Less offshore decommissioning work was carried out in 2023, despite a higher overall spending in the sector, according to Offshore Energy UK (OEUK). The organisation reported that £1.7 billion was invested in decommissioning activities on the UK continental shelf in 2023, a slight increase from the previous year. However, only 126 wells were decommissioned in 2023, compared to 139 in 2022, as outlined in OEUK’s annual offshore decommissioning report.
Ricky Thomson, who authored the report, highlighted the need for a “step change” in the coming years as over 2,050 wells are expected to undergo decommissioning in the next decade, representing more than 80% of the active well stock. One of the challenges facing the industry is the competition for resources, as many of the assets required for oil and gas decommissioning are also essential for offshore wind installation. This clash presents a significant hurdle for both sectors.
OEUK’s operations director, Mark Wilson, emphasised the impact of cost inflation, political uncertainty, and resource competition on decommissioning activities. He noted that despite a slight increase in spending in 2023, the actual work carried out in the sector had decreased. Wilson highlighted the need for innovation to attract more heavy-lift ships to UK waters to aid in decommissioning projects.
The industry is facing macroeconomic challenges that cannot be overlooked, with factors like cost inflation and political risks making it increasingly difficult for businesses to operate in the decommissioning sector. The uncertain fiscal landscape has also contributed to a decrease in activities across the decommissioning work breakdown structure (WBS) in 2023, despite a rise in overall spending. OEUK pointed out that the UK had spent more money on decommissioning in 2023 while accomplishing less work.
OEUK’s report discussed the complexities ahead, including the surge in renewable projects competing for the UK supply chain’s resources and the prevailing uncertain political and fiscal environment that has dampened investment. The clash between offshore decommissioning and wind installation activities poses a significant challenge for the industry, requiring innovative solutions to navigate these competing demands. As the sector looks towards the future, collaboration and strategic planning will be essential to overcome these obstacles and drive sustainable decommissioning efforts in the UK.