DECOMMISSIONING INSIGHT 2016

DECOMMISSIONING INSIGHT 2016

DECOMMISSIONING INSIGHT REPORT 2016

DECOMMISSIONING INSIGHT REPORT 2016

Contents
1.
2.
3.
4.
5.

6.

7.

8.
9.

Foreword
Executive Summary
Introduction
Decommissioning Expenditure and Activity on the
UK Continental Shelf in 2015
Decommissioning Activity Forecast 2016 to 2025
5.1
Well Plugging and Abandonment
5.2
Facilities and Pipelines Making Safe and
Topside Preparation
5.3
Topside and Substructure Removal
5.4
Subsea Infrastructure Decommissioning
5.5
Pipeline Decommissioning
5.6
Onshore Recycling and Final Disposal
5.7
Site Remediation and Monitoring
Forecast Decommissioning Expenditure
2016 to 2025
6.1
Forecast Expenditure on the
UK Continental Shelf
6.2
Key Expenditure Metrics on the
Norwegian Continental Shelf
Forecast Unit Costs 2016 to 2025
7.1
Well Plugging and Abandonment
7.2
Facilities Making Safe
(UK Continental Shelf Only)
7.3
Topside and Substructure Removal
(UK Continental Shelf Only)
Appendices
Glossary

4
6
10
11
12
12
20
27
36
38
42
46
47
47
57
59
59
63
64
67
69

DECOMMISSIONING INSIGHT REPORT 2016

1.

Foreword

Oil & Gas UKs Decommissioning Insight 2016 presents a unique forecast of offshore oil and gas infrastructure
decommissioning in the UK and Norway over the next ten years. The report gives the most comprehensive picture
to date of anticipated activity in these territories, providing asset operators with valuable insights to assist in
effective decommissioning planning and pointing the supply chain to where demand for services is likely to lie.
The analysis confirms that, despite low oil prices continuing to challenge the economics of many of the more
mature offshore assets, there has not been a rush to decommission. The reality is much more complex, with
different market forces influencing decommissioning strategies across the North Sea. While some companies are
delaying activity due to cash-flow constraints, others are deferring cessation of production as sustained efforts
to improve efficiency result in extended field life. Others are expediting decommissioning as the cost of some
decommissioning activities becomes cheaper at lower prices.
Yet it is clear that decommissioning is a growing, if still emerging, market. Last year, 1.1 billion was spent on
decommissioning in the UK and 1 billion in Norway, compared with 800 million and 770 million in the same
countries in 2014. This trend is expected to continue, as in 2015, decommissioning accounted for 5 per cent of total
industry expenditure, up from 2 per cent in 2010. This proportion is likely to exceed 12 per cent in the UK next
year. This not only reflects increasing decommissioning activity, but also needs to be set against the wider impact
of reducing operating costs and falling capital investment in the lower price environment.
Fifty-two new projects appear for the first time in this years report, bringing to more than 100 the number of
platforms forecast for complete or partial removal from both continental shelves over the next ten years. Over
1,800 wells are expected to be plugged and abandoned and some 7,500 kilometres of pipeline are scheduled for
decommissioning. Most of this activity has been long planned.
Overall, decommissioning on the UK Continental Shelf (UKCS) from now until 2025 represents an estimated
17.6 billion opportunity, with over 50 per cent of this market to be found in the central North Sea. This offers
considerable scope for companies to develop world-class competencies in decommissioning both for deployment
on the UKCS and export overseas. To make the most of this opportunity, the UKs supply chain will need to position
itself by offering high quality, cost-efficient goods and services if they are to win business in a fiercely competitive
global market.
The offshore oil and gas industry is one of the cornerstones of the UK economy. In 2016, total offshore expenditure
is expected to be 19 billion, while the supply chain is forecast to generate revenues of 30 billion. The industry
supports around 330,000 highly skilled, well-paid jobs, and provides a secure domestic supply of primary energy.
Oil and gas production rose in 2015 for the first time in 15 years, a trend that will continue in 2016.
It is believed that there could be up to 20 billion barrels of oil and gas still to recover. If the UK is to continue
to gain the full economic benefit from its oil and gas resource, it is important that the industry works with the
Oil and Gas Authority (OGA) and HM Treasury to attract fresh investment, avoid premature decommissioning,
retain the critical infrastructure required to access future reserves and ensure decommissioning is carried out in a
timely and most cost-effective way.
This work is strengthened by a competitive tax regime designed to promote new investment and government
funding for seismic surveys to open up new areas for exploration. Oil & Gas UK is now working with HM Treasury to
explore further avenues in its Driving Investment strategy for the sector, including the possibility of transferring
tax relief on decommissioning costs on the sale of assets.
4

In parallel, Oil & Gas UK is working on the MER UK Decommissioning Board with the OGA and the
Department for Business, Energy and Industrial Strategy (BEIS) to develop new fit-for-purpose technical,
commercial and operational solutions to lower the cost of decommissioning, while maintaining high safety and
environmental standards.
The industry fully respects its environmental obligations and is assisting BEIS as it prepares for the forthcoming
review of the OSPAR decision 98/3 by the OSPAR Offshore Industry Committee in 2018.
Broad comparisons of the 2016 survey with last years report suggest that the unit costs of decommissioning
are falling, particularly for well plugging and abandonment. This is partly due to a market-driven response to
the downturn as associated costs such as rig-rates have fallen, but it may also indicate that the industrys own
efficiency improvements and the experiences gained from past decommissioning activity being applied to new
projects are beginning to have effect.
This is good news. It will only be through focused and effective collaboration between industry, government
and the regulators that the outcomes from decommissioning North Sea assets can be optimised in a mutually
beneficial manner.

Michael Tholen,
Upstream Policy Director, Oil & Gas UK

N.B. The collection and analysis of the data by Oil & Gas UK on behalf of the industry has the support of the
Norwegian Petroleum Directorate and Norsk Olje & Gass.
8

DECOMMISSIONING INSIGHT REPORT 2016

2.

Executive Summary

Decommissioning Overview
This report captures data from 186 decommissioning projects1 across the UK (153) and Norwegian (33) Continental
Shelves. Fifty-two of these projects are new to this years report due to the survey timeframe shifting to 2016
to 20252; some projects being brought forward in response to the low oil price environment; or estimates only
now becoming available.
Seventeen projects have been postponed since last years survey to outside the timeframe as operators have
successfully extended field life.
Of the 134 existing projects included in both this years and last years survey, there have been some movements
in the timing of specific decommissioning activities within project scopes. For example, one company might
accelerate a well plugging and abandonment (P&A) campaign to take advantage of falling rig rates during the
current downturn, while another defers this activity due to cash-flow constraints.
Looking across the breadth of activity, there is more evidence of projects being brought forward in the
central and northern North Sea than in the southern North Sea, Irish Sea and Norwegian Continental Shelf.
On the UK Continental Shelf (UKCS), 94 per cent of the 153 projects in this region do not yet have firm timings
and are still in the early planning stages. This involves outlining the scope of the activities to be undertaken and
carrying out feasibility studies that will ultimately be influenced by changing market conditions over time.
Sustained efficiency improvements and cost reductions could defer cessation of production (CoP) and therefore
push back decommissioning in some cases, while the low oil price environment and access to infrastructure
issues might expedite it in other cases. For example, over the last 12 months, 33 assets within the timeframe on
the UKCS have deferred CoP, 72 have brought forward CoP, while for 135 CoP remains unchanged.

Current Activity
The decommissioning market is an emerging sector across the UK and Norwegian Continental Shelves.
Twelve operators carried out decommissioning activity across these regions in 2015.
In 2015, 1 billion was spent on decommissioning on the Norwegian Continental Shelf and 1.1 billion on the
UKCS, compared with 770 million and 800 million3 in 2014, respectively4.
The decommissioning market has expanded from 2 per cent of total industry expenditure in 2010 in both the UK
and Norwegian Continental Shelves to 5 per cent of total expenditure in 2015.
Annual expenditure on decommissioning is expected to reach around 2 billion on the UKCS by 2017 making up
12 per cent of total expenditure, but it is likely to remain close to 1 billion on the Norwegian Continental Shelf
and 5 per cent of total expenditure.
Project is defined by the operator and can range from a single well for P&A to multi-platforms.
The 2015 survey covers the timeframe 2015 to 2024 and the 2016 survey covers the timeframe 2016 to 2025.
3
This survey covers data from end-of-field-life decommissioning projects and does not include expenditure of activity
associated with mid-life decommissioning.
4
Figures for Norway are taken from the Norwegian Petroleum Directorate. See www.npd.no/en
1
2

Ten-Year Outlook

Over the next decade across the UK and Norway:

More than 100 platforms are forecast for complete or partial removal.

Over 1,800 wells are forecast for P&A.

Close to 7,500 kilometres of pipeline are lined up for decommissioning.

Forecast activity on the UKCS is significantly higher than on the Norwegian Continental Shelf over the next ten
years. This reflects the relative maturity of the two regions, with more fields reaching the end of their field life
in the UK.

On the UKCS, 17.6 billion is forecast to be spent on decommissioning between 2016 and 2025.
This is an increase of 0.7 billion on the 2015 reports ten-year forecast of 16.9 billion, primarily due to 41 new
UKCS projects in this years survey.
Fifty-three per cent (9.4 billion) of the forecast expenditure on the UKCS will be concentrated in the central
North Sea.

The Norwegian Petroleum Directorate estimates that annual expenditure on decommissioning will average
around 1 billion per year on the Norwegian Continental Shelf until 20205, compared with close to 1.7 billion
per annum on the UKCS.
7

With exception of one well in the Norwegian Sea, all decommissioning activity in Norway over the next decade
is planned in the Norwegian North Sea area.
The largest category of expenditure on the UK and Norwegian Continental Shelves is well P&A at 47 per cent and
56 per cent, respectively.

Compared with last years survey, the ten-year outlook for the average unit cost of platform well P&A has fallen
by one-third in the southern North Sea and Irish Sea to 2 million, but has remained unchanged across the
central North Sea, northern North Sea and west of Shetland at 4.1 million.

Average subsea exploration and appraisal well P&A unit costs over the next ten years are forecast to fall by over
35 per cent in the southern North Sea and Irish Sea to 5.6 million. The cost per well in the central North Sea,
northern North Sea and west of Shetland is also set to be around 20 per cent cheaper at 6.2 million compared
with forecasts made last year.
Subsea development well P&A unit costs over the next decade have fallen by around 20 per cent on average in
the southern North Sea and Irish Sea to 7.6 million. The average forecast cost per well in the central North Sea,
northern North Sea and west of Shetland has increased by around 3 per cent to 10.2 million.

See Norwegian Petroleum Directorate www.npd.no/en. Total forecast decommissioning expenditure from 2016
to 2025 is not available.
7

DECOMMISSIONING INSIGHT REPORT 2016

Activity Forecast 2016 to 20256

Southern
North Sea
and Irish Sea

Central
North Sea

Northern
North Sea
and West of
Shetland

Number of
projects6

39

83

Number of wells for

P&A

396

Proportion of wells
that are platform
wells

Total UK

Norwegian
Continental
Shelf

Total UK
and Norway

31

153

33

186

644

430

1,470

362

1,832

80%

37%

73%

60%

85%

64%

Number of
platforms for
removal

67

16

12

95

14

109

Topside weight to
be removed

90,260
tonnes

187,238
tonnes

262,022
tonnes

539,520
tonnes

112,612
tonnes

652,132
tonnes

Substructure weight
to be
removed

63,745
tonnes

71,056
tonnes

96,737
tonnes

231,538
tonnes

84,734
tonnes

316,272
tonnes

Number of
mattresses to be
decommissioned

4,526

5,979

1,162

11,667

188

11,855

Subsea
infrastructure to be
removed

4,268
tonnes

56,714
tonnes

1,697
tonnes

62,679
tonnes

1,745
tonnes

64,424
tonnes

Number of
pipelines to be
decommissioned

200

484

96

780

67

847

Length of
pipelines to be
decommissioned

3,426
kilometres

2,666
kilometres

1,038
kilometres

7,130
kilometres

297
kilometres

7,427
kilometres

Total tonnage
coming onshore

164,834
tonnes

369,190
tonnes

360,456
tonnes

894,480
tonnes

199,091
tonnes

1,093,571
tonnes

Project is defined by the operator and can range from a single well for P&A to multi-platforms.

Average Forecast Plugging and Abandonment Costs per Well from 2016 to 2025
Central and
Southern North Sea Northern North Sea
and Irish Sea
and West of
Shetland

UKCS

Norwegian
Continental Shelf
10 million

Platform well P&A

2 million

4.1 million

3 million

Subsea suspended
exploration and
appraisal well P&A

5.6 million

6.2 million

6.1 million

Subsea
development
well P&A

7.6 million

16.1 million
10.2 million

9.6 million

Average Forecast Cost per Tonne for Removal from 2016 to 20257
Southern North Sea and Irish Sea

Central and Northern North Sea

and West of Shetland

Facilities making safe

1,200 per tonne

490 per tonne

Topside removal

2,600 per tonne

3,000 per tonne

Substructure removal

2,600 per tonne

4,400 per tonne

Some of the average cost forecasts are significantly different to those presented in the 2015 survey. These changes
will be discussed in section 7.

Data were unavailable for Norway.

9

DECOMMISSIONING INSIGHT REPORT 2016

3. Introduction
3.1 Survey Development and Methodology
The Decommissioning Insight 2016 provides the first joint decommissioning activity forecast for the UK and
Norwegian Continental Shelves for the period 2016 to 2025 so that operators and the supply chain have a more
comprehensive picture across the North Sea and can effectively plan for decommissioning in the most cost
efficient way8. The report also provides detailed expenditure forecasts for activity on the UK Continental Shelf
(UKCS) and some key expenditure metrics for the Norwegian Continental Shelf. Complete expenditure information
was not available for Norway.
The report is compiled through primary data collection from 25 operators on the UKCS and 6 operators on the
Norwegian Continental Shelf between June and September 2016. This provides over 95 per cent coverage in both
regions. There are more operators on the UKCS with forecast decommissioning activity, reflecting the relative
maturity of the two shelves.
The survey was structured around the components of the decommissioning Work Breakdown Structure described
in Oil & Gas UKs Decommissioning Cost Estimation Guidelines9. Following feedback received from the industry
and the joint industry-Oil and Gas Authority (OGA) MER UK Decommissioning Board, the report has also been
expanded to include additional insight into topside and substructure removal activity on the UKCS, splitting the
activity into work already contracted out and work that is still to be contracted.
The information collected is presented in a non-attributable and aggregated format. Analysis has been carried out
on a regional basis and split into groups the central (CNS) and northern North Sea (NNS) and west of Shetland
(W o S); the southern North Sea (SNS) and Irish Sea; and the Norwegian Continental Shelf. Almost all of the
activity on the Norwegian Continental Shelf is concentrated in the Norwegian North Sea area. Wherever possible,
information has been split further into more specific regions. Where particular projects are referred to, this
information has been gathered from publicly available data.

3.2 Decommissioning Forecasting

Planning for decommissioning can be a long and challenging process that operators start well before cessation
of production (CoP). Over time, the scope of each project is refined as engineering studies and comparative
assessments are carried out to determine the optimum approach. Forecasting the precise schedule of
decommissioning activity and the associated expenditure at the outset of a project is therefore challenging. There
are many uncertainties and factors influencing these, such as the duration of well plugging and abandonment
(P&A) or the availability of heavy lift vessels.
Forecasts contained in this report are therefore based on operators best available estimates at the time of
surveying. The majority are not sanctioned decommissioning projects and are subject to change as work scopes
are further developed and refined. This is particularly true of activity forecast for the second half of the survey
timeframe (2021 to 2025). See section 6 for more on estimate types.

This survey covers data from end-of-field-life decommissioning projects and does not include expenditure of activity
associated with mid-life decommissioning.
9
The Guideline on Decommissioning Cost Estimation is available to download at www.oilandgasuk.co.uk/product/op061
8

10

4. Decommissioning Expenditure and Activity on the

UK Continental Shelf in 2015

Analysis was carried out to assess actual decommissioning activity in 2015 on the UKCS, outlined in Figure 1
below. All of the planned activity was undertaken last year totalling 1.1 billion.

Figure 1: Decommissioning Activity in 2015 on the UK Continental Shelf10

Decommissioning Activity

Total

Platform well P&A

50

Subsea well P&A

17

Mattresses decommissioned

575

Subsea infrastructure removed

5,886 tonnes

Pipelines for 'making safe'

357 kilometres

Modules for 'making safe'

13

Modules for topside preparation

34

10

Complete data were not available for Norway.

11

DECOMMISSIONING INSIGHT REPORT 2016

5.

Decommissioning Activity Forecast 2016 to 2025

The North Sea decommissioning market does not end at the median line and, as such, forecast activity on
both the UK and Norwegian Continental Shelves has been compiled to provide a more complete overview. The
following sections focus on specific areas of decommissioning activity. A great opportunity exists for the supply
chain offering decommissioning services. However, companies must be able to compete successfully for this
work in a global marketplace on quality, efficiency and cost, while maintaining focus on high environmental and
safety standards.
In total, this report captures data on 186 decommissioning projects across the UK (153) and Norway (33) Continental
Shelves11. Fifty-two of these projects are new to this years report due to the survey timeframe shifting to 2016 to
202512; some projects being brought forward in response to the low oil price environment; or estimates only now
becoming available. Seventeen projects have been postponed since last years survey to outside the timeframe as
operators have successfully extended field life.
It should be noted that the peaks of activity over the next decade shown in the following sections are likely to
smooth out over the years. This is because decommissioning activities tend to be spread over a number of years,
but for the purposes of this survey operators will often select a specific year for particular work to be undertaken.
Over the next decade, forecast activity on the UKCS is significantly higher than on the Norwegian Continental
Shelf. This reflects the relative maturity of the two shelves, with more fields reaching the end of their life in the UK.

5.1 Well Plugging and Abandonment

The purpose of well plugging and abandonment (P&A) is to isolate the reservoir fluids within the wellbore and from
the surface or seabed. This activity is carried out in accordance with industry guidelines13 and the Offshore Wells
Design and Constructions Regulations 199614 on the UKCS, and in accordance with NORSOK D-010 regulations15
on the Norwegian Continental Shelf. Well P&A can be challenging and may involve intervention in the form of
the removal of downhole equipment, such as production tubing and packers, and well-scale decontamination
treatment. The process also requires the wellhead and conductor to be removed.
Across the two regions of the North Sea, a total of 1,832 wells are forecast to be plugged and abandoned from
2016 to 2025 (1,470 wells on the UKCS and 362 wells on the Norwegian Continental Shelf). Sixty-four per cent of
these (1,180) are platform wells and the remainder are subsea wells, although the proportion varies across each
sub-region (see regional breakdown from p14).
Figure 2 opposite shows that there is less variation year-on-year in the combined forecast for the two shelves
than in each of the regions considered separately, clearly demonstrating the consistent market opportunity that
well P&A in the North Sea represents for the supply chain. In 2016, 137 wells are forecast to be plugged and
abandoned, rising to over 230 in 2017. Year-on-year activity will average at around 180 wells per year over the
next decade with activity forecast to fall in 2022 before the next wave of projects commences from 2023 onwards.

Project is defined by the operator and can range from a single well for P&A to multi-platforms.
The 2015 survey covers the timeframe 2015 to 2024 and the 2016 survey covers the timeframe 2016 to 2025.
13
Guidelines on the Abandonment of Wells and Qualification of Materials for Abandonment are available to download at
www.oilandgasuk.co.uk/product/op105 and www.oilandgasuk.co.uk/product/op109
14
See www.legislation.gov.uk/uksi/1996/913/made
15
See NORSOK Standard D-010 Well Integrity in Drilling and Well Operations, (Rev.4 June 2013) at http://bit.ly/20BWqdD
11

12

12

The region with the highest number of wells of all types forecast for P&A within the survey timeframe is the
central North Sea where 35 per cent (644) of the wells are located. The region with the least amount of activity is
the Norwegian Continental Shelf where 362 wells are due to be plugged and abandoned of which there is only a
single well in the Norwegian Sea.

Figure 2: Combined Well P&A Forecast for the UK and Norwegian Continental Shelves
CNS - Platform Wells
NNS and W o S - Platform Wells
SNS and Irish Sea - Platform Wells
NCS - Platform Wells

250

CNS - Subsea Wells

NNS and W o S - Subsea Wells
SNS and Irish Sea - Subsea Wells
NCS - Subsea Wells

Increased Uncertainty
in Forecasts

200
Number of Wells

150

100

6
50

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

There are a variety of factors that affect the timing of well P&A activity, including but not limited to changes to the
CoP date, alignment of well activity with other fields, available rig slots and the availability of capital to carry out
the work. Where the following forecasts by region indicate high peaks in activity, Oil & Gas UK would expect these
to smooth out as operators further develop and define their projects.

13

DECOMMISSIONING INSIGHT REPORT 2016

Central North Sea

Of the 644 wells forecast for P&A in this region over the next decade, the number of platforms wells has decreased
to 241 from 292 estimated in 2015, while the number of subsea wells has increased by 71 to 403. This leads to an
overall increase of 20 wells compared with the 2015 survey. Sixty-three per cent of wells for P&A in this region
are subsea, a higher proportion than the 53 per cent forecast in 2015.
The increase in subsea well activity comes from 21 new projects in this region included in the survey, 19 of
which are subsea projects ranging from subsea tie-backs to single suspended exploration and appraisal (E&A)
wells as operators take advantage of current low rig rates to carry out this activity during the downturn.
The net decrease in platform wells is due to activity already completed, combined with field-life extension
projects that have postponed decommissioning on some platforms to outside the survey timeframe.
An additional floating, production, storage and offloading (FPSO) decommissioning project has also been
included for the first time, brought forward due to the low oil price.
Twenty wells are planned for P&A in 2016, rising to an average of 77 wells per year from 2017 to 2021.
Activity is forecast to peak at 116 wells in 2024 as 16 different projects plan to carry out activity in the same year.
The scheduling of P&A activity for the majority of projects has changed since the 2015 report as activity has
either been brought forward for some projects or postponed for other projects, highlighting how plans can
change as project scopes are refined.
Figure 3: Number of Wells Forecast to be Plugged and Abandoned in the Central North Sea

140
120

Platform
Subsea Development
Suspended Subsea E&A Wells

Increased Uncertainty
in Forecasts

Number of Wells

100
80

60
40

20
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025
Source: Oil & Gas UK

14

Northern North Sea and West of Shetland

The number of wells forecast for P&A over the next ten years in the northern North Sea and west of Shetland
has increased to 430 from 326 in the 2015 survey.
The addition of 81 platform wells and 23 subsea wells is due to two large platform removal projects and a
subsea project that now expect to carry out decommissioning earlier due to the challenges of operating in a low
oil price environment.

Seventy-three per cent of wells for P&A in these regions are platform wells.

Forty-eight wells are forecast to be plugged and abandoned in 2016, with an annual average of 65 wells between
2016 and 2018.
4

As several P&A campaigns are likely to start earlier to take advantage of current low rig rates, 80 more wells are
expected in the near term (2016 to 2018).
Activity is forecast to spike at 79 wells in 2023 due to the three new projects in the northern North Sea.

Figure 4: Number of Wells Forecast to be Plugged and Abandoned in the

Northern North Sea and West of Shetland
6

140

Platform
Subsea Development
Suspended Subsea E&A Wells

120

Increased Uncertainty
in Forecasts

Number of Wells

100
80

60

40
20
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025
Source: Oil & Gas UK

Number of Wells 2016 to 2025

Proportion that are Platform Wells

Total

1,074

52%

CNS

644

37%

NNS and W o S

430

73%
15

DECOMMISSIONING INSIGHT REPORT 2016

Southern North Sea and Irish Sea

Nearly 400 wells are forecast for P&A in the southern North Sea and Irish Sea over the next decade, an increase
of 122 on last years report due to 17 new projects for which estimates are now available.
Sixteen of the new projects are platform removals with predominantly platform wells.
The proportion of platform wells has therefore increased to 80 per cent from 73 per cent in the 2015 report.
Twenty-one wells are forecast for P&A in 2016, with 40 fewer wells to be plugged and abandoned over 2016 and
2017 as some operators postpone decommissioning expenditure in the current climate to manage cash-flow.
Activity from new wells will be concentrated towards the end of the survey timeframe.
The peak year of activity has slipped from 67 wells in 2019 in last year's survey to 80 wells in 2020.
Figure 5: Number of Wells Forecast to be Plugged and Abandoned in the Southern North Sea and Irish Sea
90
80

Platform
Subsea Development
Suspended Subsea E&A Wells

Increased Uncertainty
in Forecasts

70

Number of Wells

60
50

40
30
20
10
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

16

Number of Wells 2016 to 2025

Proportion that are Platform Wells

396

80%

Norwegian Continental Shelf

Approximately 800 of the 3,800 wells that will eventually require decommissioning on the Norwegian Continental
Shelf have already been plugged and abandoned16. Of the remaining 3,000 wells, 12 per cent (362) are forecast to
be decommissioned between 2016 and 2025, rising from 284 reported earlier this year due to ten new projects
that lie at the end of the survey timeframe.
Eighty-five per cent of wells for P&A over the next decade are platform wells compared to 95 per cent forecast
in the last Norwegian Decommissioning Insight as the new projects have a higher proportion of subsea wells.

All of the well P&A activity is concentrated in the Norwegian North Sea region of the basin with the exception of
one suspended subsea E&A well in the Norwegian Sea.
Activity in the near term (2016 to 2020) has increased as the durations of a number of large P&A campaigns have
reduced in light of experience gained from previous activity.
Forty-eight wells are forecast to be plugged and abandoned in 2016, with an average of 41 wells per year from
2016 to 2020.

Activity is estimated to peak at 90 wells in 2025 due to the new projects included.
Figure 6: Number of Wells Forecast to be Plugged and Abandoned on the Norwegian Continental Shelf
100

Increased Uncertainty
in Forecasts

Platform Wells
Subsea Wells

90

80

Number of Wells

70
60

50
40
30

20
10
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025
Source: Oil & Gas UK

16

Number of Wells 2016 to 2025

Proportion that are Platform Wells

Total

362

85%

Norwegian North Sea

361

85%

Norwegian Sea

0%

Barents Sea

No activity

No activity

See Abandonment of Obsolete Wells and Installation on the Norwegian Continental Shelf; a Study into the Magnitude
and Technical and Economic Challenges, June 2014, University of Stavanger, at http://bit.ly/1m8jpNW
17

DECOMMISSIONING INSIGHT REPORT 2016

Rig Type
There are a number of methods that can be used for well P&A and the rig type will primarily depend on the well type
and water depth. In some instances, the availability of well P&A technologies could remove the requirement for a
rig altogether. For example, a low-cost method of well P&A without the requirement of a rig was recently trialled
onshore by Centrica in Canada in a collaboration with Interwell P&A, BP, Statoil, and the Norwegian Research
Council. The new technology uses a thermite plug to seal off the well by melting both the well components and the
rock formation around them to recreate the cap rock. The trial results demonstrated that this technology could
potentially reduce well P&A costs in the North Sea by more than 50 per cent.
Platform wells are typically plugged and abandoned in phases. The first phase can be rig-less and uses lower cost
methods such as wireline, coil tubing, or a hydraulic workover unit. This is followed by the second and third phases
that are more likely to require a rig.
For platform wells on the central and northern North Sea and west of Shetland, and the Norwegian Continental
Shelf, 86 and 68 per cent, respectively, will be plugged and abandoned using an integral rig.
Modular rigs are also popular for platform well P&A in Norway, although most of the wells using this rig type fall
outside the survey timeframe.
For operators planning to use an integral rig for platform well P&A, the opportunity exists for alternative
approaches that preclude the use of the platforms existing drilling derrick, which can prove challenging and
expensive to upgrade.
In the southern North Sea and Irish Sea, the majority (64 per cent) of platform wells will be plugged and
abandoned using a standalone jack-up rig.
Operators are also considering rig-less, lower cost solutions to well P&A. For example, in the southern North Sea
and Irish Sea, 30 per cent of platform wells are forecast to use rig-less methods such as coil tubing and wireline.
For subsea wells, a standalone jack-up rig will be used for 98 per cent of wells on the Norwegian Continental
Shelf and 70 per cent on the southern North Sea and Irish Sea.
In the central and northern North Sea and west of Shetland, 63 per cent will use a semi-submersible rig for
subsea well P&A due to the greater water depths.
For a greater proportion of subsea wells, the rig type has not yet been determined as operators consider
alternative solutions (25 per cent in the southern North Sea and Irish Sea and 19 per cent in the central and
northern North Sea and est of Shetland).

