To say that these are challenging times for the North Sea oil and gas industry is already a cliche. According to the latest Oil and Gas UK (OGUK) report, falling oil prices have meant that revenues fell to just over £24billion last year – the lowest since 1998.
Together with rising operating costs, this has resulted in negative cash flows of £5.3billion for the basin, the worst since the 1970s.
Last week’s budget was a game-changer, with all the industry experts involved in the current campaign for ‘Maximising Economic Recovery’ (MER) agreeing that the chancellor’s efforts will make a difference.
But what about decommissioning? The scope of decommissioning oil and gas infrastructure remains and will be executed over many years to come. According to the latest estimates, the financial liability of decommissioning all wells, facilities and pipelines amounts to £46billion. A cost that will be shouldered by oilfield owners and taxpayers alike.
By Richard Heard, managing director of Strategic Decom, a specialist consultancy which advises companies on the safe, efficient and cost-effective decommissioning of assets.