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OE17: Decommissioning is an opportunity, says Treasury boss

Written by  OE Staff Tuesday, 05 September 2017 03:26

Scotland could be at the forefront of the future of oil and gas through developing expertise in decommissioning, the Exchequer Secretary Andrew Jones, Exchequer Secretary to the Treasury, is due to tell SPE Offshore Europe this morning.

The North Sea is one of the first regions in the world to start decommissioning on such a large scale, says HM Treasury, which wlil fund up to 70% of decommissioning costs through tax rebates, this morning.

As other basins mature across the world, there is opportunity for the UK to become pioneers in this area, says Jones, who is speaking in this morning's plenary session.

Jones says: "The UK oil and gas industry supports 300,000 jobs, and with up to 20 billion barrels of oil yet to recover, has many productive years ahead. As the need for decommissioning grows, we must seize the opportunity to cement the UK as a world-leader in this field and export this knowledge globally."

The Scottish government has pledged support for decommissioning sites in the country. However, the Murchison topsides last year went to Norway and the Brent Delta topside, removed by the Pioneering Spirit heavy lift vessel earlier this year, went to Able in northeast England. 

The Treasury, which wants to reduce the cost of decommissioning, to reduce the bill it has to pay, says: "Making efficiencies in this area means big changes to the oil and gas industry – requiring new technology, skills and innovative approaches. This will ensure that decommissioning is safe and cost-effective while also protecting the environment."

Chief Executive of The Oil and Gas Authority (OGA), Andy Samuel, said: "Decommissioning presents great opportunities for innovation and the development of UK skills and capability. We are working closely with operators and service providers and are already seeing some great performance in cost efficient decommissioning, new collaborations and technology trials. This bodes well for the shared target of 35% cost reductions and the considerable domestic and export value that can be realised."

In the UK, 10% of old oil and gas facilities have already been removed and in the next 10 years alone, more than 100 platforms are expected to need to be scrapped and more than 1800 oil wells plugged, says the Treasury.

The OGA forecasts that UK oil and gas operators will spend almost £60 billion on decommissioning between now and the 2050s.

To ensure this industry thrives, conditions must be right. The government provides tax relief on decommissioning, which covers around 40% of the total cost for UK companies – forecasted to be worth around £24 billion between now and the 2050s. The OGA have also pledged to reduce the overall cost by 35%.

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