The UK oil and gas industry is set to become a pioneer in decommissioning activity globally and has the opportunity to become a leader in this field, according to Wood Mackenzie.
"Although decommissioning in the North Sea has been an impending reality for some time, the high oil price between 2011-2014 allowed some mature, high-cost fields to keep producing economically,” said Wood Mackenzie’s Ian Thom, senior research manager, UK upstream research.
“The lower for longer oil price environment compounded by the maturity of the basin means that continuing production of certain fields in the North Sea region is no longer viable. We expect companies will not be able to keep producing UK fields at a loss, and decommissioning activity will ramp up as a result," he added.
So far in 2016, operators of five fields have announced their intention to cease production. Wood Mackenzie estimates this figure could go to up 50 fields, with many expected to enter 'lighthouse mode' to save the imminent decommissioning costs. A total of 126 UK fields have already ceased but only 27 percent of the ceased fields have been fully abandoned.
Based on the current oil price environment Wood Mackenzie estimates that 142 fields in total will cease production over the next five years and that $80 billion will be spent on decommissioning in the UKCS. This includes the removal of around 340 platforms and over 3,000 development wells.
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