In August 2020, the OGA published a new cost estimate for offshore oil and gas decommissioning in the UK Continental Shelf (UKCS).
The report shows that the total cost of UK offshore oil and gas decommissioning has fallen by a further 2% on a like-for-like basis in 2019 to £48bn.
With a shared objective of industry and government to reduce decommissioning costs by at least 35%, the report shows estimated decommissioning costs have, to date, reduced by 19% since the OGA began benchmarking in 2017.
This is compared with the OGA’s 2017 baseline estimate of £59.7bn.
The report identifies:
2020 “Like-for-like” Decommissioning Cost Estimate (2017 inventory and prices). The cost reduction target is based on this number.
- Comparing the same inventory as 2017, estimated costs have reduced slightly by 2% to £48 billion.
- The 2% cost reduction is driven by improvements in planning and execution practices. This has led to reductions in the estimated cost of platform and subsea infrastructure removals in the Northern North Sea (NNS) and Central North Sea (CNS).
- There remain considerable opportunities for future cost reductions which are necessary to meet the UKCS cost reduction target of greater than 35% (to levels below £39bn)
2020 Decommissioning Cost Estimate (2020 inventory, 2019 prices):
Estimated (P50) decommissioning costs remain at £51 billion in 2020.
- Several operators have made significant improvements in subsea well plugging and abandonment (P&A) costs, but those savings have been offset by cost increases reported by other operators.
The analysis also finds that cost reductions are evident in actual decommissioning expenditure, and in 2019 expenditure was £170 million lower than estimated the previous year. Although this is partly due to activity deferral, 70% was from actual cost reductions in live projects.
The OGA is supporting the UK government's commitment to reach net zero emissions by 2050 and is actively engaging with operators on more extensive repurposing of offshore infrastructure to meet that aim.
Earlier cost esimates 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, and the UKCS Decommissioning 2019 Cost Estimate Report, published in July 2019.