Defusing the Decommissioning Time Bomb

Oil And Gas Companies Must Collaborate To Contain The Potentially Crippling Costs Of Removing Offshore Facilities

Oil and gas companies have installed thousands of structures offshore in the earth’s oceans, and the time is quickly approaching for those wells, pipelines and other pieces of equipment to begin coming out.

Already in some basins, such as the United Kingdom’s continental shelf, low production, falling efficiency, aging assets and rising decommissioning liabilities are making production less attractive. Now, persistently low oil prices are putting pressure on producers to consider the costly and irreversible decision to decommission those structures.

How can both independent producers and international oil companies develop the capabilities and strategies for decommissioning?  Is forming a collaboration the answer? And what do organisations stand to save by adopting these approaches?  Read the full article on the Oliver Wyman Ideas app or download the PDF.

Deconstructing Decommissioning

A breakdown of decommissioning costs

Proportion of total expenditure for each element of decommissioning

*Other includes site remediation, onshore recycling and monitoring
Source: Oil & Gas UK; Oliver Wyman analysis

Defusing the decommissioning time bomb

Oil and gas companies must collaborate to contain the potentially crippling costs of removing offshore facilities.

Thorsten Querfurt, Nic Singleton

Defusing the Decommissioning Time Bomb