North Sea offers £20bn business opportunity for Scotland's 'world-class' decommissioning industry

Shutting down obsolete North Sea energy installations is a business opportunity worth more than £20 billion and many jobs over the next decade, according to a major trade body.

Ricky Thomson, OEUK decommissioning manager and author of the report, says: 'Thousands of jobs and contracts for billions of pounds’ worth of highly skilled work are at stake.' Picture: Michal Wachucik/Abermedia.

Offshore Energies UK (OEUK) has today published its Decommissioning Insight 2023 report that it says examines requirements for decommissioning and recycling hundreds of oil and gas platforms in UK, Norwegian, Danish and Dutch waters – and provides a focal point of discussions at its conference on the topic being held in St Andrews this week. The £20bn figure is up from previous estimates of £16bn.

OEUK said North Sea oil and gas production is declining by 7 per cent a year, even with the latest round of new licences, and there are currently 283 active oil and gas fields in the North Sea, 180 of which will have ceased production by 2030. It added that decommissioning comprised 12 per cent of total oil and gas expenditure in the UK Continental Shelf in 2022, but in “the right fiscal environment” this could increase to 25 per cent in 2032 and overtake capital expenditure by 2040.

The Insight report also said more than 1,000 North Sea wells will be sealed between now and 2027, with 100,000 tons of surface and seabed structures to be removed in 2026 alone, while around 200 new large-scale wind turbines are to be installed. OEUK also highlighted the Energy Profits Levy, saying consequences include hampering decommissioning as the cost of shuttering old installations is not an allowable expense.

Ricky Thomson, OEUK decommissioning manager and author of the report, said: “This is a £20bn business opportunity for our world-class decommissioning industry, and it is vital it is handled properly so we do not lose the work to overseas competitors. There are dramatic opportunities for growth, but we need proper planning, and not just of hugely complex individual projects, but also of the specialised equipment and the efficient deployment of our highly skilled workforce.

“For the UK supply chain to work with maximum efficiency, it needs to be able to accurately forecast demand for its services, in both oil and gas and across low-carbon technologies... Government support will be needed to maintain the UK’s involvement in the sector. Thousands of jobs and contracts for billions of pounds’ worth of highly skilled work are at stake.”