Scottish Government launches North Sea decommissioning action plan

Scottish Energy Minister Paul Wheelhouse
Scottish Energy Minister Paul Wheelhouse

A plan to help maximise the value of North Sea decommissioning for small to medium-sized firms has been published by the Scottish Government’s economic development agencies.

The decommissioning action plan sets out challenges facing small firms looking to get involved in the estimated £17.6 billion decommissioning spend over the next nine years. The report also highlights the economic opportunities of the sector which is expected to deliver an £11billion economic boost by 2025 supporting a peak of around 23,000 jobs.

In the UKCS alone, 302 oil and gas installations, 373 subsea installations, 16,000km of pipelines and more than 5,000 wells will all eventually need to be decommissioned, the report said.

About 47% of decommissioning activity will be taken up with well plugging and abandonment (P&A), the report said. Onshore recycling and disposal is estimated at just over 1% of spend but is the “most visible and remains an important element of the decommissioning lifecycle and an opportunity for Scottish ports and onshore yards”.

The overall aim of the plan, developed by Scottish Enterprise and Highlands and Islands Enterprise (HIE), is to establish Scotland as an international “centre of excellence” for decommissioning.

The bodies have pledged to develop a decommissioning support programme to provide expert advice to 50 companies as well as engaging with a further 150 companies to raise awareness of and stimulate demand for innovation and R&D support for decommissioning.

The report also promises engagement with ports and onshore yards to encourage future investment opportunities and identification of overseas decommissioning opportunities.

The development of new technologies and an increased focus on skills and training is also highlighted.

The plan will be led, in the main, by Scottish Enterprise and HIE with close collaboration with others including Skills Development Scotland, the Oil and Gas Authority (OGA), the Department of Business Energy and Industrial Strategy (BEIS) and industry bodies such as Decom North Sea and Oil & Gas UK.

Energy minister Paul Wheelhouse said: “The North Sea has a bright future but we must maximise the value of all aspects of decommissioning for our supply chain when the opportunities become available.

“This action plan clarifies the range of different activities involved in decommissioning programmes, from high value offshore activity such as well plugging and abandonment, to the relatively lower value contracts for onshore disposal of topsides and substructures.

“I am greatly encouraged by the fact that Scottish companies are already securing very significant value from a range of offshore decommissioning activities, with the majority of work being commissioned from UK contractors, and Scottish-based firms already securing the lion’s share of work secured from UK suppliers.

“This plan will build upon that success to maximise the economic opportunity arising from this key part of the lifecycle for fields on the UKCS.”

Head of oil and gas at Scottish Enterprise, David Rennie, said: “With around 20 billion barrels of oil and gas remaining in the UKCS, our support very much continues to focus on prolonging the life of Scotland’s oil and gas sector.

“That said, we can’t ignore the significant opportunities decommissioning will bring for Scotland.

“This plan will help us put in place the necessary support to help Scotland’s supply chain build on its existing success as well as maximise the significant opportunities in the future, both at home and overseas.

“We already have a strong record in decommissioning and we want to do even more.”

Head of oil and gas at Highlands and Islands Enterprise (HIE), Gavin Mackay, added: “Maximising economic recovery and further developing exciting prospects West of Shetland remain a priority for the industry and HIE’s support to the sector.

“Some of the largest oil and gas structures in the North Sea were fabricated in the Highlands and Islands and in time, it would great to see them continue to return here to be safely and efficiently dismantled once their fullest possible contribution to maximising economic recovery has been realised.”

Mike Tholen, upstream policy director at trade body Oil & Gas UK said: “This action plan outlines the potential opportunities for established oil and gas companies in Scotland to gain access to the emerging decommissioning market.

“Additionally, it highlights the significant scope for these companies to develop world-leading capabilities in late-life asset management and export their knowledge, skills and services.”

See the action plan: