Urgent action to ensure oil and gas companies meet their legal obligations to safely remove ageing oil and gas infrastructure from the North Sea could create up to 25 000 UK jobs and deliver up to £15 billion in economic benefit to the UK, a new first-of-its-kind report shows.

The report reveals that government action to guarantee operators clean up ageing oil and gas infrastructure together with support to the UK supply chain, would provide a critical skills bridge for 15 000 workers facing a ‘cliff edge’ of unemployment, while creating opportunities along the UK’s east coast in Aberdeen, East Anglia, Teesside and Tyneside.

This is the first time the impacts of decommissioning in the UK have been mapped out in such detail. Workers in the North Sea oil and gas sector have faced increased uncertainty in recent years as production from the mature basin continues to decline, operators reduce capital expenditure and oil and gas majors unload their projects and exit the basin.

This decline has created an urgent decommissioning challenge, with around 1700 wells due to be plugged and abandoned in the next six years. Around 500 wells are already overdue for decommissioning, with regulators regularly approving operator requests to delay removal.

Importantly, the report, After the oil: Jobs and economic impacts from UK offshore decommissioning, highlighted the short window for action to avoid delays causing potentially disastrous impacts for UK jobs and regional economies.

Researchers from Ebberstone and Transition Economics conducted the report, which is the first UK research commissioned and published by Redwater Insights - a new data-driven research initiative analysing the risks associated with oil and gas decommissioning liabilities.

Decommissioning benefits

The report found that timely and effective decommissioning could:

The report highlighted several challenges to realising these benefits, including significant delays and major bottlenecks. Oil well degradation and deterioration of structures was expected to significantly increase the cost of repair and removal work. This would be exacerbated by workers retiring or leaving the sector amid continued delays.

Recommendations from the report include:

Redwater Insights Director of Legal Sophie Marjanac said: “Many North Sea workers are currently facing a cliff edge as projects mature and wind down. When operators delay their clean up responsibilities, this creates further uncertainty for workers and their communities.

“Proper decommissioning will provide a skills bridge for current oil and gas workers and create new jobs along the east coast of the UK, from Aberdeen to Great Yarmouth. We need urgent action to avoid a disaster for jobs, communities and the UK economy.

“There are more than 500 oil and gas wells currently overdue for plugging and abandonment in the North Sea, with hundreds more expected to reach end-of-life in the next few years.

“Overly flexible regulation means operators are kicking the decommissioning can down the road. But delaying too much longer runs the risk of ballooning costs and highly skilled workers leaving the industry.

“The Treasury could face a significant challenge if cost blowouts cause companies to fail and decommissioning liabilities fall to taxpayers. Meanwhile, regional communities risk being hit harder if the only workers skilled enough to decommission old assets have had to leave the industry because of continued delays.

“There is a fast closing window for proper decommissioning. We need urgent action from government, regulators and most importantly from operators who are legally obliged to ensure their wells are cleaned up properly.”

Read the article online at: https://www.oilfieldtechnology.com/special-reports/24042026/urgent-oil-and-gas-decommissioning-could-deliver-25-000-jobs-for-north-sea-workers/

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