Cost estimate- Decommissioning and Repurposing

The North Sea Transition Authority (NSTA) published its UKCS Decommissioning Cost and Performance Update on 10 July 2025. It shows that operators spent a record £2.4 billion on decommissioning in 2024 and are in the midst of a pivotal 10-year period, with £27bn estimated to be spent in this area between 2023 and 2032. This is more than half the total forecast cost of fully decommissioning the remaining UKCS scope - £44bn, in 2024 constant prices.

It is vital that industry undertakes decommissioning activities in an effective manner that limits the cost of tax-relief to the Exchequer and helps the UK’s supply chain continue to offer competitive services in the North Sea, cementing its reputation as world leader in this field.

While several companies are performing admirably and are in the top quartile for efficiency, many are struggling to keep costs under control. Activities have become more expensive, resulting in a £3bn increase in the estimate for 2023–32, from £24bn in last year’s report. The increase is due to multiple factors, including decommissioning work being brought forward, inflation, higher day rates for rigs and activities exceeding planners’ initial cost estimates. With high expenditure expected near-term, industry must act with urgency to consolidate best practice across the basin and capture cost-efficiencies, or the opportunity will be lost. It can do this by planning thoroughly, engaging with the UK’s world-leading supply chain at the earliest opportunity and adopting innovative technologies and contracting models.

The activity with the greatest potential for cost savings is well plugging and abandonment (P&A), which is forecast to make up about half of total decommissioning expenditure. It is also the area causing the greatest concern, as too many companies are delaying well P&A work. A backlog of more than 500 wells which missed their original decommissioning deadline has built up, while in excess of 1,000 wells will be due for P&A between 2026 and 2030.

However, operators have not been awarding well P&A contracts quickly enough or on a sufficient scale, prompting rig owners to look for opportunities overseas in hope of securing longer deals and at higher day rates than in the UK. If supply chain capacity continues to shrink in the UK, costs will likely rise further, as there are already not enough rigs in the basin to meet forecast demand.

The NSTA is committed to holding industry to account on its legal obligation to decommission wells after they permanently stop producing. The regulator has provided clear expectations and written to licensees to remind them of their responsibilities. It opened investigations into missed well P&A deadlines for the first time last year and has consulted on proposals to publish a league table of well decommissioning performance.

The NSTA is also doing its utmost to help companies save time and money on well decommissioning by making more information freely available all the time, including through its Data Visibility Dashboards and Tree and Wellhead Information for Subsea Tooling database.

Furthermore, the NSTA has developed an initial well P&A plan to help industry sequence this activity effectively in the coming years. The authority is using this information to identify opportunities to set up cost efficient well decommissioning campaigns involving multiple operators and fields. The NSTA expects operators to rise to the challenge on well decommissioning, either using the information in the well P&A plan, or through their own initiative to ramp up their activity levels and clear the backlog to safeguard their credibility.