Since the start of 2017, the North Sea industry has cut the overall cost estimate for decommissioning by 25%, or £15 billion. The NSTA is now challenging the sector to lower the total estimate for decommissioning redundant platforms, wells and pipelines by an additional 10%, from £37 billion to £33.3 billion, between 2023 and end-2028.
Keeping costs under control is good for industry and the UK public, as the money saved can be invested in new production as well as emissions reduction projects, such as carbon capture and storage and platform electrification. This bolsters the UK’s energy security while helping the government deliver its net zero ambitions. The cost to the Exchequer of decommissioning tax reliefs is also reduced.
The new target will be applied to the actual cost of completed projects, as well as the overall estimate. In the past five years, reductions to estimates were reflected in the final cost of projects and the NSTA wants industry to continue this trend.
The NSTA will continue to use its influence, analysis and benchmarking to push those who consistently lag behind the top performers. Companies are encouraged to plan early, adopt commercial models such as decommissioning campaigns, repurpose infrastructure, and use new technology, in line with the NSTA Decommissioning Strategy.
Pauline Innes, NSTA head of decommissioning, said: “We have rightly praised industry for the work it has already done to save billions of pounds on decommissioning, but now is the time to press home the advantage. This new target will help keep up momentum and strengthen our industry’s reputation for safe, efficient and economical offshore project execution.”
Bob Fennell, co-chair of the Decommissioning and Repurposing Taskforce, said: “Over the past six years, the North Sea decommissioning industry has made significant steps in better forecasting, improved planning and more effective execution. This has been achieved by using new technologies, sharing knowledge, data and best practice and campaign collaboration. It is now important for us to focus on the next 10 years, building on the great progress industry has already made.”
The Exchequer secretary to the treasury James Cartlidge, said: “The North Sea industry in the UK has made strong progress cutting decommissioning costs in the past five years. I welcome the North Sea Transition Authority’s challenge to build on this momentum and reduce these costs even more, supporting the UK’s net zero ambition and importantly saving money for the taxpayer.”