Scotland launches action plan for O&G decommissioning

Highlands and Islands Enterprise (HIE) and Scottish Enterprise (SE) have launched a new decommissioning action plan aimed to support Scotland’s oil and gas sector.

HIE, an organization supporting economic and community development, said on Wednesday that on the UKCS alone, 302 oil and gas installations, 373 subsea installations, 16,000km of pipelines, and more than 5,000 wells would eventually need to be decommissioned.

An Oil & Gas UK forecast claims that around £17.6 billion ($21.7 billion) would be spent on decommissioning work on the UKCS between now and 2025.

HIE estimates that Scotland could get between £8.3 billion and £11.3 billion of the decom purse which could lead to 18,900 jobs being supported as a result.

Gavin Mackay, HIE’s head of oil and gas, said: “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 be great to see them continue to return here to be safely and efficiently dismantled.”

The main target of the plan is to establish Scotland as an international Centre of Excellence for decommissioning and the development and delivery of effective solutions for decommissioning.

The plan will be led, in the main, by HIE and SE in collaboration with organizations like the Oil and Gas Authority, the Department of Business Energy and Industrial Strategy (BEIS) and industry bodies such as Decom North Sea and Oil & Gas UK.

Minister for Business, Innovation and Energy, Paul Wheelhouse, said: “The North Sea has a bright future, but we must maximize the value of all aspects of decommissioning for our supply chain when the opportunities become available.

“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 maximize the economic opportunity arising from this key part of the lifecycle for fields on the UKCS.”

The action plan also aims to support companies to focus, in particular, around the higher value activities, such as well plugging and abandonment (P&A), which is estimated to be worth 47 percent of the total decommissioning activities in the UKCS.

International sector head for oil and gas at Scottish Enterprise, David Rennie, added: “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. We already have a strong record in decommissioning, and we want to do even more.”

Commenting on behalf of the industry, Mike Tholen, upstream policy director at 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.”

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