Rystad Energy estimates the total value of the global pool of decommissioning projects that will accumulate through 2024 could reach $42 billion, the media reported. Global oil and gas companies are cutting costs on new exploration and production as a result of the depleting oil prices and an unprecedented event like the coronavirus pandemic.
Rystad Energy revealed that with an average asset age of 25 years, the Northwest European decommissioning market could grow 20 percent in annual commitments through 2022.
In the next five years, Rystad Energy expects an average of 23 assets to cease production annually. Around 2,500 oil and gas wells are expected to be decommissioned during the period with around 1,500 in the UK alone.
The UK will be followed by Norway and Denmark when it comes to decommissioning of projects in Europe.
With regard to the oil and gas decommissioning cost, Sumit Yadev, energy service analyst at Rystad Energy told the media, “A protracted low price environment can potentially motivate operators to leverage low contract prices and commit to their asset retirement obligations, thus spurring decommissioning activity in the Northwest Europe region. This will also provide welcome opportunities for contractors in an otherwise gloomy oilfield services market.”
“While decommissioning is becoming a pressing concern for North Sea operators, the prevailing low-price environment presents an opportunity for driving down costs. For instance, after the oil price slump of 2014, rig and vessel rates declined by 30 percent to 40 percent. We expect rig and vessel rates to exhibit a downward trend this time as well, with declines likely lasting until 2022.”