A new report prepared by Arup has revealed that work on decommissioning of the North Sea oil and gas projects in the UK Continental Shelf (UKCS) could cost about £30bn by 2040.
The report, prepared for Decom North Sea and Scottish Enterprise, revealed that there may be a significant increase in activity, with an estimated annual investment of more than £2.5bn per annum in the next five to ten years as ageing assets reach the end of their life.
Attracting skilled workers and passing on knowledge is one of the considerations Arup made in the report.
The annual average decommissioning activity is expected to double in the next ten years, suggesting a need to increase the workforce capability.
A significant proportion of the 271,000 people directly employed within the oil and gas industry through the UK, Norway and Denmark are likely to have applicable or transferrable skills to support decommissioning.
The report also noted that innovation can play a role in decommissioning in a more cost effective manner, and procurement strategies need to become significantly distinct, as it is inherently different to that of the exploration and production market.
Arup also highlighted the need to shift procurement strategies away from focusing only on providers with long-term experience in the industry.
Arup also suggested including new entrants to the supply chain who can introduce innovative methods, reduce costs, and expand the supply chain market.
Scottish Enterprise international sector head for oil and gas David Rennie said: "Decommissioning is highlighted as a key opportunity for the supply chain in Scotland’s oil and gas strategy. With an increasing number of assets approaching end of life, we recognise we need to ensure the supply chain is prepared to meet the challenges this presents.
"This report identifies key capacity constraints and we will continue to work closely with Decom North Sea and industry to help develop capacity and raise awareness of these and other opportunities to meet our decommissioning needs."
Decom North Sea chief executive Nigel Jenkins said: "A principal role of Decom North Sea is to facilitate supply chain collaboration to reduce the cost of decommissioning. This report provides an invaluable insight into the potential resource constraints, this insight will be a significant benefit to our members and stakeholders."
Image: Scottish Enterprise international sector head for oil and gas David Rennie. Photo: courtesy of Scottish Enterprise.