Latest analysis from Westwood Global Energy Group (Westwood), a specialist energy market research and consultancy firm, reveals the extent of financial and logistical hurdles for North Sea decommissioning.
Political and fiscal uncertainty has impacted investor confidence in the UK which is accelerating the decline of domestic production. As a result, $26 billion could be spent on decommissioning in the next decade, with well plug and abandonment (P&A) alone accounting for ~50% of the cost.
Analysis reveals that timing uncertainty is driving financial and operational risks for operators, as the decommissioning workload increases but contract awards are lagging, particularly for rigs. Deferring work scopes could strain the supply chain’s limited capacity to execute the work. If delays persist and rig availability tightens, well P&A costs could climb by up to $5.5 billion, due to higher offshore rig dayrates, increasing financial liabilities for both operators and the UK Government, which provides tax relief on decommissioning costs.
“As the UK North Sea enters a new phase where decommissioning becomes the dominant industry driver, the supply chain faces significant demand and major financial risk,” said Yvonne Telford, Research Director at Westwood. “Based on current investment plans, up to 40% of UK fields could cease production before 2030. With the impact of decommissioning tax liabilities on abandonment expenditure, cost-effective P&A must be paramount.
Dominic Ferry, CEO at Westwood, added: “Westwood’s new Atlas Decommissioning module provides the clarity the market needs by linking infrastructure data with economic forecasts, offering stakeholders a clear view of the timing, cost, and risks associated. By delivering granular insights into decommissioning activity, the module helps operators, service providers, and investors make informed decisions, mitigate financial exposure, and seize emerging opportunities in this evolving landscape.”
The research comes as Westwood launches its new Atlas Decommissioning module, providing real-time flexibility for users offering detailed insights into decommissioning timelines, infrastructure removal and market dynamics. For the first time, industry players will be able to dynamically model decommissioning schedules based on key economic drivers, such as commodity prices and operating costs, allowing them to predict shifts in activity and optimize planning.
Learn more about the Atlas Decommissioning module here.