18

Figure 7: Forecast Rig Type for Well Plugging and Abandonment on the
UK and Norwegian Continental Shelves from 2016 to 2025

Subsea Well P&A CNS, NNS and W o S

Platform Well P&A CNS, NNS and W o S

Semi-Submersible Rig
2%

Jack-Up Rig
9%

Not Yet Determined

19%

Rig-Less Intervention
3%

Several Rig Types

4%
Jack-Up Rig
8%
Rig-Less Intervention
6%

4
Integral Rig
86%

Source: Oil & Gas UK

Semi-Submersible Rig
63%

Source: Oil & Gas UK

Subsea Well P&A SNS and Irish Sea

Platform Well P&A SNS and Irish Sea

Not Yet Determined
6%

Not Yet Determined

25%

Rig-Less Intervention
30%

7
Rig-Less Intervention
5%
Jack-Up Rig
64%

Jack-Up Rig
70%

Source: Oil & Gas UK

Source: Oil & Gas UK

Platform Well P&A Norwegian Continental Shelf

Subsea Well P&A Norwegian Continental Shelf

Not Yet Determined
2%

Modular Rig
11%

Jack-Up Rig
21%

Integral Rig
68%

Source: Oil & Gas UK

Jack-Up Rig
98%

Source: Oil & Gas UK

Source: Oil & Gas UK

19

DECOMMISSIONING INSIGHT REPORT 2016

5.2 Facilities and Pipelines Making Safe and Topside Preparation

For a platform or pipeline to be decommissioned, they must first be hydrocarbon free. This activity is referred to
as making safe in the Oil & Gas UK Decommissioning Work Breakdown Structure and must be carried out in line
with environmental and safety considerations. Making safe of facilities includes cleaning, freeing equipment of
hydrocarbons, disconnection and physical isolation, and waste management. Making safe of pipelines involves
depressurising them and removing hydrocarbons. Then the pipelines are cleaned and purged, with the cleaning
programme based on the specific needs of the system. This may involve the use of pigs, which are maintenance
tools used to clean or inspect the insides of pipelines.
Pipeline making safe is sometimes carried out alongside facilities making safe, particularly in the case of small
topside and pipeline tie-backs. In these cases, the same team and some of the same equipment can be used for
both activities. Making safe can be carried out several years prior to removing a platform or decommissioning a
pipeline, leaving them hydrocarbon free until the next phase of decommissioning.
For facilities, the next phase involves separating the topsides and process and utilities modules and carrying out
appropriate engineering, such as the installation of lift points to prepare for removal. The topside preparation
required will depend on the removal method used.
Over 570 topside modules are forecast for making safe on the UK and Norwegian Continental Shelves from 2016
to 2025. The greatest number of modules are located in the northern North Sea and west of Shetland (211) with
the least amount in the southern North Sea and Irish Sea (83).
Operators expect 600 topside modules to be prepared for removal. The forecast is slightly higher than that for
facilities making safe as some projects have already carried out making safe activity.
Over the next decade, close to 5,200 kilometres of pipeline are expected to be 'made safe'. Fifty-six per cent of
this activity is concentrated in the southern North Sea (2,885 kilometres), while only 7 per cent is forecast on the
Norwegian Continental Shelf (354 kilometres).

20

Figure 8: Combined Facilities Making Safe and Topside Preparation Forecast for the
UK and Norwegian Continental Shelves
Norwegian Continental Shelf
Northern North Sea and West of Shetlands

Number of Topside Modules

120

Central North Sea

Southern North Sea and Irish Sea

Increased Uncertainty
in Forecasts

100

80
60

40

20

Making Safe
Preparation

Making Safe
Preparation

Making Safe
Preparation

Making Safe
Preparation

Making Safe
Preparation

Making Safe
Preparation

Making Safe
Preparation

Making Safe
Preparation

Making Safe
Preparation

Making Safe
Preparation

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Figure 9: Combined Pipelines Making Safe Forecast for the UK and Norwegian Continental Shelves
1,400

Southern North Sea and Irish Sea

Northern North Sea and West of Shetlands

Kilometres of Pipeline

1,200

Increased Uncertainty
in Forecasts

Central North Sea

Norwegian Continental Shelf

1,000

9
800
600
400
200
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

21

DECOMMISSIONING INSIGHT REPORT 2016

Central and Northern North Sea and West of Shetland

Facilities making safe activities are planned on 26 platforms and 2 FPSOs, equating to 383 topside modules
over the next decade.
The forecast for topside preparation is slightly higher, with 406 modules on 29 platforms and 1 FPSO.
The overall activity in these regions is higher than that forecast in the 2015 report due to 24 new projects and
more detailed schedules for existing projects as their programmes have been developed and refined.
Four platform removal projects have been postponed to outside the survey timeframe, although this has been
offset by two of the new projects that have four large platforms for removal.
Close to 30 topside modules are forecast for making safe and topside preparation in 2016, with making safe
activity peaking at 77 modules in 2018 and topside preparation peaking at 68 modules in 2021.
Just under 2,000 kilometres of pipeline are forecast for making safe in these regions over the next decade, with
activity varying over the ten-year period, particularly in the second half of the survey timeframe (2021 to 2025).
Forecast activity is lower than reported in 2015 as some projects with significant levels of activity have been
postponed. Although decommissioning on some projects has been brought forward, any associated pipeline
activity lies outside the survey timeframe, leading to a net decrease in activity from the 2,350 kilometres
forecast in 2015.
Seven projects currently plan to carry out pipeline making safe in 2023 causing a peak of 753 kilometres. For fields
with significant lengths of pipeline to be decommissioned, making safe may be carried out over a number of years.
Figure 10: Forecast Number of Topside Modules for Making Safe and Topside Preparation
in the Central and Northern North Sea and West of Shetland
90
80

Making Safe

Increased Uncertainty
in Forecasts

Topside Preparation

Number of Topside Modules

70
60
50
40
30

20
10
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

22

Number of Modules 2016 to 2025

Number of Platforms 2016 to 2025

Facilities making safe

383

26 platforms
2 FPSOs

Topside preparation

406

29 platforms
1 FPSO

Figure 11: Forecast Length of Pipelines for Making Safe in the Central and Northern North Sea

and West of Shetland

800

Increased Uncertainty
in Forecasts

700

Kilometres of Pipeline

600
500

400
300

200

100

7
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Pipeline 'Making Safe' 2016 to 2025 (Kilometres)

1,954

23

DECOMMISSIONING INSIGHT REPORT 2016

Southern North Sea and Irish Sea

Facilities making safe and topside preparation activities are forecast to be carried out on 38 normally
unmanned installations (NUIs) and 32 manned platforms in these regions, equating to 83 topside modules from
2016 to 2025.
The overall activity has increased from 65 topside modules forecast a year ago given the 16 new platform
removal projects included in the southern North Sea. The additional activity is expected to occur between 2018
and 2025.
Activity in the near term is consistent with last years report, indicating that these projects are further along in
their planning and the timing is better defined.
Over the next decade, nearly 2,890 kilometres of pipeline are estimated to be made safe in the southern North
Sea and Irish Sea, an increase from the 2,490 kilometres forecast a year ago.
Activity is forecast to peak at just under 600 kilometres this year, with significant activity between 2019 and
2023 also expected.
Figure 12: Forecast Number of Topside Modules for Making Safe and Topside Preparation
in the Southern North Sea and Irish Sea
18

Increased Uncertainty
in Forecasts

Making Safe
Topsides Preparation

16

Number of Topside Modules

14
12
10
8
6
4
2
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Facilities making safe and

topside preparation

24

Number of Topside Modules

2016 to 2025

Number of Platforms
2016 to 2025

83

38 NUIs
32 manned platforms

Figure 13: Forecast Length of Pipelines for Making Safe in the Southern North Sea and Irish Sea
700

Increased Uncertainty
in Forecasts

600

Kilometres of Pipeline

500

400
300

4
200
100

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Pipeline 'Making Safe' 2016 to 2025 (Kilometres)

2,885

Operators forecast that 108 topside modules on 13 platforms and 2 FPSOs will be made safe in preparation for
removal over the next ten years.

Norwegian Continental Shelf

Topside preparation is slightly higher with a forecast of 111 topside modules on 14 platforms and 2 FPSOs, as
making safe work has already been carried out on one platform.
The bulk of work is planned between 2019 and 2023, peaking at over 40 topside modules in 2023.
Just over 350 kilometres of pipeline are forecast for making safe on the Norwegian Continental Shelf over the
next decade. All of this activity is in the Norwegian North Sea.
Activity will vary significantly year-on-year, peaking at 120 kilometres in 2020.
Forecast pipeline making safe activity in the Norwegian North Sea region of the Norwegian Continental Shelf
has increased since estimates made last year as ten new projects are captured.
The bulk of the pipeline decommissioning activity associated with these projects however lies outside the
survey timeframe.
In contrast to the 2015 report, no pipeline decommissioning activity is forecast in the Norwegian Sea due to the
deferral of a subsea project.

25

DECOMMISSIONING INSIGHT REPORT 2016

Figure 14: Forecast Number of Topside Modules for Making Safe and Topside Preparation
on the Norwegian Continental Shelf
45
40

Facilities Making Safe

Topside Preparation

Increased Uncertainty
in Forecasts

Number of Topside Modules

35
30

25
20
15

10
5
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025
Source: Oil & Gas UK

26

Facilities Making Safe

2016 to 2025

Topside Preparation
2016 to 2025

Norwegian North Sea

108 modules on 13 platforms

and 2 FPSOs

111 modules on 14 platforms

and 2 FPSOs

Norwegian Sea

No activity

No activity

Barents Sea

No activity

No activity

Figure 15: Forecast Length of Pipelines for Making Safe on the Norwegian Continental Shelf

140
Increased Uncertainty
in Forecasts

120

Kilometres of Pipeline

100

80

60

40
20

5
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Pipeline Making Safe 2016 to 2025 (Kilometres)

Norwegian North Sea

354

Norwegian Sea

No activity

Barents Sea

No activity

5.3 Topside and Substructure Removal

Removal is classified as the removal of topsides, substructures (jackets) and subsea infrastructure. The weights of
FPSOs have not been included in this category as they are usually relocated or sold for reuse or recycling.
The ability to cut large and often complex steel sections in an offshore environment is one of the key challenges
during this stage of decommissioning. The availability of heavy lift vessels, the development and use of new
technology for removing installations, and the capacity of disposal sites will all affect how decommissioning on
different projects is implemented. The removal method deployed will depend on the type and weight of the
topside and substructure and will be determined through comparative assessment of the available options.
The most common methods for topside removal are piece-small, reverse installation or single-lift.
The piece-small method involves dismantling the topside and using onshore demolition techniques to produce
small, manageable pieces that can be transported onshore.
For reverse installation, the topside modules are lifted separately onto a transportation barge or the deck of the
crane vessel before being taken onshore.
The single-lift method involves removing the topside in one piece and may involve extra engineering work to
reinforce the topside in preparation for removal. As technology moves on to keep up with the decommissioning
market, vessels such as the Pioneering Spirit are being designed to lift heavier loads17.
See www.allseas.com/equipment/pioneering-spirit

17

27

DECOMMISSIONING INSIGHT REPORT 2016

For the substructure, the removal method depends on the type, weight and configuration. The substructures
to be decommissioned in the southern North Sea and Irish Sea are shallow-water jackets that typically weigh
less than 2,000 tonnes and are usually deployed in water depths of 55 metres or less so they may use a
single-lift removal method.
For larger substructures (barge-launched and some self-floaters), the jacket may be cut into smaller sections in situ
and removed in segments. These more complex projects are typically located in the central and northern North
Sea and on the Norwegian Continental Shelf. The decommissioning sector continues to innovate in developing
existing and new cutting technology to undertake this task.
Operators forecast that over 652,000 tonnes of topsides from 109 platforms are to be removed from the UK and
Norwegian Continental Shelves over the next decade.
While the majority of these platforms are located in the southern North Sea and Irish Sea (61 per cent), the area
with the greatest amount (40 per cent) to be removed by weight is the northern North Sea at over 262,000 tonnes.
This reflects the size of platforms in this region.
Topside removal activity in the near term (2016 to 2020) is lower with between 15,000 and 80,000 tonnes forecast
to be removed each year. This rises to 60,000 to 128,000 tonnes per annum from 2021 to 2025.
Considering the forecast for substructure removal, Figure 17 opposite shows that 316,272 tonnes of substructure
associated with 100 platforms are forecast to be removed between 2016 and 2025. Just over 30 per cent of this
weight comes from the northern North Sea region (96,737 tonnes).
Substructure removal on the UKCS is forecast to begin in 2017, while activity on the Norwegian Continental Shelf
is expected to start later in 2019. Again, substructure removal is lower in the near term (2017 to 2020) ramping
up to a peak of just under 60,000 tonnes in 2025. Although not captured in the dataset, activity beyond 2025
is likely to remain high as there are a number of projects that have removal activity scheduled for outside the
survey timeframe.
Overall, Figures 16 and 17 show that across the UK and Norway there will be decommissioning work available for
the supply chain in every year, although no single region anticipates a consistent stream of activity with fluctuations
from year to year and area to area. All of the activity on the Norwegian Continental Shelf is concentrated in the
Norwegian North Sea region.
A significant amount of work for both topside and substructure removal is yet to be contracted out, as demonstrated
in the following sections. This provides a significant opportunity for the supply chain to bid for this work as it
becomes available.
It should be noted that in the survey operators typically indicate a single year for removal activity, but removal
contracts commonly include a time window of several years in which the activity must take place.

