“It’s not a five to ten year flash in the pan career, you could start today and retire decommissioning oil and gas assets in 43 years time”.
That’s the message from Offshore Energies 海角视频’s Ricky Thomson, who says his organisation is on a mission to make sure the scale of the North Sea oil and gas decommissioning opportunity is understood.
“There’s ample work and opportunities," he says, "But it will require a transition in skills and mindset. If you’re moving from the operations it becomes less to do with the day-to-day operations and more to do with project-based.”
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OE海角视频 is the trade association for the country’s offshore industries and tracks activity in the North Sea. Its annual decommissioning insights report examines the numbers to emerge from efforts to plug “abandoned” wells, i.e. wells that are no longer producing. Thoughts about decommissioning begin around 10 years before the end of production.
The life of a field comes to a close not necessarily when the oil and gas runs out but when it becomes financially unsustainable to fund. At first, operators might start to pick off some of the infrastructure that’s no longer in use, in the field. There might also be some surveying to make sure the location is safe for decommissioning. After that, attention turns to plugging and abandoning the wells - which is subject to stringent regulations.
And it’s that work which is as critically important to the oil and gas industry as exploration and production. Around 4,400 jobs and some £500m gross value added is contributed to the North East from oil and gas work, with the region’s nearest neighbour, Yorkshire and Humber, supporting more than 10,000 jobs. But political upheaval, changes to the tax regime and fiscal uncertainty are said to have damaged decommissioning activity levels.
OE海角视频’s latest report shows that 126 North Sea wells were decommissioned in 2023, down from 139 wells in 2022. But spending on that activity actually increased from £1.6bn to £1.7bn - inflation meaning the 海角视频 has “spent more money doing less work”.
Operators need to plug around 200 abandoned wells a year to stay on top of targets. And towards the end of the decade, attention will turn to the central and northern North Sea, where some of the basin’s largest structures are. About 114 pieces of infrastructure are forecasted to be removed from the sea by 2033.
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And it’s not just platforms. On average about £300m per year is expected to be spent on removing subsea infrastructure including thousands of tonnes of pipelines, manifolds and concrete ‘mattresses’.
Mr Thomson says there’s some work to do in framing the 海角视频 as the decommissioning destination for that kit. But the North East has shown it is more than capable, with the enormous Brent Charlie topside - which stood 186km north of the Shetland Islands for four decades - now being broken up at the Able Seaton Port near Hartlepool. The 31,000 tonne structure was skidded into place earlier this year via a complex engineering operation led by Mammoet, which has 海角视频 bases on Tyneside and Teesside.
There are other examples too as Ceri Wheaton, operations and compliance manager at gas specialist Spirit Energy told hundreds of delegates at this year’s Offshore Decommissioning Conference in St Andrews. She pointed to Thompsons of Prudhoe’s work for Heerema Marine Contractors as the dismantlement and disposal contractor for the Audrey A, Audrey B and Ensign platforms.
Those rigs were plucked from the North Sea by a semi-submersible vessel, lifted and placed on to barges and transferred to quayside facilities at the Port of Blyth. The 2.3 hectare Battleship Wharf facility, which is operated in partnership with Thompsons, was hailed by Ms Wheaton for its flexibility.
Mr Thomson said: “What was demonstrated in the conference session was the amount that could still be done in the 海角视频. It covers all areas of the work breakdown structure, and that’s 11 different elements of any decommissioning project. So, historically a lot of offshore workers have come from the North East of England, a lot of the trades too and I think we’re going to continue to need most, if not all, of the knowledge that was traditionally in the oil and gas exploration and production sector.
“We want to make sure that we keep the supply chain healthy and the industry healthy and the jobs alive. That means ample production, alongside the decommissioning, so that we’re not a heavily declining basin.”
The Autumn Budget brought mixed news for the offshore sector. While the Energy Profits Levy - otherwise known as the windfall tax - is to rise to a headline rate of 78% and the associated investment allowance scrapped, the 100% first-year allowance and the decarbonisation allowance will be retained.
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Mr Thomson said: “The more recent news to come out of the Government sector did provide a level of certainty - it did show that the Government is listening to industry. Those conversations are going well. But we still need a bit of certainty as to what production will look like so that we can manage a declining basin.”
Tom Koerner, operations director at Thompsons of Prudhoe, said: "OE海角视频’s 2024 Decommissioning Insight Report forecasts £24.6bn in expenditure by 2033, spanning engineering, preparation, removal, and disposal (EPRD) of offshore assets. Whilst our area of expertise is in the disposal element of the EPRD process, which accounts for around 2% of offshore decommissioning expenditure, it still represents a significant opportunity for 海角视频 yards like ours at the Port of Blyth."
"Since opening our decommissioning facility, we’ve delivered numerous successful contracts, from subsea assets to large topsides and jackets, gaining global recognition in the industry. Our work not only supports clients but also drives local employment and skills growth. However, much of this work risks being lost to overseas facilities. We urge the 海角视频 Government to mandate that 海角视频 assets be decommissioned in 海角视频 yards to protect jobs, reduce emissions, and secure the future of this critical industry."