There seems to be a lot of thought going into the issue of Decommissioning in the North Sea, with companies perhaps beginning to realise that the traditional approach – to take a ‘finger in the air' estimate of the potential costs to put into their accounts and then breathe a sigh of relief when the oil or gas price rises and so pushes Cessation of Production (CoP) further into the future – is no longer appropriate.
Stepping right back, it seems to me that the problem we now need to solve is that the total cost of North Sea Decommissioning may be up to £100bn and we the taxpayer may be on the hook for half of this.
Being of the “lower for even longer” persuasion as far as oil and gas prices are concerned, I see two solutions:
Either: we accept that much CoP is upon us and find a way to cut the costs of Decommissioning. My colleagues at Petromall have developed some Insights which I commend to you.
And/or: we bring on stream a whole new generation of discoveries – whether new ones (shale oil, for example) or existing ‘marginal' discoveries – that means much existing infrastructure gets a new lease of life, via subsea developments, minimum facilities unmanned platforms, tie-ins to existing lines etc.
And to state the obvious, we must find a way to ensure that ‘future useful' infrastructure is not scrapped because of some ‘local' CoP event……..
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