Are North Sea Oil Fields Set to Slump?

While the North Sea is currently renowned as one of the most productive oil rich regions on the planet, the latest research from a leading industry analyst predicts that up to a quarter of platforms could be scrapped in the next 10 years. Recent figures from industry body Oil and Gas UK back the prediction, confirming that around 65,000 jobs have been lost within the sector since 2014. The future isn’t looking bright, with energy industry market research and consultancy firm Douglas Westwood forecasting that up to 150 oil platforms in UK waters would be canned within a decade.

“146 platforms will be removed from the UK during 2019-2026”, reads a Douglas Westwood company statement. This represents around 25% of the current total.

Ageing rigs + plummeting oil prices = economic disaster

So what will trigger the mass closure? Douglas Westwood asserts that the ageing platforms simply don’t align with the current price of oil, which has dropped dramatically over the past few years. The company maintains that platforms “Have an average age of over 20 years and are uneconomic at current commodity prices.” It maintains that this is due to “High maintenance costs and the expensive production techniques required for mature fields”.

While the latest research from Douglas Westwood exclusively covered UK rigs, its upcoming 2016 - 2040 decommissioning market forecast for the North Sea will cover a wider range of countries, including Denmark, Germany and Norway.

Good news for decommission experts

On the bright side, there are big opportunities on the horizon for decommissioning specialists, with Douglas Westwood asserting that “The oil price collapse has been bad news for nearly every company involved in the industry, but one group that could actually benefit from it are specialist decommissioning companies. For these companies there is an opportunity to be part of removing the huge tonnage of infrastructure that exists in the North Sea.” Unsurprisingly, the decommissioning process won’t come cheap, with costs estimated to exceed US$50 billion using current removal methods, or US$43bn if SLVs such as the Pioneering Spirit are employed. 

High maintenance costs are a key factor eliciting the mass closure of UK North Sea rigs. For more insight into the arena of MRO within the oil and gas sector, ‘Inspectahire Relies on the FLIR GF320 Optical Gas Imaging Camera for Maintenance Inspections and Hydrocarbon Leak Detection in the Offshore Oil and Gas Industry’ is packed full of information on industry leading technology. It looks at the legacy of Inspectahire, and the specialist remote visual inspection solutions it provides to companies across the globe, including oil and gas producers.