The North Sea Transition Authority (NSTA) published its Decommissioning Cost and Performance Report on 9 August 2023, showing that the cost estimate for decommissioning remaining oil and gas infrastructure on the UK Continental Shelf is £40 billion.
In November 2022, the NSTA and industry agreed a target of cutting the estimate to £33.3 billion by the end of 2028 in an effort to maintain focus on cost-efficient project execution. The target is based on NSTA decommissioning benchmarking and actual cost savings secured by the sector’s top quartile performers in recent years.
The cost estimate was reduced by 25%, or £15 billion, between 2017 and 2022. These savings free up money which companies can invest in new production and emissions reduction projects. The cost of decommissioning tax reliefs to the Exchequer is also reduced.
This impressive progress was due to industry’s ability to learn from experience, share lessons and execute projects more efficiently, aided by the deployment of new technologies and techniques. Operators also improved the accuracy of their forecasts.
Achieving the 2028 cost reduction target will be challenging in light of current market conditions. Industry must maintain its focus on performance, collaborate effectively and urgently commit to decommissioning plans to achieve further cost-efficiencies.
The NSTA is supporting industry by introducing new key performance indicators and benchmarks – developed with industry and underpinned by the collection of new datasets, including the length of time taken to complete specific tasks, the number of crew members employed, and the types of vessels used.
With £21 billion expected to be spent on UKCS decommissioning between 2023 and 2032, the sector has a great opportunity to enhance its skills and experience and become even more cost competitive. This will reinforce the UK supply chain’s reputation as the world leader in decommissioning.
Earlier cost estimates were also provided in the UKCS Decommissioning 2017 Cost Estimate Report, published in June 2017, the UKCS Decommissioning 2018 Cost Estimate Report, published in June 2018, the UKCS Decommissioning 2019 Cost Estimate Report, published in July 2019, the UKCS Decommissioning 2020 Cost Estimate Report, published in August 2020, the UKCS Decommissioning 2021 Cost Estimate Report, published in July 2021, and the UKCS Decommissioning 2022 Cost Estimate Report, published in August 2022.