A new decommissioning action plan launched today by the Scottish Government’s economic development agencies aims to support Scotland’s oil and gas sector to take advantage of the estimated £17.6 billion forecast by Oil & Gas UK to be spent on decommissioning on the UK Continental Shelf (UKCS) between now and 2025.
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.
With a strong track record developing around decommissioning projects, it is estimated the Gross Value Add (GVA) direct and indirect impacts for Scotland could reach £11 billion by 2025, which would support a peak of around 23,000 jobs as a result.
The overall aim of the plan, developed by Scottish Enterprise and Highlands and Islands Enterprise, is to establish Scotland as an international Centre of Excellence for decommissioning and to assist the development and delivery of effective solutions for decommissioning.
Building on Scotland’s globally recognised oil and gas expertise, the plan is focused around six strategic objectives - information, supply chain, technology and innovation, infrastructure, skills and training and international opportunities. These will be delivered through a number of actions such as:
The development of new technologies and an increased focus on skills and training is also highlighted to help grow Scotland’s reputation and position it at the forefront of this global opportunity.
The Plan will be led, in the main, by Scottish Enterprise and Highlands and Islands Enterprise with close collaboration with others including Skills Development Scotland, 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 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.”
Scotland is increasingly developing a strong reputation in supporting decommissioning activities. Xodus Group, for example, has completed over 80 projects to date. Building on this success, the action plan aims to identify the range of activities involved in decommissioning programmes as well as 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 per cent of the total decommissioning activities in the UK Continental Shelf (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.”
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.”