£15bn Rig Closure Opportunities for UK Firms
12 March 2009
THE massive programme to decommission the North Sea's offshore oil and gas fields could provide a £15 billion "abandonment jackpot" for British companies which could last almost a century.
A report published by Oil & Gas UK, the pan-industry trade body, yesterday revealed that almost 5,000 platform and subsea wells will eventually have to be abandoned in the UK Continental Shelf (UKCS).
And the majority are likely to be decommissioned in the next 15 years, opening up a huge opportunity for companies which specialise in well abandonment technology. The report states: "This study has determined that the prize of UK North Sea well abandonment work to be very significant in both the platform and subsea categories – currently being 3,725 platform wells and 910 subsea wells.
"There is an estimated equivalent total of at least 97 years of platform well abandonments and at least 26 years of subsea well abandonments to be performed in the UK North Sea.
"It is reasonable to estimate that the cost would lie between £5bn and £15bn in 2008 money."
Paul Dymond, the operations director at Oil & Gas UK, welcomed the findings of the study. And he urged British companies to seize the lion's share of the lucrative prize on offer.
He said: "Despite improved oil and gas recovery techniques delaying decommissioning in many cases, some projects are already going ahead, for example on the Miller, Brent and Indefatigable fields.
"This report highlights the considerable opportunities presented by the decommissioning of North Sea infrastructure for suppliers to invest in the provision of innovative services and new technology."
Phil Chandler, the senior petroleum engineer with InterAct, the company which prepared the study, explained: "The report estimates that 3,725 platform wells and 910 subsea wells in the UK offshore will need to be abandoned, the majority in the next 15 years.
"Existing technology will permit the rigless abandonment of two thirds of those wells, a method which is typically more cost effective than using a rig."
Jules Schoenmakers of Shell, who chairs the industry's well abandonment workgroup, said: "Many felt that a significant market opportunity for well abandonments on the UKCS exists."