28

Figure 16: Combined Topside Removal Forecast for the UK and Norwegian Continental Shelves
140,000
120,000

Southern North Sea and Irish Sea

Northern North Sea and West of Shetland
Central North Sea
Norwegian Continental Shelf

Increased Uncertainty
in Forecasts

Tonnes to be Removed

100,000

80,000
60,000

4
40,000

20,000

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Figure 17: Combined Substructure Removal Forecast for the UK and Norwegian Continental Shelves
70,000
60,000

Southern North Sea and Irish Sea

Northern North Sea and West of Shetland
Central North Sea
Norwegian Continental Shelf

Increased Uncertainty
in Forecasts

Tonnes to be Removed

50,000

40,000
30,000

20,000
10,000

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

29

DECOMMISSIONING INSIGHT REPORT 2016

Central and Northern North Sea and West of Shetland

Operators forecast the removal of 342 topside modules from 28 platforms from 2016 to 2025, with a total
weight of 449,260 tonnes to be removed.
A number of topside removals are forecast between 2016 and 2017 with no activity between 2018 and 2019.
This is similar to the forecast in last years report due to the small number of large decommissioning projects
already under way in the northern North Sea.
Activity beyond 2019 is higher than last years forecast due to the inclusion of new projects and more detailed
activity schedules.
From 2020 to 2025, 62,000 tonnes of topsides on average are estimated to be removed per annum.
Topside removal activity on eighty-two per cent (23) of the platforms has not yet been contracted out.
Figure 18 opposite shows the tonnage per year of uncontracted topside removals. The topside removals for
the Brent and Murchison fields, not shown, have already been contracted to Allseas and a consortium of AF
Gruppen and Heerema (the Heerema-AF Consortium), respectively.
The removal of Brent will be carried out by single-lift using the Pioneering Spirit heavy lift vessel, while the
removal method for Murchison involves a combination of reverse installation and piece-small.
The total forecast for substructure removals in these regions is close to 167,800 tonnes on 21 platforms from
2016 to 2025.
Activity mirrors the forecast for topside removal, with some planned removals in the near term (2016 to 2020).
Fifteen of the planned substructure removals are expected to take place between 2023 and 2025.
Ninety per cent of this activity is yet to be contracted out (19 substructures), shown in Figure 19 opposite.

30

Figure 18: Uncontracted Topside Removal Forecast in the Central and Northern North Sea
and West of Shetland 2016 to 2025
80,000

Increased Uncertainty
in Forecasts

70,000

Tonnes to be Removed

60,000
50,000

40,000
30,000
20,000

10,000
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Topside Removal

Weight (Tonnes) 2016 to 2025

Number 2016 to 2025

Total

449,260

342 topside modules on

28 platforms

Contracted activity

119,880

5 platforms

Uncontracted activity

329,380

23 platforms

Figure 19: Uncontracted Substructure Removal Forecast in the Central and Northern North Sea
and West of Shetland 2016 to 2025
50,000

Increased Uncertainty
in Forecasts

45,000

Tonnes to be Removed

40,000
35,000

30,000

25,000
20,000
15,000
10,000
5,000

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Substructure Removal

Weight (Tonnes) 2016 to 2025

Number 2016 to 2025

Total

167,793

21 platforms

Contracted activity

21,000

2 platforms

Uncontracted activity

146,793

19 platforms
31

DECOMMISSIONING INSIGHT REPORT 2016

Southern North Sea and Irish Sea

Operators forecast the removal of 83 topside modules on 67 platforms over the next decade, with a total weight
of 90,260 tonnes. This is an increase on the 66 modules on 57 platforms in last years report (78,900 tonnes) due
to the new projects.
Just over 4,000 tonnes of topsides are forecast to be removed in 2017, rising to almost 15,000 tonnes in 2018.
For three of the projects, although CoP dates have come forward, some decommissioning activity has been
deferred as companies want to preserve cash-flow in the current climate.
Topside removal activity on 85 per cent (57) of platforms has not yet been contracted out, with 18 of these
installations set for removal by 2020.
More operators are looking at decommissioning their assets in batch campaigns compared to last years forecast.
Batching well P&A and topside and substructure removal activity across several assets allows the operator to
optimise contracting strategy and the use of vessels, rigs and accommodation. This is now being considered by
all operators in the region to carry out decommissioning in a more cost-effective manner.
Campaigns are not typically cross-operator, however, some operators have carried out feasibility studies looking
at the benefits and risks of cross-operator campaigns that could lead to further efficiency gains.
The estimate for substructure removal in these regions mirrors that of topsides, with 63,745 tonnes of
substructure on 67 platforms to be removed over the decade compared with 46,200 tonnes on 57 platforms in
last years report.
In 2017, 6,600 tonnes of substructure are forecast to be removed.
Activity deferral on some projects and spreading of activity on others has caused the peak to shift since a year
ago from 2017 to 11,680 tonnes in 2021.
The inclusion of additional projects in the survey has increased forecast activity for both topside and
substructure removal in the second half of the decade (2021 to 2025) compared to last year.
Again, 85 per cent of the substructure removals (57) planned over the next decade are yet to be contracted out.

32

Figure 20: Forecast Number of Topside Modules and Topside Weight to be Removed in the Southern North Sea
and Irish Sea Split by Work Already Contracted
Topside Weight - Work Not Yet Contracted

Topside Weight - Not Defined by Operator

Number of Topside Modules

18,000

16

Increased Uncertainty
in Forecasts

16,000

12

14,000

Tonnes to be Removed

14

10

12,000
10,000

8,000

6,000

4,000

Number of Topside Modules

Topside Weight - Work Already Contracted

20,000

2,000
0

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

N.B. Individual segments represent different projects

Source: Oil & Gas UK

Topside Removal

Weight (Tonnes) 2016 to 2025

Number 2016 to 2025

Total

90,260

83 modules on 67 platforms

Contracted activity

3,510

9 platforms

Uncontracted activity

85,510

57 platforms

Not defined

1,240

1 platform

Figure 21: Forecast Substructure Weight to be Removed in the Southern North Sea
and Irish Sea Split by Work Already Contracted
14,000

Not Yet Contracted

Not Defined by Operator

12,000

Tonnes to be Removed

Increased Uncertainty
in Forecasts

Contracted Out

10,000
8,000

6,000
4,000
2,000
0
2016

2017

2018

2019

2020

2021

2022

N.B. Individual segments represent different projects

2023

2024

2025
Source: Oil & Gas UK

Substructure Removal

Weight (Tonnes) 2016 to 2025

Number 2016 to 2025

Total

63,745

67 platforms

Contracted activity

6,125

9 platforms

Uncontracted activity

56,770

57 platforms

Not defined

850

1 platform
33

DECOMMISSIONING INSIGHT REPORT 2016

Norwegian Continental Shelf

Operators forecast just over 112,600 tonnes of topsides from 14 platforms will be removed over the next decade,
all in the Norwegian North Sea.
The next removal is scheduled for 2018, following the successful single-lift removal of the 13,500 tonne YME
platform in August this year by the Pioneering Spirit heavy lift vessel.
The bulk of activity over the decade is forecast between 2019 and 2024, peaking at close to 43,000 tonnes
in 2024.
Just over 84,700 tonnes of substructure from 12 platforms will be removed between 2016 and 2025, again all in
the Norwegian North Sea.
Substructure removal is due to begin in 2019, with the majority of activity concentrated between 2019 and 2022,
but peaking at 30,000 tonnes in 2025.
The forecast for substructure removal mirrors the forecast for topside removal, with a time lag of around a year.
Figure 22: Forecast Number of Topside Modules and Topside Weight to be Removed
on the Norwegian Continental Shelf

40,000

Tonnes to be Removed

45

Topside Weight
Topside Modules

Increased Uncertainty
in Forecasts

40

35,000

35

30,000

30

25,000

25

20,000

20

15,000

15

10,000

10

5,000

0
2016

34

Number of Topside Modules to be Removed

45,000

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Topside Removal

Weight (Tonnes) 2016 to 2025

Number 2016 to 2025

Norwegian North Sea

112,612

102 modules on 14 platforms

Norwegian Sea

No activity

No activity

Barents Sea

No activity

No activity

Figure 23: Forecast Substructure Weight to be Removed on the Norwegian Continental Shelf

35,000
Increased Uncertainty
in Forecasts

30,000

Tonnes to be Removed

25,000
20,000

15,000
10,000

5,000
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Substructure Removal

Weight (Tonnes) 2016 to 2025

Number 2016 to 2025

Norwegian North Sea

84,734

12 platforms

Norwegian Sea

No activity

No activity

Barents Sea

No activity

No activity

35

DECOMMISSIONING INSIGHT REPORT 2016

5.4 Subsea Infrastructure Decommissioning

Mattresses are concrete structures usually used to protect or support subsea pipelines. Mattress decommissioning
typically involves recovery from the seabed. This is a diver and vessel-intensive operation, with duration of the
work dependent on the mattress age and condition. In some cases where the mattresses are badly degraded,
regulatory approval may be sought to decommission mattresses in situ.
Other subsea infrastructure includes manifolds, Christmas trees, risers, spools, jumpers, anchors and subsea
isolation valves, which are removed as part of the decommissioning programme.
Just under 12,000 mattresses are forecast to be decommissioned across the UK and Norwegian Continental
Shelves from 2016 to 2025.
Sixty per cent of this activity (see table opposite) is concentrated in the central and northern North Sea and
est of Shetland; 38 per cent in the southern North Sea and Irish Sea; and the remaining two per cent on the
Norwegian Continental Shelf.
Just over 64,400 tonnes of other subsea infrastructure will be removed from the UK and Norwegian Continental
Shelves from 2016 to 2025, compared with 86,000 tonnes forecast a year ago.
The decrease in subsea infrastructure removal compared with last year is due to subsea infrastructure removal
falling outside the survey timeframe for many of the projects included.
Ninety-one per cent of this activity is concentrated in the central and northern North Sea and west of
Shetland, six per cent is in the southern North Sea and Irish Sea, and three per cent on the Norwegian
Continental Shelf.
All of the mattress and other subsea infrastructure decommissioning activity on the Norwegian Continental
Shelf is concentrated in the Norwegian North Sea.
The large amount of mattress and other subsea infrastructure activity in the central and northern North Sea and
est of Shetland is due to the scale and types of projects in these regions. There are 13 fields serviced by FPSOs
plus a number of projects with multiple subsea tie-backs.
The relatively low forecast on the Norwegian Continental Shelf is due to there being fewer decommissioning
projects in this region and activity for many projects lies outside the survey timeframe.

36

Figure 24: Forecast for Mattress and other Subsea Infrastructure Decommissioning on the
UK and Norwegian Continental Shelves

Number of Mattresses to be Decommissioned

2,500

Southern North Sea and Irish Sea

Increased Uncertainty
in Forecasts

Central and Northern North Sea

and West of Shetland

2,000

Norwegian Continental Shelf

1,500

1,000

4
500

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Tonnage of other Subsea Infrastructure to be Removed

18,000
16,000
14,000

6
Norwegian Continental Shelf

Increased Uncertainty
in Forecasts

Central and Northern North Sea

and West of Shetland
Southern North Sea and Irish Sea

12,000
10,000

8,000
6,000
4,000

2,000
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Central North Sea

Northern North Sea and
West of Shetland
Southern North Sea and Irish Sea
Norwegian North Sea
Norwegian Sea
Barents Sea

Matt resses (Number)

2016 to 2025

Other Subsea Infrastructure

(Tonnes) 2016 to 2025

5,979

56,714

1,162

1,697

4,526
188
No activity
No activity

4,268
1,745
No activity
No activity
37

DECOMMISSIONING INSIGHT REPORT 2016

5.5 Pipeline Decommissioning

The extensive pipeline network in the North Sea measures in excess of 45,000 kilometres in total and is used to
deliver hydrocarbons to receiving facilities and end-users across Europe. This transportation network is of vital
importance when the economics of field-life extension projects and future development opportunities are being
assessed and it is therefore essential that major pipelines are not decommissioned prematurely. On the UKCS,
to achieve the objectives of the MER UK (maximising economic recovery from the UKCS) strategy, the deferral of
pipeline decommissioning to the end of field life, or for possible reuse, is sometimes carried out under the Interim
Pipeline Regime, whereby the regulator the OGA may request that the pipeline owner carries out making safe
activities and maintains the pipeline for possible future reuse.
There are rigid pipelines and flexible flowlines in the North Sea. Their diameters can vary between 2 and 44 inches.
Options for decommissioning include full removal, decommissioning in situ, trenching and burial. The approach
adopted will be based on comparative assessments of all the different options and consideration of safety and
environmental factors, technical feasibility, other sea users and cost. All decisions are made on a case-by-case
basis in consultation with key stakeholders and with regulatory approval.
Operators intend to decommission around 17 per cent of the total pipeline network length from the UK and Norwegian
Continental Shelves over the next decade, close to 850 pipelines with a total length of almost 7,500 kilometres.
The central North Sea is the area where the greatest number of pipelines (484) is estimated to be decommissioned,
making up 57 per cent of the total. However, in terms of length to be decommissioned, the southern
North Sea and Irish Sea will see the greatest proportion at 3,426 kilometres or 46 per cent of the total
pipeline length to be decommissioned. On the Norwegian Continental Shelf, all the activity is planned in the
Norwegian North Sea.
It should also be noted that many of the larger projects lie towards the end of the survey timeframe and so the
associated pipeline decommissioning activity will occur beyond 2025.
Figure 25: Combined Pipeline Decommissioning Forecast for the UK and Norwegian Continental Shelves18

1,800
1,600

180

Trunklines
Other Pipelines

Increased Uncertainty
in Forecasts

Umbilicals

160

Number of Pipelines (inc Umbilicals)

140

Total Length (km)

1,400

120

1,200

100

1,000
80

800

60

600

Number of Pipelines

2,000

40

400

20

200
0

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025
Source: Oil & Gas UK

Trunklines are pipelines with a diameter greater than 14 inches and a length in excess of 18 kilometres. Umbilicals are
utility support pipelines.

