North Sea decommissioning could cost £47.5 billion

A £47.5 billion business opportunity is opening up for companies in decommissioning the North Sea’s huge infrastructure of offshore oil and gas fields according to new research to be published by Deloitte and Douglas-Westwood.

The new North Sea Offshore Decommissioning Market Report highlights that the majority of decommissioning activity and related spend will occur between 2016 and 2031. The projected workload is expected to exceed the capacities of the existing heavy lift vessel fleet and onshore deconstruction facilities. The report projects that new specialised vessels will be required a swill new onshore yards to deal with the demand.

The forecasted peak period of decommissioning is a likely to coincide with a peak in offshore wind turbine installation projects, which is likely to put even more pressure on existing decommissioning facilities.

Andrew Reid, Douglas-Westwood CEO, commented, “If the supply chain fails to rapidly prepare, our research clearly shows that the huge amount of decommissioning activity in the North Sea could be dramatically delayed and consequently be more costly. An average £1.58 billion per annum price tag over the next thirty years highlights the potential for the oil services industry – most importantly it could significantly boost the regional economies involved.   And these expenditure forecasts are low-case estimates – the final cost could be significantly higher.”

The report considers two scenarios which account for developing offshore lift technologies and the associated variable onshore costs; the first scenario presents a ‘business as usual’ situation whereby existing heavy lift vessels are used to carry out decommissioning using an ‘offshore deconstruction’ process.  The second scenario assumes a step change in offshore lifting technology and the development of Super Heavy Lift Vessels (SLVs) that are capable of lifting upwards of 15,000 tonnes.

“Decommissioning itself is not a new phenomenon – indeed, over 100 small platforms a year have been removed from the Gulf of Mexico using well developed procedures. However, the challenge posed by the North Sea structures – because of their heavier weight and the local climate – represents a major challenge on a totally different scale,” concludes Graham Sadler, Managing Director, Deloitte’s Petroleum Services Group.

Published on 15/11/2011


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