OGA Publishes New Cost Estimate for UKCS Decommissioning

The Oil and Gas Authority (OGA) has published a report which provides a new cost estimate for offshore oil and gas decommissioning in the UK Continental Shelf (UKCS).

With a shared objective of both industry and government to reduce decommissioning costs, the OGA has set industry a target to reduce costs by at least 35 percent. This would see the decommissioning cost value drop from $77.4 billion (GBP 59.7 billion) to less than $50.5 billion (GBP 39 billion).

The OGA will monitor industry’s performance towards the target and support their efforts through:

• Publishing an annual progress update report
• Benchmarking, using actual decommissioning costs to assess operators’ estimates
• Working with operators and the wider industry to share lessons learned, develop innovative approaches to contracting strategy and enhance capability of the supply chain
• Promoting innovative collaboration, for example the multi-operator well plugging and abandonment (P&A) campaign

"To achieve this target there will be a need for significant change in the way decommissioning is approached and behavioural change will be a critical component,” Gunther Newcombe, the OGA’s operations director, said in an organization statement.

“The OGA will continue to work closely with operators and the supply chain to ensure key information and lessons are shared and new approaches to contracting are developed. There is a clear and sizeable opportunity for the supply chain to develop an efficient, low cost and exportable industry capability,” he added.