In June 2017, the OGA published this report which provides a new cost estimate for offshore oil and gas decommissioning in the UK Continental Shelf (UKCS).
With a shared objective of both industry and government to reduce decommissioning costs, the OGA has set industry a target to reduce costs by at least 35%. This report was produced to provide greater certainty of the cost of decommissioning all of the UK’s current and future offshore facilities, pipelines, development wells, suspended open water exploration wells and appraisal wells and onshore terminals.
The OGA’s approach has been to develop a probabilistic cost estimate, which takes into account the broad range of uncertainties and uses data submitted by oil and gas operators as part of its 2016 UKCS Stewardship Survey. Using this approach, the OGA has produced a decommissioning cost estimate (P50) value of £59.7 billion in 2016 prices. Taking into account the shared goal of a minimum of 35% cost reduction, this results in a target of less than £39 billion.
The OGA will monitor industry’s performance towards the target and support their efforts through:
- Publishing an annual progress update report
- Benchmarking, using actual decommissioning costs to assess operators’ estimates
- Working with operators and the wider industry to share lessons learned, develop innovative approaches to contracting strategy and enhance capability of the supply chain
- Promoting innovative collaboration, for example the multi-operator well plugging and abandonment (P&A) campaign