Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

North Sea needs to address spending on ‘pseudo-dead facilities’, says Whalsay Energy chief

Paul Warwick, executive director of Whalsay Energy
Paul Warwick, executive director of Whalsay Energy

The head of Whalsay Energy has said the North Sea oil industry needs to address high spending on “pseudo-dead” facilities after they stop producing.

Executive director Paul Warwick gave the keynote speech at the Decom Offshore conference at the AECC yesterday, discussing the sector’s challenge to reduce its £59bn decommissioning bill by 35%.

Part of the problem, he said, was the “burgeoning” amount of spending on facilities that are no longer producing.

He said: “An area which I think is a huge surprise is the amount of post-cessation of production operational expenditure (opex) that has emerged within this particular basin compared to others, probably with the exception of Norway.

“In a 35% cost reduction environment, that burgeoning amount of opex running a pseudo-dead facility, effectively operating as though it was still producing hydrocarbons,  is a problem for the industry, it’s definitely a problem for the operators.”

Another “surprise” which emerged in the last decade has been the increasing amount of obligation operators’ face to retire their assets, brought on by an inflation of decommissioning costs.

Mr Warwick said this has removed firms’ flexibility to have capital via debt to fund “value-adding” projects.

He added: “One needs to understand the UK perspective as being an unprecedented amount of spend in any basin on decommissioning.

“This is not something that is normal to spend £58bn on something which, for most operators, is not a value-add.

“It is a necessity, it is an essential part of our extractive business, but it is something that the operators would prefer not to spend.”

Recommended for you

More from Energy Voice

Latest Posts