Offshore staff

EDINBURGH, UK --Wood Mackenzie has forecast that $42 billion in decommissioning expenses remain in the North Sea, with almost 90% of that to come in the Norwegian and UK sectors.

The report says that 40 fields have been abandoned to date (23 in the UK, 11 in Norway and 6 in The Netherlands). A further 66 fields are being decommissioned or await abandonment of their facilities. Although new fields are continuing to be developed, the number of fields that will commence their abandonment will increase over the next decade.

"Under our current modeling, we anticipate the majority of future decommissioning expenditure to be between 2015 and 2031 with a plateau of spend of around US$1.5 billion per annum, says Malcolm Ricketts, analyst – upstream research.

Wood Mackenzie also highlightes industry concerns about taxation and regulation issues that could impact decommissioning costs. In the UK, companies are concerned particularly about future fiscal change that could impact the levels of tax relief on decommissioning costs. However, the UK industry would welcome change to current liability and financial security requirements, the report says.

12/14/2006