Decommissioning making up a growing percentage of North Sea investment

Decommissioning in 2022 accounted for 12% of overall oil and gas expenditure across the UK Continental Shelf, according to industry association’s Offshore Energies UK’s (OEUK) Decommissioning Insight 2023 report. It said that the percentage could reach 25% by 2032. By 2040, depending on the UK’s future fiscal regime, decommissioning investments could exceed field capital expenditure.

OEUK counted 283 active oil and gas fields in the UK North Sea, of which it expected 180 to cease production by 2030. Between now and 2027 more than 1,000 North Sea wells will be plugged and abandoned. That will mean 100,000 tonnes of surface and seabed structures will need to be removed in 2026 alone.

The report, claimed that increased petroleum taxes on UK projects had impacted decommissioning progress, as the cost of shutting down old installations cannot be treated as an allowable expense. OEUK said that it was in talks with the UK Treasury concerning the degree of uncertainty that had been created by the levy on North Sea investment.