18

38

Central and Northern North Sea and West of Shetland

Operators plan to decommission 580 pipelines with a total length of 3,700 kilometres from these regions over
the next decade.
Around 25 kilometres of pipeline are forecast to be decommissioned in 2016, rising to an average of over
300 kilometres per year between 2018 and 2022.
Activity is expected to peak at over 1,000 kilometres in 2024.

The majority of this activity involves inter-field pipelines connecting fields to host facilities, although some
import/export lines are included.
Pipeline decommissioning activity is one of the later activities in a decommissioning project and there is therefore
a high degree of uncertainty in the timing.
Figure 26: Forecast of Pipeline Decommissioning Activity in the Central and Northern North Sea
and West of Shetland
1,200

Umbilicals
Other Pipelines
Trunklines

1,000

Increased Uncertainty
in Forecasts

800
Total Length (km)

600

8
400

200

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025
Source: Oil & Gas UK

Pipeline Decommissioning
2016 to 2025

Pipeline Decommissioning
(Kilometres) 2016 to 2025

Total

580

3,704

Umbilicals

221

1,027

Trunklines

68

1,117

Other pipelines

291

1,560

39

DECOMMISSIONING INSIGHT REPORT 2016

Southern North Sea and Irish Sea

The overall forecast for pipeline decommissioning in these regions over the next decade at 3,426 kilometres is
similar to a year ago, although deferral and spreading of activity has occurred.
Some 1,600 kilometres of trunkline are forecast to be decommissioned over the next ten years in these regions,
with high activity forecast in 2019, 2020, 2023 and 2024.
Activity is expected to peak at 700 kilometres in 2024, of which just under 500 kilometres is trunkline.
To achieve MER UK and avoid premature decommissioning, the OGA is in discussion with operators to assess the
impact of this decommissioning activity on future production and whether alternative solutions are available.
Figure 27: Forecast of Pipeline Decommissioning Activity in the Southern North Sea and Irish Sea
800

Umbilicals
Other Pipelines
Trunklines

700

Increased Uncertainty
in Forecasts

Total Length (km)

600
500
400
300

200
100
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025
Source: Oil & Gas UK

40

Pipeline Decommissioning
2016 to 2025

Pipeline Decommissioning
(Kilometres) 2016 to 2025

Total

200

3,426

Umbilicals

46

443

Trunklines

21

1,603

Other pipelines

133

1,380

Norwegian Continental Shelf

Sixty-seven pipelines with a total length of 297 kilometres will be decommissioned from 2016 to 2025.
The majority are inter-field connectors that link fields to host facilities.

Ten kilometres of pipeline are to be decommissioned in 2016, with activity forecast to peak at over 100 kilometres
in 2022.
3

For many of the projects included in the survey, pipeline decommissioning lies outside the timeframe.
Figure 28: Forecast of Pipeline Decommissioning Activity on the Norwegian Continental Shelf
120

4
Umbilicals
Other Pipelines
Trunklines

Increased Uncertainty
in Forecasts

100

Total Length (km)

80

60

40

20

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Pipeline Decommissioning
2016 to 2025

Pipeline Decommissioning
(Kilometres) 2016 to 2025

67

297

Umbilicals

28

Trunklines

39

45

Other pipelines

23

224

Norwegian Sea

No activity

No activity

Barents Sea

No activity

No activity

Total
Norwegian
North Sea

41

DECOMMISSIONING INSIGHT REPORT 2016

5.6 Onshore Recycling and Final Disposal

Onshore topside and substructure recycling and disposal includes activities related to the cleaning and handling
of hazardous waste, deconstruction, reuse, recycling, disposal and waste management accounting. Operators
have a duty to monitor all waste generated offshore and its handling and disposal through an environment
management system19.
Preferred processes to deal with offshore structures that are no longer in use follow the hierarchy of reuse,
recycling and onshore disposal. Once the structures are onshore, disassembling and processing takes place on
specialist licensed sites.
Reuse is any activity that will lengthen the life cycle of an item, while it is still used for its initial purpose. This is not
to be confused with recycling, which is when an item is reprocessed into a new, raw material. Reuse is often more
challenging than recycling, however, it is often cost efficient and can help minimise waste disposal. The decision of
whether to reuse, recycle or dispose to landfill is driven by various factors, including the amount of maintenance
needed, the prevalence of out-dated technology, and the quantity of harmful material on an asset.
Topsides are made from various materials and therefore dismantling and safe waste management is often
more difficult than managing substructures that are generally made of steel and can be processed and recycled
more readily. Recent decommissioning projects demonstrate high levels of reuse and recycling at 95 per cent of all
recovered materials. Hess details a reuse and recycling percentage of 96.9 per cent in the close-out report for the
Fife, Fergus, Flora and Angus fields decommissioning programme, with a reuse rate of 48.2 per cent20.
Close to 1.1 million tonnes of infrastructure are expected to be brought onshore for recycling and final disposal
from the UK and Norwegian Continental Shelves between 2016 and 2025.
Thirty-four per cent (369,190 tonnes) will come from the central North Sea, 33 per cent (360,456 tonnes) from the
northern North Sea and est of Shetland, 18 per cent from the Norwegian Continental Shelf (199,091 tonnes), and
15 per cent from the southern North Sea and Irish Sea (164,834 tonnes).
Over 36,000 tonnes are forecast to come onshore in 2016, with an average yearly weight of 62,400 between 2016
and 2019. Activity is expected to rise as the decade progresses, peaking at just under 200,000 tonnes in 2024.

19
20

See Oil & Gas UKs Environment Report at www.oilandgasuk.co.uk/environment-report

See http://bit.ly/HessFFF

42

Figure 29: Combined Forecast of Tonnage Coming Onshore for Recycling and Disposal
on the UK and Norwegian Continental Shelves
250,000

Total Weight (Tonnes)

200,000

Southern North Sea and Irish Sea

Northern North Sea and West of Shetland
Central North Sea
Norwegian Continental Shelf

Increased Uncertainty
in Forecasts

3
150,000

4
100,000

50,000

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

43

DECOMMISSIONING INSIGHT REPORT 2016

Central and Northern North Sea and West of Shetland

Operators forecast that close to 729,650 tonnes of offshore infrastructure will come onshore from the regions
for recycling and disposal between 2016 and 2025.
This is an increase of close to 237,400 tonnes on the 2015 report, due to the inclusion of new projects and more
detailed forecasts on existing projects.
The spread of activity across the decade reflects the topside and substructure removal activity lower in the
near-term (from 2016 to 2019) and higher later in the decade, peaking at 125,600 tonnes in 2024.
Figure 30: Forecast of Tonnage Coming Onshore for Recycling and Disposal in the
Central and Northern North Sea and West of Shetland
140,000
Increased Uncertainty
in Forecasts

120,000

Total Weight (Tonnes)

100,000
80,000

60,000
40,000
20,000
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Onshore Recycling and Disposal (Tonnes) 2016 to 2025

44

Central North Sea

369,190

Northern North Sea

and West of Shetland

360,456

Southern North Sea and Irish Sea

Over 164,800 tonnes are to come onshore for recycling and disposal in these regions between 2016 and 2025.
This is an increase of close to 37,500 tonnes compared to the 2015 report, as new projects are included for the
first time.

The spread of activity again correlates with topside and substructure removal, peaking in 2021 at 28,200 tonnes.
3

Figure 31: Forecast of Tonnage Coming Onshore for Recycling and Disposal
in the Southern North Sea and Irish Sea
Increased Uncertainty
in Forecasts

30,000

Total Weight (Tonnes)

25,000

5
20,000

15,000

10,000

7
5,000

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Southern North Sea and Irish Sea Onshore Recycling and Disposal (Tonnes) 2016 to 2025
164,834

45

DECOMMISSIONING INSIGHT REPORT 2016

Norwegian Continental Shelf

Close to 199,100 tonnes of offshore infrastructure will be decommissioned and brought onshore from the
Norwegian Continental Shelf between 2016 and 2025. Almost all of this activity is in the Norwegian North Sea.
Activity is forecast to peak in 2024 at 44,000 tonnes.
Figure 32: Forecast of Tonnage Coming Onshore for Recycling and Disposal
on the Norwegian Continental Shelf
50,000
Increased Uncertainty
in Forecasts

45,000

Total Weight (Tonnes)

40,000

35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Norwegian Continental Shelf Onshore Recycling

and Disposal (Tonnes) 2016 to 2025
199,091

5.7 Site Remediation and Monitoring

Site remediation includes cuttings piles management, debris clearance and over-trawl surveys. Over-trawl
surveys make sure the seabed is safe for normal fishing activities to resume. Monitoring is the very final stage of
decommissioning, where operators must carry out surveys on the site after physical decommissioning has been
completed. Details of these programmes are agreed on an individual basis with the Department for Business,
Energy and Industrial Strategy.
Activity associated with site remediation and monitoring is not forecast in this report, however, estimated
expenditure can be found in section 6.1.

46

6. Forecast Decommissioning Expenditure 2016 to 2025

6.1 Forecast Expenditure on the UK Continental Shelf

Forecast decommissioning expenditure on the UKCS between 2016 and 2025 is 17.6 billion, compared with the
ten-year forecast of 16.9 billion in the 2015 Decommissioning Insight21. This increase is due to the new projects
entering the survey timeframe rather than increased cost estimates from existing projects.
Although decommissioning is still in its infancy on the UKCS, it is a growing area of the business and offers scope
for the UK supply chain to diversify and establish a global centre of excellence. Accounting for just 2 per cent of
total UKCS expenditure in 2010, the decommissioning market is expected to grow to over 12 per cent of total
expenditure by 2017.
Estimate Types
In the survey, UKCS operators were asked to indicate whether the forecasts they were providing for
decommissioning expenditure over the next decade were provisioning or project estimates. Provisioning
estimates are those developed for Asset Retirement Obligations22 and are typically calculated prior to carrying
out the comparative assessments23 that determine the decommissioning method to be deployed. Project
estimates are those developed during the project delivery process as the decommissioning method is being
determined and are therefore typically far more detailed with a higher degree of certainty.
Ninety-six of the 114 projects in the central and northern North Sea and west of Shetland are provisioning
estimates. In the southern North Sea and Irish Sea, where decommissioning is likely to occur sooner, only 13 of the
39 projects are provisioning estimates.
Operators were also asked to provide a project cost class estimate using the Association for the Advancement of
Cost Engineering (AACE) guidelines24 (see Appendix for AACE matrix). These classifications seek to define a project
and reflect the degree of uncertainty in the estimates.
Overall, 96 per cent of the 153 UKCS projects included in the survey are classified using the AACE Cost Estimation
Classification Matrix. It should be noted that a high proportion of projects are classified as Class 4 (39 per cent)
or Class 5 (55 per cent), which have project definition levels from 0 to 15 per cent, revealing that 94 per cent of
UKCS projects are in the early planning stages of outlining the scope of decommissioning activities and carrying
out feasibility studies. This indicates that activity and expenditure forecasts included in this report could change
as these projects are refined, particularly for those towards the end of the survey timeframe. Nonetheless, the
forecasts provide a good indication of the scale of decommissioning that lies ahead.

The 2015 survey covered the timeframe 2015 to 2024, whereas the 2016 survey covers the period 2016 to 2025.
An Asset Retirement Obligation (ARO) is a liability associated with the eventual retirement of a fixed asset.
23
A comparative assessment is used to compare options, examine differences and identify the most preferred option in
the development of decommissioning programmes for:
a) All installations for which derogation is sought under OSPAR Decision 98/31
b) All pipelines being decommissioned under the Petroleum Act 1998
c) All drill cuttings piles that are not screened-out at Stage 1 of OSPAR Recommendation 2006/51
24
Further information on the Association for the Advancement of Cost Engineering (AACE) classification scheme is
available at http://web.aacei.org
21

22

47

DECOMMISSIONING INSIGHT REPORT 2016

None of the UKCS projects included in the survey are reported as Class 1. These would have project definition
levels of 50 to 100 per cent with many of the activities already in execution. Projects that were classified as Class
1 in the 2015 report have now been completed and no new projects have moved into this category. Only two
projects were reported as Class 2, where project definition is between 30 and 70 per cent and is either at the
contracting stage or being executed.
Figure 33 shows the percentage of annual expenditure for projects on the UKCS split by AACE classification.
Sixty-nine per cent of expenditure in 2016 comes from the large number of Class 4 or 5 projects, each contributing
a small amount of expenditure, typically for operator project management or well P&A. Companies often start
well P&A while they develop and define the scopes of the other decommissioning activities.
Figure 33: AACE Cost Class Breakdown
100%
90%

Percentage of Annual Expenditure

80%
70%
60%

Class 5
Class 4

50%

Class 3
Class 2

40%

Class 1

30%
20%
10%
0%
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025
Source: Oil & Gas UK

48

Historical Comparison of Annual Forecasts

Data for the UKCS from previous Decommissioning Insight reports (2011 to 2015) have been used to compare
annual forecast expenditure. As illustrated in Figure 34, near-term (2016 to 2019) expenditure forecasts are
broadly similar to those in the 2015 report, although a mixture of project deferrals and some projects being
brought forward has led to a slight change in the profile. Although expenditure is still expected to rise this year to
1.2 billion, the estimated increase has been revised downwards due to some expenditure slipping over the last
12 months. This means the forecast for 2017 is now almost 2 billion25.
Over the next ten years, the average annual forecast expenditure is now just under 1.8 billion, an increase on
the 1.7 billion reported in 2015. This comes from the inclusion of new projects in the survey, with much of the
associated expenditure occurring towards the end of the survey timeframe peaking in 2024.

