Product Code: ISBN 978-1-910045-29-9
North Sea Decommissioning Industry to Boom after Numerous False Starts
Douglas-Westwood's new North Sea Decommissioning Market Forecast 2016-2040 predicts that between 2016 and 2040 $70-$82 billion (bn) will be spent on decommissioning activity in Denmark, Germany, Norway and the UK; a marked increase on any past work that has been completed, as the region enters a permanent decline.
Decommissioning activity is expected to grow over the next few years, driven by the sustained low oil price, the maturity of North Sea fields and the age of infrastructure that has pushed maintenance costs up, leading to a high breakeven price.
The forecast includes two different scenarios, one assumes that decommissioning methods will remain the same, with reverse installations utilising Heavy Lift Vessels (HLVs) as the most common method. The other scenario considers the impact the Single Lift Vessel (SLV) Pioneering Spirit and others that follow it could have on the market. Scenario 2 will see cost reductions of around $12bn on Scenario 1, demonstrating this impact. It has to be stressed however, that this is contingent on E&P operators embracing this method of removal over the more established method. As a result a huge amount will depend on the success of early removal projects Yme and Brent.
As the country with the largest amount of installed infrastructure, as well as the oldest platforms, the UK will make up over half of all expenditure, with a total cost of over $50bn in Scenario 1 or $43bn in Scenario 2. Unlike the other countries in the report, the UK will see reasonably high levels of activity throughout the forecast period. From 2030 onwards, however, Norway will grow to become an incredibly important part of the decommissioning market. It is expected to account for 32% of the total spend 2016-2040, with 79% of this coming in the last ten years, as the large hubs finally begin to lose commerciality.
This represents a powerful opportunity for specialist companies to establish themselves in the industry and become trusted and reliable partners to the platform operators who will desire speed, safety, cost effectiveness and reliability, as they aim to keep decommissioning costs low and ensure removal work is completed without incident.
The North Sea Decommissioning Market Forecast is supported by analysis, insight and industry consultation and includes:
- Drivers & indicators - a review of the factors influencing the North Sea decommissioning market, including: oil & gas prices; maturity of fields; tax regimes; operations and maintenance costs; legislation and challenges in the oil & gas industry.
- Overview of decommissioning process - an in-depth look into how decommissioning is completed, from the cessation of production all the way through to the onshore deconstruction phase. This details the different options available to operators, including the use of HLVs and SLVs and a section on the current HLV and HTV fleets.
- The supply chain - detailed analysis of the supply chain, outlining the specialised well abandonment firms, system inerting companies, disconnection specialists, infrastructure removal businesses and disposal companies.
- Market forecast - summary of total expenditure, weight removed and the number of platform and well removals for the four countries featured in the report, as well as a country-by-country breakdown. Expenditure is split into two different scenarios, one showing the impact SLVs could have and one assuming the market continues as it previously has. In addition, for each scenario and country, expenditure is broken down into the following segments: FPS removal, heavy transport, onshore deconstruction, PSV (and DSV), substructure removal, topside removal and well decommissioning. There is also a separate section on the onshore deconstruction market.
- Supporting databook - the report will be released with a supporting Excel workbook that features all of the tables and charts that are included in the report.
Why purchase the North Sea Decommissioning Market Forecast?
DW's market forecasting is trusted by sector players worldwide, with clients including the world's top-10 oil & gas companies, top-10 oilfield services companies and top-10 private equity firms.
The report is essential for financial institutions, equipment manufacturers, offshore engineering, operations & maintenance companies, ROV operators, cutting service companies, contractors, oil & gas companies and agencies & government departments wanting to make more informed investment decisions.
Our proven approach includes:
- Unique and proprietary data - updated year-round from published sources and insight gained from industry consultation.
- Detailed methodology - analysis is based on DW's in-house Oil & Gas database which details every field in the North Sea. The data feeds into the market model to generate forecasts of decommissioning activity on a yearly basis.
- Comprehensive analysis - comprehensive examination, analysis and 25-year coverage of decommissioning expenditure, tonnage removal and the number of platform and well removals each year.
- Concise report layout - consistent with DW's commitment to delivering value for our clients, all our market forecasts have a concise layout consisting of industry background and supporting materials condensed to enable quick review with ‘speed-read' summaries of key points throughout.
