December 12, 2018

North Sea Oil Infrastructure Decommissioning

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For over 40 years the North Sea has provided a steady stream of major projects ranging from field explorations to well drilling and completions. Over that time the UK sector of the North Sea oil has made a significant contribution to the UK economy. Most of the large oil and gas fields are now, however, well into maturity and overall North Sea production is well past its peak. The inevitable and irreversible decline in both reserves and production has led to a corresponding change in project emphasis from exploration and development towards infrastructure decommissioning.

By Gary Bembridge from London, UK (North Sea Oil Rig) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Infrastructure decommissioning in the North Sea is a major issue and presents an entirely different project profile to land-based decommissioning. The North Sea infrastructure includes a wide range of different components ranging from production rigs and ships to undersea storage and pipelines. An activity as simple as closing and sealing a well is much more complex on the seabed than it is on land; the corresponding risk profile is more complex and the potential consequences of any major risk impact are that much greater.

Given the complexity of the work and the likely risk profiles involved, it is clear that North Sea infrastructure decommissioning will be both long-term and very expensive. A recent article in the Financial Times mentions a figure of £24bn for decommissioning the UK North Sea oil and gas infrastructure (‘UK faces £24bn bill for shutting North Sea fields’, FT 8 January 2017).

There is still a great deal of uncertainty involved but it is clear that North Sea oil and gas infrastructure decommissioning (a) will go ahead, (b) will be very complex and expensive, and (c) will generate plenty of exciting major projects for decades to come. These projects will be carried out in an extreme environment and will involve cutting edge technologies and innovations. A whole new type of project manager specialising in offshore decommissioning is likely to emerge.