Forecast Expenditure ( Million - 2015 Money)

Figure 34: Comparison of Annual Forecast Decommissioning Expenditure on the UKCS

3,000

Increased Uncertainty
in Forecasts

2,500

2,000

1,500

7
1,000

500

0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
2011

2012

2013

2014

2015

2016

Source: Oil & Gas UK

Regional Breakdown26
Looking at the regional breakdown of UKCS decommissioning expenditure from 2016 to 2025, 53 per cent
(9.4 billion) is estimated to be spent in the central North Sea and 30 per cent (5.3 billion) in the northern North
Sea and west of Shetland. The remaining 17 per cent (3 billion) is allocated to the southern North Sea and Irish
Sea, of which over 90 per cent is concentrated in the southern North Sea.

This survey covers data from end-of-field-life decommissioning projects and does not include expenditure or activity
associated with mid-life decommissioning.
26
All forecasts by region and component are rounded and so the sum of them may not come to the total
forecast expenditure.
25

49

DECOMMISSIONING INSIGHT REPORT 2016

The higher proportion of expenditure in the central and northern North Sea regions reflects the number, size and
degree of complexity of projects in these regions. While the number of platforms to be removed is greater in the
southern North Sea and Irish Sea, these are typically much smaller installations that are simpler and therefore
cheaper to decommission.
Operators start planning for decommissioning far ahead of CoP. The complex decisions on the timing of CoP and
the subsequent schedule of decommissioning activity are made by the operator in conversation with industry
regulators and take many factors into account, including future recovery potential, tie-back opportunities to
existing infrastructure, oil price and the wider business environment.
Analysis has been carried out on the key changes that have taken place on the UKCS since publication of the 2015
report, looking at shifts in both CoP and forecast expenditure. This analysis has been split into two regions the
central and northern North Sea and west of Shetland, and the southern North Sea and Irish Sea.
Central and Northern North Sea and West of Shetland
Seventy-five per cent (114) of the projects on the UKCS are located in these regions. At an individual project
level, there have been significant shifts in the anticipated cost and timing of decommissioning projects since
forecasts were made a year ago, with the number of projects that have been delayed replaced by those that have
accelerated decommissioning.
There has been an increase of 500 million from existing projects that now have a greater proportion of expenditure
within the survey timeframe, plus 24 new projects are now expected to be decommissioned earlier bringing a
further 1.5 billion of expenditure into the survey timeframe. However, this 2 billion increase has been partially
offset by an expected fall in decommissioning costs by 500 million since last year and 14 project deferrals moving
an additional 1 billion outside of the survey timeframe. Overall expenditure has increased by a net 500 million
to 14.6 billion.
Fourteen projects have been deferred where operators have succeeded in extending field life in line with the
statutory obligation to achieve MER UK. These projects range from small subsea tie-backs to larger fields with
platforms and multiple subsea tie-backs.
By contrast, 24 new projects are included because CoP and decommissioning dates have moved forward in light
of the low oil price environment and a shift in survey timeframe. Many of these are small-scale projects involving
single suspended subsea E&A wells or small subsea tie-backs. There are, however, some large new projects
involving multiple platform removals.
The associated expenditure has led to an increase in the annual expenditure forecast from 2016 to 2020 in
comparison to last year (shown in Figure 35 opposite). By contrast, as several projects have deferred
decommissioning activity, the peak year of expenditure has shifted from 2022 to 2024.
For projects included in both this years and last years surveys, the majority (87) of assets report no change in
planned CoP, while 57 have brought their expected date forward. Operators have cited the low oil price and the
knock-on effect of host facilities shutting down earlier than anticipated as the principal reasons for accelerated
CoP dates. By contrast, for 19 assets, CoP dates have been postponed due to improved economic outlook or
decommissioning being delayed to align with other assets27.

27

T he number of assets is higher than the number of projects as operators can assign different
CoP dates for assets within a project.

50

Figure 35: Comparison of Forecast Decommissioning Expenditure in the

Central and Northern North Sea and West of Shetland

Forecast Expenditure ( Million - 2015 Money)

2,500

Increased Uncertainty
in Forecasts

2016 Survey
2015 Survey

2,000

3
1,500

1,000

500

0
2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Southern North Sea and Irish Sea

Several changes have taken place in these regions since forecasts were made a year ago. Total forecast expenditure
has increased by 200 million to 3 billion over the next decade due to 17 new projects, all of which are platform
removal projects with the exception of one subsea tie-back. The net increase in expenditure arising from these
new projects totals 550 million, but this has been partially offset by an expected fall in decommissioning costs
since last year by a total of 350 million28. This reflects lower unit costs for well P&A and for removal costs per
tonne as rig and removal vessel rates are deflated amid the global downturn in the industry.

For those projects included in this years and last years survey, there has been no change in planned CoP for the
majority (48) of assets, although dates have changed for 29 assets, with 15 brought forward and 14 deferred.
Increased costs to tie fields back to host facilities, the accelerating CoPs of host facilities and poor results on wells
that were drilled to extend field life have all been cited as reasons for earlier CoP.

28

This conclusion takes into account the difference in survey timeframes.

51

DECOMMISSIONING INSIGHT REPORT 2016

Overall, Figure 36 shows that near-term expenditure (2016 to 2019) in the southern North Sea and Irish Sea is
lower than was forecast a year ago. This can be attributed to the deferral of some activity to preserve cash-flow
in the current business climate, larger campaigns spreading their activities across the decade, and lower unit costs
for well P&A and removals. The marked increase in forecast expenditure in the latter part of the decade is due to
the inclusion of new projects to this years report.
Figure 36: Comparison of Forecast Decommissioning Expenditure in the Southern North Sea and Irish Sea
500

2016 Survey
2015 Survey

Forecast Expenditure ( Million - 2015 Money)

450

Increased Uncertainty
in Forecasts

400
350
300
250
200
150
100
50
0
2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

Forecast Expenditure by Decommissioning Component

Decommissioning expenditure is categorised according to the components referenced in the Work Breakdown
Structure (see section 3.1 on the survey methodology and the Appendix):
Operator project management/facility running costs (owners costs)
Well P&A
Removal and other associated activity
The components that incur expenditure are determined by the project size and type. A large and complex
decommissioning project, for example, may incur expenditure across all categories. Projects such as these will
involve significant overhead costs for project management and operations, as well as requiring substantial
engineering expertise, equipment and personnel. In contrast, decommissioning a small subsea tie-back may only
involve single well P&A.

52

Owners costs are expenses incurred to operate the decommissioning programme post-CoP through to completion.
These costs include management of the facility in both the pre-NUI and NUI stages. This covers expenditure
associated with logistics, the decommissioning team itself, deck crew, power generation, platform services,
integrity management (inspection and maintenance) and specialist services.
As shown in Figure 37 overleaf, owners costs are forecast to remain relatively stable across the timeframe, with
an average annual expenditure of 340 million per year. Expenditure is forecast to increase towards the end of the
survey timeframe as activity increases, peaking at 450 million in 2025.
However, owners costs over the next decade are 300 million less than those outlined in the 2015 report,
despite the increase in the level of activity and overall expenditure in this years survey. This reflects efficiency
improvements seen across the industry being projected onto future estimates of facility running costs for
decommissioning projects.
Well P&A costs, meanwhile, include rig upgrades, studies to support wells programmes, project management,
operations support, and specialist services such as wireline or conductor recovery. This expenditure is forecast to
peak in 2024 at almost 1.2 billion, with an average annual spend of just over 820 million over the next ten years.
This compares with an average annual expenditure of 770 million in the 2015 report and 640 million in the
2014 report.
Removal and other associated activity include expenditure on:

Making safe
Topsides preparation
Removal of topsides, substructures and subsea infrastructure
Pipeline decommissioning
Transportation and onshore-load in
Disposal
Recycling
Site remediation and monitoring

Expenditure from 2016 to 2025 associated with removal activities is forecast to be lower in the near term, rising
year-on-year from just under 300 million in 2016 to a peak of just over 900 million in 2024. Expenditure over the
decade has increased by 500 million compared to the 2015 report.

53

DECOMMISSIONING INSIGHT REPORT 2016

Figure 37: Total Forecast Decommissioning Expenditure on the UKCS by Work Breakdown Structure Category

Total Expenditure ( Million - 2015 Money)

3,000

2,500

Operator Project Management and Facility Running Costs

Well P&A
Increased Uncertainty
Removals and Other Associated Activity
in Forecasts

2,000

1,500

1,000

500

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source: Oil & Gas UK

UKCS Expenditure 2016 to 2025

Owners costs

3.4 billion

Well P&A

8.3 billion

Removal

3.4 billion

Other associated activity

2.6 billion

In line with previous reports, well P&A remains the largest category of forecast expenditure, accounting for
47 per cent (8.3 billion) of total forecast expenditure over the next ten years. Owners costs and expenditure
associated with topsides, substructure and subsea infrastructure removal each account for 19 per cent of total
forecast expenditure at 3.4 billion each. For subsea projects, well P&A accounts for 65 per cent of the total,
compared with 8 per cent for owners costs (4 billion total expenditure on subsea projects).
Breaking this down further, of the 8.3 billion expenditure associated with well P&A, 57 per cent (4.7 billion) is in
the central North Sea, an increase from the 4 billion forecast in 2015 due to the additional subsea wells included
that are more expensive to plug and abandon.
Ninety-seven per cent (3.3 billion) of the total owners costs are concentrated in the central and northern North
Sea and west of Shetland. In these areas, platforms are typically manned resulting in much higher facility running
costs. Projects are also larger and more complex, with, in turn, higher operator project management costs. The
owners costs account for 31 per cent (2.5 billion) of expenditure on platform removal projects in these areas
compared to four per cent (118 million) in the southern North Sea and Irish Sea.

54

Figure 38 overleaf breaks down the total forecast expenditure of 17.6 billion by Work Breakdown Structure
component proportion for different project types:

All UKCS projects

Subsea projects
Platform removal projects
FPSO vessel projects29

It is important to note that the graphs only include the breakdown of expenditure that falls within 2016 to 2025.
Decommissioning projects can span many years and therefore some expenditure associated with a project may
fall outside the survey timeframe.
There are 13 FPSOs forecast to be decommissioned on the UKCS over the next decade, 12 of which are located in
the central North Sea. Decommissioning a field serviced by an FPSO primarily involves subsea activity, although
some expenditure is also associated with disconnecting the FPSO. Following disconnection, FPSOs are typically
relocated or sold for reuse or recycling. These activities are reflected in the breakdown of expenditure seen in
Figure 38. The total forecast decommissioning expenditure for fields serviced by an FPSO is 2.6 billion.

29

Total expenditure for platform removal projects, FPSO projects and subsea projects is 17.3 billion. This does not equal
total forecast expenditure because some projects do not fall clearly into one category and therefore have not been
used to calculate the Work Breakdown Structure percentage for individual project types.
55

DECOMMISSIONING INSIGHT REPORT 2016

Figure 38: Total Forecast Decommissioning Expenditure on the UKCS by Work Breakdown Structure
Component and Project Type from 2016 to 2025

All UKCS Projects

Subsea Projects
Monitoring

100%

100%

Site Remediation

Removals*: 19%

80%

Topsides and Substructure

Onshore Recycling
Pipelines
Subsea Infrastructure

70%

Substructure Removal
Topsides Removal

60%

Topsides Preparation

50%

90%
Removals*: 10%

Proportion of Total Expenditure for Each Work

Breakdown Structure Component

Proportion of Total Expenditure for Each Work

Breakdown Structure Component

90%

80%
70%
60%

50%

Facility/Pipeline Making Safe

Well P&A: 47%

40%

Subsea Wells
Platform Wells

30%

Facility Running/Owner
Costs
Operator Project
Management

20%
10%

30%
20%

* Indicates expenditure

Owners' Costs: 19%

10%

clearly identified as removal

0%

Source: Oil & Ga

SNS and Irish Sea Platform Removal Projects

Monitoring

100%

Owners' Costs: 8%

0%

Source: Oil & Gas UK

CNS, NNS and W o S Platform Removal Projects

Well P&A: 69%

40%

Monitoring

100%

Site Remediation

Site Remediation

Removals*: 23%

80%

Topsides and Substructure

Onshore Recycling
Pipelines
Subsea Infrastructure

70%

Substructure Removal

60%

Topsides Removal
Topsides Preparation

50%

Well P&A: 32%

Facility/Pipeline Making Safe

40%

Subsea Wells

30%

Platform Wells

20%

Facility Running/Owner
costs
Operator Project
Management

Owners' Costs: 31%

10%

* Indicates expenditure

90%
Proportion of Total Expenditure for Each Work
Breakdown Structure Component

Proportion of Total Expenditure for Each Work

Breakdown Structure Component

90%

80%

Removals*: 27%

70%

Source: Oil & Gas UK

100%
FPSO
Vessel Projects

Topsides Removal

Topsides Preparation

50%

Facility/Pipeline Mak
Safe
Subsea Wells

40%

Platform Wells

30%

Well P&A: 48%

20%
10%

clearly identified as rem

56

80%
70%
60%
50%
40%
30%
20%

Proportion of Total Expenditure for Each Work

Breakdown Structure Component

Proportion of Total Expenditure for Each Work

Breakdown Structure Component

90%

Site Remediation

Topsides and Substructure

Onshore Recycling
Pipelines

Topsides and Substructure

Onshore Recycling
Pipelines

Subsea Infrastructure

Removals*: 13%

80%
Removals*: 13%

70%

Subsea Infrastructure

60%
50%
40%

Well P&A: 63%

Well P&A: 63%

Topsides Removal

Topsides Removal

Topsides Preparation

Topsides Preparation

Facility/Pipeline Making Safe

Facility/Pipeline Making Safe

Subsea Wells

Subsea Wells

Facility Running/Owner Costs

20%
10%

0%

0%

Operator Project
Management

* Indicates expenditure
Owners' Costs: 12%

Owners' Costs: 12%

Substructure Removal

Substructure Removal

Platform Wells

30%

10%

Owners' Costs: 4%

0%

Site Remediation
Monitoring

clearly identified as removal

Source: Oil & Gas UK

Facility Running/Own
Costs
Operator Project
Management

* Indicates expenditure

Monitoring

90%

100%

Subsea Infrastructur

Substructure Remov

60%

clearly identified as removal

0%

Topsides and Substru

Onshore Recycling
Pipelines

Platform Wells
Facility Running/Owner Costs
Operator Project
Management

* Indicates expenditure

clearly identified as removal

Source: Oil & Gas UK

Source: Oil &

UKCS

Central and Northern

North Sea and
West of Shetland

Southern North Sea and

Irish Sea

Total

Owners' costs

3.3 billion

118 million

3.4 billion

Well P&A

4.7 billion (CNS)

2.1 billion
(NNS and W o S)

1.5 billion

8.3 billion

Facilities making safe

and topside preparation

760 million

137 million

897 million

Pipelines making safe

89 million

192 million

281 million

Topside removal

1.5 billion

104 million

1.6 billion

Substructure removal

544 million

503 million

1 billion

Mattress decommissioning
and other subsea
infrastructure removal

613 million

149 million

762 million

Pipeline decommissioning

847 million

193 million

1 billion

Onshore recycling
and disposal

161 million

53 million

214 million

Site remediation

94 million

16 million

110 million

Monitoring

21 million

5 million

26 million

6.2 Key Expenditure Metrics on the Norwegian Continental Shelf

The Norwegian Petroleum Directorate estimates that close to 1 billion will be spent on decommissioning in 2016 on
the Norwegian Continental Shelf30 and that annual expenditure will average at around 1 billion each year until 2020.
A detailed breakdown of forecast expenditure by decommissioning component is not available for the Norwegian
Continental Shelf, and operators have instead indicated the proportion of decommissioning expenditure associated
with the following four categories for 10 out of 14 removal projects within the survey timeframe.

