Offshore decommissioning cost dropping, OGA says

The cost of offshore oil and gas infrastructure decommissioning in the UK North Sea is continuing to fall, the UK Oil and Gas Authority (OGA) has said.

The latest analysis shows strong progress towards the shared objective of industry and government to reduce decommissioning costs by at least 35%, OGA said in a report last week.

According to 2019 decommissioning cost estimate, presented by OGA last week, estimated (P50) decommissioning costs have reduced to £51 billion in 2019, compared to £59.7 billion in 2017, despite including more assets and infrastructure than in the 2017 inventory.

The OGA said the cost reduction has been primarily driven by continued improvement in planning and execution practices.

This has led to reductions in the estimated cost of well plug and abandonment (P&A) in the Northern North Sea (NNS) and Central North Sea (CNS); Platform running costs in the NNS; Platform and subsea infrastructure removals in the NNS and CNS; and reduced contingency associated with improved estimating definition.

OGA’s Head of Decommissioning, Nils Cohrs said: “It’s really good news that industry is now half-way towards the collective target in just two years. Better capability and experience is providing greater certainty of actual UK decommissioning costs with several operators already achieving significant cost savings through adopting different approaches, learning and sharing with others, and challenging previous norms. The supply chain is also bringing new solutions to the market in terms of pricing structures, business models and technology.”