Oil and gas decommissioning cost drops

The estimated cost of decommissioning the oil and gas infrastructure on the UK Continental Shelf has decreased by £4 billion, according to a study published today.

Picture: FPA

The Decommissioning Cost Estimate Report released by the Oil and Gas Authority (OGA) shows the predicted decommissioning costs from 2017 onwards have fallen to £55.7bn (in 2016 prices), down from the original estimate of £59.7bn.

Industry experts said the report shows the progress the industry has made by working with the government to lower estimated costs by 7 per cent.

The OGA, industry and government set a shared objective to reduce the costs by at least 35 per cent, resulting in a target of £39bn in 2016 prices.

Gunther Newcombe, director of operations at the OGA, said: “The tripartite relationship between government, the OGA and industry is working well together.

“It’s very pleasing to see industry make real progress towards the decommissioning cost reduction target set with them. However, costs still need to reduce further and industry must keep focused.

“The OGA is sharing some of the great examples we’re seeing of individual companies thinking differently to save time and cost.”

The report cites “significant efficiencies” in well plug and abandonment costs and substantial reductions in platform running costs as such examples.

Experts said the practical experience that companies are gaining in decommissioning activities is also a key contributor.