Table of Contents
1. Summary & Conclusions
2. Drivers and Indicators
- Offshore Oil & Gas and the North Sea
- Oil - Supply & Demand
- Oil Price Volatility
- Oil Price Impacts
- Historical Platform Installations
- Historical Subsea Tree Installations
- Oil & Gas Challenges
- Drivers of North Sea Decommissioning
- Drivers of North Sea Decommissioning - Legislation
3. Overview of Decommissioning Process
- Decommissioning Planning Phase
- Overview of Decommissioning Process
- Well Abandonment
- Infrastructure Removal
- Other Considerations
- Decommissioning - HLVs
- Decommissioning - HTVs
- Decommissioning - SLVs
- Decommissioning - SLV: Pioneering Spirit
4. Supply Chain
- Well Abandonment
- Platform Decommissioning - System Inerting and Disconnection
- Platform Decommissioning - Infrastructure Removal & Disposal
5. Market Forecast
- Denmark, Germany, Norway & UK : Total Expenditure
- Denmark, Germany, Norway & UK : Total Removals
- Summary : Weight
- Denmark : Total Expenditure
- Denmark : Platform & Well Removals
- Germany Summary
- Norway : Total Expenditure
- Norway : Platform & Well Removals
- UK : Total Expenditure
- UK : Platform & Well Removals
- Onshore Deconstruction
- Data and Text Conventions
Figures and Tables
- Figure 1: Tonnage Removed by Country
- Figure 2: Capex Comparison S1 and S2
- Figure 3: Global Onshore vs Offshore Oil & Gas Production, 2005-2021
- Figure 4: Regional Offshore Oil & Gas Production, 2000-2015
- Figure 5: Oil Price & Demand,1990-2015
- Figure 6: World Liquids Production Growth, 2005-2015
- Figure 7: Historical Brent and WTI Oil Prices, January 2010 -January 2016
- Figure 8: Average Annual Brent Spot Price Forecasts, 2010-2020
- Figure 9: O&G Sector Average Stock Performance Index, June 2014-Dec 2015
- Figure 10: Quarterly Visible Subsea Production Tree Orders, Q1 2008-Q3 2015
- Figure 11: Fixed Platform Installations 1990-2015
- Figure 12: Subsea Tree Installations 1990-2015
- Figure 13: Oil & Gas Production versus E&P Spend, 2000-2016
- Figure 14: Skilled Workers by Age Category, 2014
- Figure 15: Model cash flow for a development drilling project
- Figure 16: Allseas Pioneering Spirit
- Figure 17: North Sea Total Cost Scenario 1
- Figure 18: North Sea Total Cost Scenario 2
- Figure 19: Number of Platforms Removed by Country
- Figure 20: Number of Wells Removed by Country
- Figure 21: Substructure Tonnage Removed by Country
- Figure 22: Topside Tonnage Removed by Country
- Figure 23: Tonnage Removed by Size 2016-2040
- Figure 24: Denmark - Total Cost Scenario 1
- Figure 25: Denmark - Total Cost Scenario 2
- Figure 26: Denmark - Number of Platforms Removed by Size
- Figure 27: Denmark - Number of Wells Removed by Surface/Subsea
- Figure 28: Norway - Total Cost Scenario 1
- Figure 29: Norway - Total Cost Scenario 2
- Figure 30: Norway - Number of Platforms Removed by Size
- Figure 31: Norway - Number of Wells Removed by Surface/Subsea
- Figure 32: UK - Total Cost Scenario 1
- Figure 33: UK - Total Cost Scenario 2
- Figure 34: UK - Number of Platforms Removed by Size
- Figure 35: UK - Number of Wells Removed by Surface/Subsea
- Figure 36: Onshore Deconstruction Expenditure Comparison
- Table 1: Tax Rates
- Table 2: Number of Platforms by Size Category
- Table 3: Average Age of Platforms by Size Category
- Table 4: Key OSPAR Terms
- Table 5: Re-use and Disposal of Platform Components
- Table 6: Forms of Topside Removal
- Table 7: Forms of Steel Jacket Removal
- Table 8: Heavy Lift Barge Fleet
- Table 9: Heavy Lift/Crane Vessel Fleet
- Table 10: Heavy Transport Fleet >5,000t Deadweight Capacity, by Operator
- Table 11: SLVs Under Construction
- Table 12: Fixed Platform Size Categories
- Table 13: History of Platforms Offshore Germany
- Table 14: Onshore Cost by Country