North Sea Risks Becoming 'Net Drain' on UK Resources
The North Sea risks becoming a net drain on UK resources as taxpayers face a $29 billion (GBP 24 billion) bill for decommissioning oil and gas fields in the region, the Financial Times reported Monday.
Oil companies are forecast to spend $64 billion (GBP 53 billion) from 2017 on North Sea decommissioning operations with almost half expected to be recouped from the Treasury through tax relief, according to Wood Mackenzie, the FT reported.
The projections, based on analysis of the latest industry plans for plugging wells and dismantling platforms and pipelines, is 50 percent higher than the official Treasury forecast for a public liability of $19 billion (GBP 16 billion), the FT said.
Industry body Oil & Gas UK estimates that $21.6 billion (GBP 17.6 billion) will be spent on decommissioning on the UK Continental Shelf (UKCS) between now and 2025. In the UKCS alone, 302 oil and gas installations, 373 subsea installations and more than 5,000 wells will all eventually need to be decommissioned, according to the Highlands and Islands Enterprise (HIE).
It is estimated that Scotland could capture between $10.2 billion (GBP 8.3 billion) and $13.9 billion (GBP 11.3 billion) of this spend, which could lead to 18,900 jobs being supported as a result, HIE added.
Globally, decommission spending for aging offshore oil and gas assets is on track to increase from $2.4 billion in 2015 to $13 billion each year by 2040, according to an IHS Markit study.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.