OGA Drops UK Decommissioning Cost Estimate

The estimated cost of decommissioning the remaining oil and gas infrastructure on the UK continental shelf has fallen by nearly £9bn ($11.3bn) to £51bn, according analysis released by the Oil and Gas Authority (OGA) July 18.

The ‘UKCS Decommissioning Cost Estimate 2019’ report shows strong progress towards reducing decommissioning costs by at least 35%, an objective that the OGA says is shared by the industry and government. Improving capabilities and experience are driving costs lower, the report says.

Several operators have already achieved significant cost savings through adopting different approaches, learning and sharing with others and challenging previous norms, the OGA analysts note. The supply chain is also bringing new solutions to the market in terms of pricing structures, business models and technology.

Estimated costs have fallen to £51bn from £59.7bn in 2017, despite the 2019 inventory including more assets and infrastructure than the 2017 version. Comparing the same inventory as 2017, estimated costs have dropped by 17% to £49bn.

The analysis shows that actual decommissioning expenditure in 2018 was reported to be £400mn lower than forecast the previous year.

“There is considerable opportunity for future cost improvements, to meet the targeted UKCS cost reduction target of greater than 35% (to levels below £39bn), as decommissioning operators and contractors extend industry learning to other offshore assets, and other cost categories,” the report reads.