turning it into a casino. In the end, rings cut from the hull became part of the quay extension at Mekjarvik, while the spar’s operations module and living quarters were scrapped at a Norwegian landfill site.

However, the discussions of fitting it with a wind-powered generator to drive a desalination plant, or adding multiple aero-generators and using it as a floating power station continue to have resonance today while more recently, tidal generation has joined the list of possible reuses.

Other options include using platform bases as deepwater bridge piers, conversion to heavy-lift cranes to facilitate further decommissioning, or creating static oil storage tanks.

In some cases there is also the possibility of installations completely reprising their original role, as happened with the Hutton TLP which was ultimately re-installed at the Prirazlomnoye Field, in the Barents Sea.

The rise of subsea systems has also increased the reuse potential for many offshore installations, especially where subsea manifolds are tied into floating facilities – and FPSO vessels in particular. Accordingly, after the effective decommissioning of their respective fields, FPSOs Angus, Emerald , Donan , Blenheim / Bladon and Durward / Dauntless and the floating platform Argyll have all been subsequently reused.


Despite the maturity of Britain’s North Sea oil and gas fields, they still hold reserves amounting to around an estimated 25 billion barrels of oil equivalent and against a background of rising oil prices, these assets should have increasing attraction, particularly for small and medium-sized newcomers.

There have been some developments in this direction – over the last five years, for instance, Shell has sold off several of its interests in the region, but concerns over the potential exposure to decommissioning costs has been firmly indicted by a number of sources in slow asset trading.

“Around 1,000 offshore structures have already been removed from the Gulf of Mexico.”

According to an Oil & Gas UK survey in February 2008, investment in developing new oil and gas reserves in the North Sea offshore UK fell to just under £5bn in 2007 – a real-term drop of around £1bn. Malcolm Webb, Oil & Gas UK’s CEO, describes decommissioning as ‘the logjam of the moment’.

One big reason for this appears to be the ‘joint and several liability’ provision in the current UK legislation.

This effectively means that new licence owners assume responsibility for decommissioning costs, but the seller also remains exposed since there is no automatic release from liability when licence equity is sold on.

With all parties agreed that the long-term future of the North Sea depends upon recovering remaining reserves, the challenge for both industry and UK government lies in achieving a practical way to balance end-of-life liability and incremental investment potential. With the decommissioning boom on its way, getting the economic aspect right is every bit as important as the technical, particularly if it is not to act as a barrier to smaller companies entering the arena.