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UKCS Decommissioning Cost Estimate 2019 Report published

Source: www.gulfoilandgas.com 7/18/2019, Location: Europe

The estimated cost of decommissioning the UKCS’s remaining oil and gas infrastructure is continuing to reduce, according to the latest analysis by the Oil and Gas Authority (OGA).

The ‘UKCS Decommissioning Cost Estimate 2019’ report, published today (18 July 2019), shows strong progress towards the shared objective of industry and government to reduce decommissioning costs by at least 35%.

Better capability and experience in the sector 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.

The findings include:

2019 Decommissioning Cost Estimate (2019 inventory, 2018 prices):
- Estimated costs reduced to £51 billion in 2019 (compared to £59.7 billion in 2017) despite including more assets and infrastructure than the 2017 inventory.

2019 “Like-for-like” Decommissioning Cost Estimate (2017 inventory and 2016 prices).
- Comparing the same inventory as 2017, estimated costs have reduced significantly, by 17% to £49 billion.

The reduction has been primarily driven by continued improvement in planning and execution practices, leading to reductions in the estimated cost of:

- Well plug and abandonment 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.
- Reduced contingency associated with improved estimating definition.

The analysis also reveals that actual decommissioning expenditure in 2018 was reported to be £400million lower than estimated the previous year, of which around 90% is actual total project cost reduction.

The OGA’s interactive learning microsite continues to promote late life and decommissioning learnings and provides a great snapshot of some of this innovative thinking.

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Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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