BRITAIN’S offshore industry will spend more than £4billion on North Sea decommissioning over the next five years alone, Oil and Gas UK said yesterday.
OGUK chief executive Malcolm Webb told the 2011 Offshore Decommissioning Conference at Dunblane that overall expenditure on removals to 2050 would likely pass £30billion and that this was a “very significant sum and affords commercial opportunities”.
Turning to the controversial issue of tax reliefs, he said OGUK had re-established a dialogue with the Treasury following the tax increase imposed on oil and gas producers early this year.
Mr Webb added: “Since the Budget, we’ve experienced some rather constructive engagement with Treasury ministers on both issues; field allowances and on the thorny question of gaining some bankable assurances from the government on tax reliefs for decommissioning.
“Now, neither of these issues is yet in the bag and there is some way to go to land them, but I have to say that I’m more optimistic than I have been in a long time, that there is a real possibility – not yet probability – of a reasonable outcome.
“That I need hardly say would be good for us in this industry.”
He said it was important for the UK’s offshore industry to get its approach to decommissioning redundant infrastructure right, especially in light of last year’s Macondo disaster in the Gulf of Mexico.
“What this teaches me is that we not only have to achieve superior safety and environmental outcomes in all we do.”
He indicated that this also applied as much to the “significant” number of suspended wells in open water on the UK continental shelf – exploration wells drilled and left in abeyance pending possible future investigation – as it did to life-expired production infrastructure.
Mr Webb added: “In my view the industry needs to rise to the challenge and get rid of most if not all of these as soon as we reasonably can.
“In today’s post-Macondo world and with the European Commission thirsting to get in the act and prove its virility in such matters, I urge you to consider these matters and come up with a plan.”
It was said at the conference that the bill for plugging and abandoning redundant production and other wells on the UKCS will be at least £1.5billion over the next few years alone.
Decom North Sea said yesterday it had elected nine new directors.
The offshore oil and gas decommissioning forum, now has about 160 members.