Decommissioning of North Sea oil and gas fields to cost billions

Dec 14, 2006 01:00 AM

It will cost $ 42 bn (£ 21 bn), in 2007 terms, to decommission the remaining oil and gas assets in the North Sea, with most of that being spent in Norway and the UK, according to a report by consultants Wood Mackenzie.
Of the total cost of retiring and dismantling the North Sea's oil and gas rigs, 48 % will have to be spent in Norway and 40 % by UK North Sea operators, the consultancy said.

"Under our current modelling, we anticipate the majority of future decommissioning expenditure to be between 2015 and 2031, with a plateau of spend of around $ 1.5 bn per annum," Wood Mackenzie upstream analyst Malcolm Ricketts said.
Taxation and regulation issues could also push up decommissioning costs, Wood Mackenzie's report says.

Ricketts said North Sea operators could delay paying the costs of decommissioning by extending the economic life of existing fields. This could be done by acting as processing and transportation hubs for nearby oil and gas fields or through enhanced oil recovery -- using new techniques to wring remaining deposits out of old fields.
While 40 have already been abandoned, another 66 North Sea fields are being decommissioned or awaiting closure.

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