North Sea oil and gas operators will need to spend more than 47.5 billion pounds ($76 billion) to decommission platforms, pipelines and other infrastructure after resources are depleted, Douglas-Westwood and Deloitte LLP said.
Most of the work will be carried out and money spent from 2016 through 2031, they said in a joint report. About 4 million metric tons of platforms will be dismantled onshore, potentially boosting jobs in the U.K., Denmark, The Netherlands, Norway and Ireland. Douglas-Westwood is an energy research company.
“The next 30 years will see enormous demand building for the services,” the companies said in the North Sea Offshore Decommissioning Market Report released today. “Coincidentally the forecast peak period is also due to see a major increase in offshore wind projects, putting even more pressure upon the offshore industries supply chains.”
Decommissioning liabilities have delayed North Sea assets sales as U.K. law holds sellers responsible for decommissioning if the buyer can’t pay. Sellers such as BP Plc need letters of credit to cover potential costs, adding to the expense of deals. Oil & Gas UK last year estimated that 27 billion pounds will be required for decommissioning through 2050 in the U.K. alone.