UKCS Decom Costs Drop by Nearly $20B
The total cost of decommissioning UK Continental Shelf (UKCS) offshore oil and gas infrastructure has reduced by nearly $19.3 billion (GBP 14 billion) since 2017, the UK Oil and Gas Authority’s (OGA) 2021 Decommissioning Cost Estimate report has revealed.
The cost, which is now said to stand at $63.2 billion (GBP 46 billion), equates to a projected saving of almost 23 percent since the 2017 cost reduction target was first established, the report highlighted. A goal to hit $53.6 billion (GBP 39 billion) by the end of 2022 was called for back in 2017.
The OGA highlighted that costs are dropping by an average of almost six percent a year and stated that the industry needs to maintain this level to cut the total cost by the goal of 35 percent by end-2022. In its latest report, it outlined several opportunities to bring about further cost reductions, including:
- Proven collaborative models
- The creation of an environment and culture of stability and certainty
- And the increased sharing of lessons learned and good practices through improved communication, engagement, and stewardship
The OGA report also notes the primary risks to continuing to bring down costs, which include:
- Operator commercial misalignment or lack of collaboration
- Poor performance
- Delayed activity planning
- Lack of real-time visibility of decommissioning during execution
- And oil sector cost inflation
“The industry is responding to the challenge to cut costs well, but it must maintain focus and increase the pace to hit the 35 percent target,” Stuart Payne, the OGA director of supply chain, decommissioning, and HR, said in an organization statement.
“The prize is significant for industry and the exchequer. So far around GBP 13 billion [$17.8 billion] has been potentially saved and there are billions more up for grabs,” he added.
“We will continue to help; benchmarking costs and promoting best practice; robustly holding operators to their regulatory commitments and providing tools like the improved Energy Pathfinder site which has multiple opportunities for collaboration and innovation,” Payne continued.
“We will also work to bring companies together – because collaboration and knowledge-sharing is key, companies must continue to step up and collaborate in this area,” the OGA representative went on to say.
To contact the author, email andreas.exarheas@rigzone.com
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