North Sea oil and gas producers in the UK will spend almost $24bn over the next ten years tearing down over 2,000 inactive wells and facilities in the old basin, Offshore Energies UK (OEUK) said in a report on Tuesday.
At an average cost of $9.2m per well, it is predicted that OEUK will unplug approximately 2,100 North Sea wells during the next ten years.
According to the report, UK dismantling is rapidly developing, with a boom in activity expected over the next three to four years. It predicts that the business will expand further as other future offshore energy technologies, such as offshore wind farms, require the service.
The central North and northern North Sea will account for more than 75% of overall dismantling spending. The increase in work could assist industrial communities along surrounding coastlines, particularly those near Teesside, Humber, Aberdeen, and Inverness. This could generate economic benefits in areas such as Merseyside due to the dismantling of facilities in the Irish Sea, OEUK says.
OEUK decommissioning manager Ricky Thomson said: “With the right support from the 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.”
Dismantling accounts for one-tenth of UK Continental Shelf oil and gas spending in 2021. This proportion rose to 14% in 2022, which could reach 19% by 2031. Over the next ten years, decommissioning expenditures could come to $23.3bn.
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Thomson said: “The UK’s decommissioning sector is snowballing and will continue growing for years to come. The growth of renewables and demand for decommissioning services and expertise will create increasing pressure for resources.”
Since peaking at roughly 4.4 million barrels of oil equivalent per day in the 1990s, oil and gas output in the North Sea has been steadily declining, Reuters reported. According to North Sea Transition Authority, the output has declined to 1.4 million barrels in 2022.