Operator project management/facility running costs (owners costs)

Well P&A
Topside removal
Substructure removal31
As on the UKCS, the largest category of expenditure is well P&A, which operators estimate to account for, on
average, 56 per cent of the total forecast expenditure. Depending on the project, this component ranges from
33 to 75 per cent. Topside and substructure removal together are expected to account for 30 per cent of total
expenditure on average, while owners costs come to 11 per cent.

30
31

See Norwegian Petroleum Directorate www.npd.no/en

For some projects, some expenditure is apportioned to other categories of activity in the Work Breakdown Structure,
such as pipeline decommissioning, which are not captured here. Total expenditure was not provided.
57

DECOMMISSIONING INSIGHT REPORT 2016

With the exception of one suspended subsea E&A well in the Norwegian Sea, all of the decommissioning activity
over the next decade is located in the Norwegian North Sea region. As illustrated in Figure 39, the proportion of
forecast expenditure attributed to each Work Breakdown Structure component varies significantly across the
10 out of 14 platform removal projects that provided data.
Figure 39: Total Forecast Decommissioning Expenditure on the Norwegian Continental Shelf
by Work Breakdown Structure Component for Platform Removal Projects

Proportion of Total Expenditure per Work Breakdown

Structure Category

80%

Average Forecast Cost

70%

Range in Cost Forecasts

60%
50%
40%
30%
20%

10%
0%
Owners' Costs

Well P&A

Topside Removal

Substructure Removal

Source: Oil & Gas UK

58

Average

Range

Owners' costs

11%

3-32%

Well P&A

56%

33-75%

Topside removal

19%

6-33%

Substructure removal

12%

5-16%

7.

Forecast Unit Costs 2016 to 2025

7.1 Well Plugging and Abandonment

The cost of well P&A depends on a number of factors that differ across the regions of the North Sea. These include
water depth, weather, reservoir type, age and, in some cases, measures that may be required to prevent well
collapse caused by depressurisation.
The cost estimates included in this report vary significantly in their degree of maturity. While some are informed
by previous experience and data from well P&A work that has been carried out, other estimates are at an earlier
stage in their development and are inherently more uncertain.
On the UKCS, data from previous Decommissioning Insight reports have been used to compare expenditure
forecasts for well P&A activity. This analysis shown in Figures 40 and 41 overleaf considers the average and range
in well P&A forecasts for each survey year from 2011 to 2016. Platform well P&A is typically cheaper than for both
types of subsea wells as it is usually not subject to the same weather constraints or rig requirements and can also
be carried out more effectively in batches or campaigns, allowing the operator to share mobilisation costs and
other efficiency gains across a number of wells. Furthermore, experienced gained from ongoing platform well P&A
has helped to inform future forecasts.
For the first time, operators on the Norwegian Continental Shelf were surveyed on their forecast well P&A costs
for projects within the survey timeframe. Figure 42 on p62 shows the average and range in cost forecasts for
platform and subsea wells in this region.
Operators have advised that wells at the low end of the cost range are typically simple, rig-less P&As, using
wireline, pumping or crane jacks where the reservoir may already have been isolated. Wells at the top end are
more complex, rig-based P&As, with challenging access and cementing. They may require retrieval of tubing and
casing, milling and cement repairs (see section 5.1 on p18 on rig type for well P&A).

Central and Northern North Sea and West of Shetland

The average forecast cost for platform well P&A across the decade at 4.1 million per well has not changed since
the 2015 report, although the range of estimates has narrowed.
As 86 per cent of platform wells in these regions are expected to use an integral rig to carry out P&A, the recent
reduction in rig rates is unlikely to impact the cost of these wells.
A wide range in expenditure forecasts for subsea wells in these regions has been reported consistently over the
last four survey years, reflecting the variation in the types of wells to be plugged and abandoned.
Average forecast costs for suspended subsea E&A wells have reduced since the 2015 report by an average of
1.6 million per well, although the range in cost forecasts remains wide.
The same decrease cannot be seen for development wells as the average cost has increased slightly by
3 per cent to 10.2 million per well, while the range in estimates has narrowed.

59

DECOMMISSIONING INSIGHT REPORT 2016

Sixty-three per cent of subsea wells in these regions plan to use a semi-submersible rig to carry out P&A. The
recent fall in rig rates could explain the fall in forecast unit costs for these wells.
However, rig rates are only one factor that impacts the cost of well P&A. The number of days to plug and abandon
a well is also an important factor, and operators have advised that expected well P&A durations have been
revised upwards for some large subsea projects based on data from completed projects and further studies on
the condition of the well stock.

50

Average Forecast Cost Platform Well

Average Forecast Cost Suspended E&A Well

Average Forecast Cost Subsea Development Well

Range in Cost Forecasts

45
40
35
30
25
20
15
10
5

Platform Wells

Suspended E&A Wells

* Data cannot be split out for subsea E&A and development wells for 2011

Well P&A

60

2016

2015

2014

2013

2012

2011*

2016

2015

2014

2013

2012

2011*

2016

2015

2014

2013

2012

0
2011

Estimated Cost per Well ( Million - 2015 Money)

Figure 40: Historical Variation in Well Plugging and Abandonment Cost Forecasts
in the Central and Northern North Sea and West of Shetland

Subsea Development Wells

Source: Oil & Gas UK

2015 Survey Average

2016 Survey Average

Platform wells

4.1 million

4.1 million

Suspended E&A wells

7.8 million

6.2 million

Subsea development wells

9.9 million

10.2 million

Southern North Sea and Irish Sea

The average forecast cost per well P&A in these regions has fallen to 2 million per platform well,
5.6 million per suspended E&A well and 7.6 million per subsea development well. The reason for
the decrease is two fold: wells included in both survey years are expected to be cheaper to perform
than they were a year ago and the new wells included in the survey have cost forecasts at the low end.
Operators have indicated that reduced well P&A durations and lower rig rates have contributed to the reduction
in forecast unit costs. Well P&A durations have reduced over the course of ongoing campaigns, reflected in
lower cost estimates for future wells.
Day-rates for jack-up rigs have fallen by over 40 per cent over the last year the lower rig rates are likely to be
reflected in the cost estimates as 64 per cent of platform wells and 70 per cent of subsea wells in these regions
plan to use a jack-up rig for well P&A.

Figure 41: Historical Variation in Well Plugging and Abandonment Cost Forecasts
in the Southern North Sea and Irish Sea

Estimated Cost per Well ( Million - 2015 Money)

50
Average Forecast Cost Platform Well

45

Average Forecast Cost Suspended E&A Well

40

Range in Cost Forecasts

Average Forecast Cost Subsea Development Well

35
30

25
20

15
10
5

Platform Wells

Suspended E&A Wells

* Data cannot be split out for subsea E&A and development wells for 2011

2016

2015

2014

2013

2012

2011*

2016

2015

2014

2013

2012

2011*

2016

2015

2014

2013

2012

2011

Subsea Development Wells

Source: Oil & Gas UK

Well P&A

2015 Survey Average

2016 Survey Average

Platform wells

3 million

2 million

Suspended E&A wells

8.8 million

5.6 million

Subsea development wells

9.6 million

7.6 million

61

DECOMMISSIONING INSIGHT REPORT 2016

Norwegian Continental Shelf

The average forecast unit cost for platform and subsea well P&A in Norway is 10 million and 16.1 million,
respectively, for the projects included in the survey.
These cost forecasts are substantially higher than on the UKCS, particularly for platform well P&A.
The higher cost estimates on the Norwegian Continental Shelf could be due to a number of factors, including
different regulatory regimes, higher vessel rates, or the maturity of the estimates. Operators have not indicated
the AACE cost classification for estimates on the Norwegian Continental Shelf.
Figure 42: Variation in Well Plugging and Abandonment Cost Forecasts on the Norwegian Continental Shelf

Estimated Cost per Well ( Million - 2015 Money)

30

25

Average Forecast Cost

Range in Cost Forecasts

20

15

10

0
Platform Well P&A

Subsea Well P&A

Source: Oil & Gas UK

62

Well P&A

2016 Survey Average

Platform wells

10 million

Subsea wells

16.1 million

7.2 Facilities Making Safe (UK Continental Shelf Only)

The scope of work associated with making safe is believed to be broadly similar across different platform types.
Although activity will typically take longer on larger structures, the fixed costs will be similar, increasing the cost
per tonne forecasts for smaller, lighter structures commonly found in the southern North Sea and Irish Sea.
Many of the installations in the southern North Sea are smaller NUIs. NUIs require transport by helicopter or an
accommodation vessel for a team to carry out making safe activities, adding further cost.

Expenditure at the lower end of the range is in line with those seen in the central and northern North Sea and est
of Shetland areas and is likely to be associated with larger, manned platforms.

The average cost per tonne for making safe is 1,200 in the southern North Sea and Irish Sea compared to just
490 in the central and northern North Sea and est of Shetland.

The range of cost per tonne forecasts has increased significantly since the 2015 report as new projects fall at the
high end of the range.
5

Figure 43: Historical Variation in the Making Safe Cost per Tonne Forecasts for Topsides on the UKCS

Estimated Cost per Tonne ( - 2015 Money)

3,500

3,000
2,500

7
2,000
1,500

8
1,000
500

9
0
2015

2016

2015

CNS, NNS, and W o S

2016

SNS and Irish Sea

Source: Oil & Gas UK

Facilities 'Making Safe'

2015 Survey Average

2016 Survey Average

Central and Northern North Sea

and West of Shetland

440 per tonne

490 per tonne

Southern North Sea and Irish Sea

990 per tonne

1,200 per tonne

63

DECOMMISSIONING INSIGHT REPORT 2016

7.3 Topside and Substructure Removal (UK Continental Shelf Only)

The weight of a platform has little effect on some of the expenditure associated with removal, including removal
preparation, vessel mobilisation, sea-fastening, transportation and load-in onshore. This can again result in a
larger cost per tonne forecast for topside removal for the smallest and lightest structures commonly found in the
southern North Sea and Irish Sea. The cost per platform, however, is significantly lower in these regions.
Central and Northern North Sea and West of Shetland
The average removal cost per tonne forecasts in these regions from 2016 to 2025 has fallen by a smaller amount
than in other areas of the UKCS (less than 10 per cent) to 3,000 for topsides and 4,400 for substructures.
The range in costs per tonne remains high, particularly for substructure removals, due to the variation in
substructure types and weights and planned removal methods.
For the 96 projects classified as provisioning estimates in these regions, the removal method may not yet be
determined as operators carry out comparative assessments to determine the best approach. As removal
methods become more defined, this can explain the changes in the cost per tonne forecasts from one year to
the next.

64

Figure 44: Historical Variation in the Removal Cost per Tonne Forecasts for Topsides
and Substructures in the Central and Northern North Sea and West of Shetland

Estimated Cost per Tonne ( - 2015 Money)

Average Forecast Topside Removal Cost per Tonne

Range in Cost Forecasts

Average Forecast Substructure Removal Cost per Tonne

14,000

12,000

10,000
8,000
6,000

4,000
2,000

0
2011

2012

2013

2014

2015

2016

2011

Topside

2012

2013

2014

2015

2016

Substructure

Source: Oil & Gas UK

Removal Cost per Tonne

2015 Survey Average

2016 Survey Average

Topsides

3,300 per tonne

3,000 per tonne

Substructures

4,800 per tonne

4,400 per tonne

Southern North Sea and Irish Sea

The average cost per tonne forecasts for both topside and substructure removal have both fallen by over
40 per cent to 2,600 per tonne compared with 2015 forecasts. This is because the new projects fall at the
low end of the range and there are lower forecast unit costs for topside and substructure removal reflected in
the majority of estimates.
This could be due to different assumptions about removal vessel day-rates. The supply of removal vessels in
these regions is greater than other areas of the UKCS because of the smaller size platforms enabling removal
by much smaller barges, driving down vessel rates more than those for large heavy-lift vessels required in the
other areas.
The large range in cost per tonne for both topside and substructure removal seen in the southern North Sea and
Irish Sea (see Figure 45 overleaf) is primarily due to varying approaches to platform removals. In these regions,
most operators plan to remove multiple platforms in one campaign, allowing mobilisation and other fixed
costs to be spread across the structures being removed. Projects at the bottom of the range are typically those
included in a batched approach, while those at the top of the range are largely planned as individual removals.

