The UK North Sea oil industry is likely to lose estimated 146 offshore oil platforms, down 25%, over the next 10 years, as many oil fields in deep waters will become uneconomic, according to industry analysts cited by BBC. Almost 50% of decommissioning is estimated to take place between 2019 and 2016, stated a Douglas Westwood analysis, taking account of the fall in the global prices of oil. Decommissioning comes due to “high number of ageing platforms in the UK, which have an average age of over 20 years and are uneconomic at current commodity prices, as a result of high maintenance costs and the expensive production techniques required for mature fields,” the consultancy company stated, as informed by The Guardian.
Currently, one in seven barrels of oil produced in UK waters is at a cash loss, another consultancy, Wood Mackenzie, reported. As it was shown, half of oil and gas companies with North Sea operations are recording losses, with a total adding up to £6.4b in the past 12 months, Company Watch, commissioned by the Financial Times, informed. The decommissioning is also reflecting upon projected expenditure of nearly £35b over the next 25 years, which may further be reduced by additional £5b if techniques change and depend on so called super-heavy lift vessels, according to Douglas Westwood. The first such ship in the North Sea is currently being built for deployment later in 2016, envisioning costs cuts in comparison to more conventional cranes.
The UK is thus expected to follow suit of Canada and Venezuela, likely to see their oil fields permanently shut down over the ongoing oil prices trend. Douglas Westwood is yet to publish later in February its market forecast for the North Sea over the period 2016 to 2040, covering countries such as Denmark, Germany, and Norway, The Guardian added. Norway is estimated to have its decommissioning program delayed longest, as around 80% of Norwegian expenditure on scrapping equipment would occur between 2030 and 2040.