For the man leading the £40 billion dismantling of North Sea oil and gas production, there are three certainties in life – death, taxes and decommissioning.
Roger Esson, chief executive of Decom North Sea , will lead the industry through the task of safely shutting down about 470 installations off the coast of Scotland over the next 40 years.
More than 4,300 wells are to be plugged over the period, with more than 3,100 miles of pipeline to be cleaned and removed in the next eight years alone.
Esson said: “To coin a phrase used by my colleague: there are three certainties in life; death, taxes and decommissioning. For operators, it has always been a case of ‘decommissioning will come, it will come, we’ll worry about it later’ but the low oil price has changed that.”
Esson said the North Sea should be “past peak decommissioning” by this stage but said there was a desire to keep production going given the broader economic picture.
“We are actually managing to keep facilities going far longer and that is good for the country, good for tax revenue.
“I’d say 95 per cent of our members want things to be out there running for a long, long period to come. A platform may still be looking at ten years before cease of production. There are things to be done now that will give us a good start for when decommissioning happens. That would help the supply chain, which is really looking for work.”
About 330,000 jobs are supported by the offshore oil and gas industry in the UK – down from 450,000 in 2014. About 38 per cent of the workforce remains in Scotland.
Royal Dutch Shell has been among those announcing a delay to decommissioning, with work to begin on its 40-year-old Brent Delta platform in 2017 – a year later than planned.
In 2015, it was reported that 21 decommissioning projects had been deferred until after 2024 in order to extend field life or improve cash flow. Recently UK Oil & Gas said £1bn was spent on decommissioning in the past year. Its annual economic survey added: “The outlook beyond 2017 very much depends on the industry’s ability to manage its ageing assets so that they remain economically viable even if low prices prevail.”
Esson said, given the time-frame of decommissioning, “a whole generation” would be looking at the area as a potential career.
Last week, it was announced that Aberdeen University and Robert Gordon University would offer the first masters degree in decommissioning offshore installations.
Deirdre Michie, Oil & Gas UK’s chief executive, said: “Current economic conditions mean that 21 fields ceased production on the UK Continental Shelf, rather than the 14 Oil and Gas UK anticipated at the beginning of last year. While more than expected, the key priority for the industry is remaining focused on maximising the economic recovery of the UK Continental Shelf to recover the ten billion to 20 billion barrels of oil equivalent that is still to play for.”