The decommissioning sector is on track to cut costs by 35% by the year 2035, according to a new report.
The report, released by the National Audit Office, predicted that oil and gas companies will spend £15.3 billion on decommissioning over the next 10 years, a reduction of 7% since 2012.
It states: “The decommissioning market is maturing and industry has the capacity and commitment to safely deliver the 35% cost reduction target through a combination of performance improvement, cost control, technological innovation and an openness to adopting new business models.”
Mike Tholen upstream policy director Oil & Gas UK, agreed with the report, saying: “The Oil and Gas Authority’s 2018 decommissioning cost report shows industry has already reduced costs by 7% from the 2017 estimate.
“This shows how it is working hard to realise the 35% cost reduction target, an interest shared with the taxpayer and all other involved Government authorities.
“Through developing world-leading expertise in decommissioning, our industry also unlocks significant potential to export this expertise to other oil provinces.”
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He added that tax revenues from decommissioning work will help the UK economy, but also said recovery was the main focus of the industry.
He said: “Industry remains focused on maximising economic recovery from the UK North Sea with a prize of up to 20 billion barrels yet to recover.
“This ambition, set out in Vision 2035, is critical to providing security of energy supply, continues to support hundreds of thousands of jobs and has already contributed over £350bn in production taxes alone over the past thirty years.”
The report also showed the amount of money being spent on the UK Continental Shelf (UKCS) had halved since 2017, from £30bn to £15bn – with the decommissioning sector the only part of the industry to experience growth.