65

DECOMMISSIONING INSIGHT REPORT 2016

Figure 45: Historical Variation in the Removal Cost per Tonne Forecasts for Topsides
and Substructures in the Southern North Sea and Irish Sea
Average Forecast Topside Removal Cost per Tonne
Average Forecast Substructure Removal Cost per Tonne

Estimated Cost per Tonne ( - 2015 Money)

10,000

Average Forecast Topside and Substructure Removal Cost per Tonne

Range in Cost Forecasts

9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

2011

2012 2013 2014 2015 2016

2012 2013 2014 2015 2016

Topside and
Substructure

Topside

Substructure
Source: Oil & Gas UK

66

Removal Cost per Tonne

2015 Survey Average

2016 Survey Average

Topsides

4,600

2,600

Substructures

4,400

2,600

8. Appendices

A. Work Breakdown Structure and Survey Methodology

Operators were asked to provide expenditure forecasts for the 20 different components of the Work Breakdown
Structure outlined in Oil & Gas UKs Decommissioning Cost Estimation Guidelines32. They were also asked to
quantify physical decommissioning activity by components, such as the tonnes of topsides to be removed or the
length of pipeline to be 'made safe'.
The Decommissioning Insight report has been produced annually since 2011. Although it is possible to compare
data across the reports, it is important to note that since 2013 surveys have been modelled on a new Work
Breakdown Structure. Historical analysis has therefore only been carried out on comparable categories.

Figure 46: Work Breakdown Structure Categories

Stages - Level 1
Operator project
management

Activities include project management core team, stakeholder engagement, studies

to support the decommissioning programme and scope definition/method
development, decommissioning programme preparation and decommissioning
programme reporting/close-out (admiralty charts, fish safe etc).

Facility running/
owners' costs

Activities include logistics (aviation and marine), operations team, deck crew,
power generation, platform services, integrity management (inspection and
maintenance) and operations specialist services e.g. waste management.

Well plugging and

abandonment

Activities include rig upgrades, studies to support well programmes, well

suspension (spread rate/duration), wells project management, operations support,
specialist services e.g. wireline, conductor recovery, cleaning and recycling, vessels.

Facilities/pipelines
'making safe'

Activities include operations (drain, flush, purge and vent), physical isolation
(de-energise, vent and drain), cleaning, pipeline pigging and waste management.

Topsides preparation
Topsides removal

32

Activities include engineering-up of temporary utilities (power, air and water),

module process/utilities separation, dropped object surveys and subsequent
remedial actions.
Activities include removal preparation (reinforcements and structural separation
for removal), vessel operations, sea-fastening, transportation and load-in.

Substructure removal

Activities include removal preparation, removal, vessel, sea-fastening,

transportation and load-in.

Topsides and
substructure onshore
recycling

Activities include cleaning and handling hazardous waste, deconstruction,

re-use, recycling, disposal and waste management accounting
(traceability of all streams).

Subsea infrastructure
(pipelines, umbilicals)

Activities include vessel preparation for subsea end-state (remove, trench,

rock-dump), sea-fastening and transportation, load-in, subsea project management
and waste management accounting (traceability of all streams).

Site remediation

Activities include cuttings pile management, oil field debris clearance

(500-metre zone and 200-metre pipeline corridor) and over-trawl surveys.

Monitoring

Activities include navigation aids maintenance and monitoring programme

for any facilities that remain.

The Guideline on Decommissioning Cost Estimation is available to download at www.oilandgasuk.co.uk/product/op061

67

DECOMMISSIONING INSIGHT REPORT 2016

B.

Association for the Advancement of Cost Engineering Classifications

The five estimate classes in the AACE Cost Estimation Classification Matrix are determined by level of project
definition with consideration to a set of secondary characteristics.

Primary
Characteristic

Estimate Class

68

Secondary Characteristic

Level of Project
Definition
End Usage Typical
(expressed as % of Purpose of Estimate
complete definition)

Methodology
Typical Estimating
Method

Expected Accuracy
Range Typical
Variation in Low and
High Range
L: -20% to -50%H:
+30% to +100%

Class 5

0% to 2%

Concept screening

Capacity factored,
parametric
models, judgement
or analogy

Class 4

1% to 15%

Study or feasibility

Equipment
factored or
parametric models

L: -15% to -30%H:
+20% to +50%

Class 3

10% to 40%

Budget
authorisation or
control

Semi-detailed unit
costs with assembly
level line items

L: -10% to -20%H:
+10% to +30%

Class 2

30% to 70%

Control or bid/
tender

Detailed unit costs

with forced detailed
take off

L: -5% to -15%H:
+5% to +20%

Class 1

50% to 100%

Check estimate or
bid/tender

Detailed unit cost

with detailed take
off

L: -3% to -10%H:
+3% to +15%

9. Glossary
AACE
Asset Retirement Obligations

Barge-launched jacket

Casing

Christmas tree
CNS
Coiled tubing

Comparative assessment

Association for the Advancement of Cost Engineering

An Asset etirement Obligation (ARO) is a liability associated with the
eventual retirement of a fixed asset. The liability is commonly a legal
requirement to return a site to its previous condition.
Barge-launched jackets weigh between 5,000 and 25,000 tonnes.
They are yard fabricated and transported horizontally to the field on a
transportation barge, then launched from the barge over rocker beams
and upended through controlled flooding. Final positioning may require
crane assistance.
Pipe installed in the wellbore to retain the borehole dimension and seal off
hydrocarbon and water-bearing formations. Casing is usually cemented in
place to ensure the pipe remains in place. The formation behind the pipe
remains intact and flow does not occur in the annulus between the casing
and the formations.
The valves and fittings assembled at the top of a completed well to
provide the ability to open and close access to the production tubing and
the annuli between the tubing and casing strings and the annuli between
casing strings.
Central North Sea
A long continuous length of pipe wound on a spool. The pipe is straightened
prior to pushing into a wellbore and rewound to coil the pipe back onto
the transport and storage spool.
Used to compare options, examine differences and identify the most
preferred option in the development of decommissioning programmes for:

a) All installations for which derogation is sought under OSPAR Decision

98/31
8

b) All pipelines being decommissioned under the Petroleum Act 1998

c) All drill cuttings piles that are not screened-out at Stage 1 of OSPAR
CoP
Conductor
Drilling derrick
Decommissioning in situ
E&A wells
Flexible flowlines

Cessation of Production
A large diameter pipe extending upwards from or beneath the seafloor to
the top of the well on the platform. The purpose of the conductor is to act
as a guide for drilling the well and a protective barrier from the elements
for the well casings and tubing during the life of the well.
A structure used to support crown blocks and drilling string of a rig.
Leaving infrastructure in place and carrying out appropriate work to ensure
that there is minimal risk to other sea users or the marine environment.
This could apply to any installed facilities on the seabed, such as pipelines,
manifolds, pipeline crossings and the footings of larger jackets.
Exploration and Appraisal Wells
Flexible flowlines usually transport hydrocarbons between subsea
infrastructure and the host platform or vessel. They are manufactured
from composite layers of steel wire and polymer sheathing that provide
protection and flexibility to the flowline.

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DECOMMISSIONING INSIGHT REPORT 2016

FPSO

Hydraulic workover unit

Integral rig
Intervention
Jack-up rig
Jumper

Lift-installed jackets

Making safe

Manifold

Mattresses
MER UK

Well servicing operations conducted within a completed wellbore to

restore or improve production or injection.
Self-contained combination drilling rig and barge with legs that can be
raised and lowered independently onto the seafloor.
A short segment of flexible pipe with a connector half at either end. A
jumper is commonly used to connect flowlines and/or subsea facilities
together.
These structures weigh less than 10,000 tonnes and are yard fabricated
before being transported horizontally or vertically on a barge to the field.
Once at the field, the jacket is lifted from the barge into position using a
suitable crane vessel.
Making safe of facilities includes cleaning, freeing equipment of
hydrocarbons, disconnection and physical isolation, and waste
management. Making safe of pipelines involves depressurising them and
removing any hydrocarbons. Then the pipelines are cleaned and purged,
with the cleaning programme based on the specific needs of the system.
This may involve the use of pigs, which are maintenance tools used to
clean or inspect the insides of pipelines.
A manifold in the context of oil and gas production is a pipe to which wells
are connected in order to collect, co-mingle and direct fluid flow from
more than one well. Such an installation can be on a platform or on the
seabed for accumulating several subsea wells. Manifolds can be used for
the distribution of fluids for injection into a series of wells.
Mattresses are often used to provide protection, for stabilisation, and as
crossover support for pipelines. These comprise flexible blocks linked with
rope or wire, or concrete forms or grout bags filled with cement.
Maximising Economic Recovery from the UKCS

NNS

A mill or similar downhole tool is used to remove casing in the well where
a barrier needs to be installed in case of pressure or potential movement
of hydrocarbons behind the casing. The objective is to prevent fluids
flowing into another formation or to the surface.
Rig designed in modules that can be lifted onto a platform by crane to be
erected on site.
Northern North Sea

NUI

Normally Unmanned Installation

OGA

Oil and Gas Authority

Milling

Modular rig

Over-trawl surveys
Pig

70

Floating, production, storage and offloading vessel a floating vessel used

by the offshore oil and gas industry for the processing of hydrocarbons,
storage of oil and the offloading of the oil either to a tanker or into a
pipeline.
Remedial work carried out in a well using a mast powered by
hydraulic fluid.
Fixed rig installed at the well location, usually self-contained, with steel or
concrete legs anchored to the seafloor.

Over-trawl surveys make sure the seabed is safe for normal fishing
activities to resume.
A device used to clean pipelines.

Piece-small
Production packer
Project estimate
Provisioning estimate
Reverse installation

Rigid pipelines

Risers

Satellite installations

Sea-fastening

Self-floaters

Single-lift

Semi-submersible rig

Shallow-water jackets
SNS
Spool

The piece-small method involves dismantling the topside and using

onshore demolition techniques to produce small, manageable pieces that
can be transported onshore.
A device installed in a well, used to isolate the annulus and anchor or
secure the bottom of the production tubing string.
An approximation of the cost of the total project, developed during project
delivery process as the decommissioning method is determined.
Provisioning estimates are those developed for Asset Retirement
Obligations and are typically calculated prior to carrying out comparative
assessments that determine the decommissioning method to be deployed.
For reverse installation, the topside modules are lifted separately onto a
transportation barge or the deck of the crane vessel before being taken
onshore.
Rigid pipelines are manufactured from carbon steel or a high performance
steel alloy, with additional coatings providing corrosion protection,
stabilisation or, in some cases, insulation. Rigid pipelines transport
hydrocarbons between subsea infrastructure and platforms and to shore.
The portion of a pipeline extending from the seafloor to the surface is
termed a riser. The function of a riser is to provide conduit(s) to move
produced fluids and/or injection fluids between the seafloor equipment
and the production host. Such risers are generally known as production
risers in order to distinguish them from other types of risers such as
marine drilling risers and completion/workover risers.
Small, unmanned platforms consisting of minimal facilities (wells,
manifolds, and perhaps minimal separation and or testing facilities).
These installations are designed to operate in conjunction with a host
fixed production platform to provide further processing and onward
transportation of fluids.
The securing of cargo to a vessel so that movement during transportation
does not cause damage.
These steel jacket structures weigh in excess of 12,000 tonnes and are
designed with two large diameter legs for buoyancy during installation.
The jacket is fabricated in a construction yard, floated horizontally to the
field using the structures inherent buoyancy, and then upended through
controlled flooding. Final positioning may require crane assistance.
The single-lift method involves removing the topside in one piece
and may involve extra engineering work to reinforce the topside in
preparation for removal.
Used for deepwater drilling. They have ballasted columns to remain on
location by either mooring lines or dynamic positioning systems. Used for
exploration and development drilling.
These structures usually weigh less than 2,000 tonnes and are typically
deployed in water depths of 55 metres or less. They include smaller
launched and lift-installed jackets, as well as minimum facilities platforms.
Southern North Sea
Short segment of rigid pipe with a connector half at either end. A spool
is commonly used to connect flowlines and/or subsea facilities together,
e.g. a subsea tree to a subsea manifold. On platforms, spools are used to
connect pre-installed piping where final connection is performed offshore.

71

DECOMMISSIONING INSIGHT REPORT 2016

Subsea isolation valves

Subsea tie-back
Trunkline
Tubing
UKCS
Umbilical
Well-scale decontamination
Well P&A
Wellhead
Wireline
WoS

72

In relation to wells, these may be referred to as a subsurface safety valve

(SSSV). This is a safety device installed in the upper wellbore to provide
emergency isolation of the producing fluids in the event of an emergency.
Two types of subsea isolation valves are available: surface-controlled and
subsurface controlled. In each case, the safety valve system is designed
to be fail-safe, so that the wellbore is isolated in the event of any system
failure or damage to the surface production-control facilities. In subsea
facilities, isolation valves are included in the seabed manifold to isolate
wells and piping to protect facilities in the event of an emergency or
routine need to prevent fluid flow.
Subsea tie-backs usually connect small reservoir accumulations, developed
using subsea trees and manifolds, back to a host platform for onward
processing and or transportation.
Trunklines are defined as pipelines with a diameter greater than 14 inches
and a length in excess of 18 kilometres.
Usually referred to as production (or injection) tubing. This is a pipe
inserted in the well to carry and contain the production (or injection) from
the reservoir to the surface.
UK Continental Shelf
Utility support pipes
The removal and decontamination of scale build-up that deposits in the
tubing of a well during production of reservoir fluids.
Well Plugging and Abandonment
The wellhead is the termination point where the casing strings in the well
are supported and provide pressure containment.
A form of well intervention that uses an electrical cable to lower tools into
the borehole and to transmit data to the surface.
West of Shetland

73

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DECOMMISSIONING INSIGHT 2016

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