E-FWDThe E-FWD logo.

analysis

North Sea 2: Decommissioning is just the beginning

Discussions of energy transition too often exclude the role of decommissioning and oil and gas expertise. They fail to close the gaps between the UK’s carbon storage ambitions and its existing infrastructure, delegates at E-FWD’s most recent event in Aberdeen heard.

Issues were discussed at length in a decommissioning and life extension working group at North Sea 2, the second event held in Aberdeen. Prominent figures from across industry and the UK and Scottish government spoke candidly in the dedicated workshop session.

Key topics of discussion spanned recruitment and the development of talent to service both decommissioning and the basin’s future carbon capture, utilisation and storage (CCUS) capabilities. They also investigated how the sector can retain and grow its supply chain and foster the right investment climate to fund it all.

From this discussion came a series of asks:

  1. A new language: The connotation of decommissioning as an end-of-life sector sends the wrong messages to government and the workforce. Instead, it must be seen as part of the wider energy transition and a crucial component in enabling a ‘circular economy’
  2. Faster decision-making: The regulatory frameworks do not allow efficient and timely planning to match up decommissioning and CCUS. Decision making must be faster and include a more strategic thought around wider future energy requirements
  3. Pipeline visibility: A clear view of what will be needed and when, offers security to the supply chain, investors and the retention of equipment and capabilities in North Sea
  4. Protect the UK supply chain: Talent and equipment are already leaving the region for higher rates and greater certainty elsewhere. Providing a pipeline of work will help ensure the UK does not risk being left without vital skills and assets
  5. A future for talent: These certainties must also be in place to attract and retain talent – and the sector must also be more flexible and open in exploring retraining routes and labelling jobs correctly
  6. Tax that works: Differing UK tax regimes are unfavourable for a mobile workforce, while changing fiscal policies are acting as a major disincentive to investment

Repositioning decommissioning

Much of the workshop’s early discussion focused on the erroneous understanding of decommissioning as an end point for the energy sector. This is an issue that has an impact on everything from infrastructure planning to recruitment. The group called for decommissioning to be seen as an intrinsic part of the energy transition and as a vital enabler for a circular economy.

The North Sea’s existing oil and gas assets will be essential to building out emerging industries such as carbon storage and hydrogen, not to mention potential re-use cases for infrastructure as envisioned in the ‘North Sea 2’ blueprint.

Decommissioning challenges at the Brent Charlie
Shell’s Brent Charlie accommodation in 1996. Picture: Shell

For those considering a career in the sector, participants also emphasised the need to show longevity in decommissioning. Such skills such as managing wells, asset integrity and reservoir management would all be highly prized and transferrable to a future carbon storage industry.

Don’t delay

The group made the case that government and industry should not be delaying decommissioning plans but should instead accelerate CCUS technologies to meet the assets at the end of their initial life. Failing to develop demand for storage in time will mean wells, platforms and pipelines are either removed or shut down entirely –curtailing any re-use opportunities – or they will cease production and be left in situ for longer periods to degrade, again potentially compromising their suitability for repurposing.

Planning and regulation was identified as central to achieving this. Participants contended that some of the North Sea’s regulatory frameworks could act as a blocker rather than an enabler to streamlined decommissioning and/or repurposing.

This is further complicated by the legal frameworks that govern decommissioning and re-use. There are various complexities around the transfer of licence ownership and liabilities if an oil or gas field is to change hands and become a carbon storage reservoir.

It was recognised that both these issues are already being addressed by parties such as the North Sea Transition Authority (NSTA). However, further progress would likely require a collective approach from both industry and regulators – and must be centred on a more holistic approach to the energy transition that is able to link the various offshore energy sectors.

Stick to the plan

Part of the success in reducing North Sea decommissioning costs in recent years has been a clearer picture of what and when work will be carried out, enabling the supply chain to invest and scale accordingly.

The NSTA’s Pathfinder database is helpful in highlighting these opportunities, and emerging potential for CCS projects. However, it risks being undermined by tardy delivery. Projects are not always executed as originally planned, eroding the potential value of the system.

With trust in execution dates beginning to slip, supply chain confidence is undermined. This leads to a weaker case for investment in facilities, staff and the deployment of new technologies. Ensuring timelines are visible and adhered to was therefore a key recommendation.

There is value in extending this visibility and co-operation to North Sea neighbours too. A looming resources crunch in 2025 and 2026 is likely to affect the availability of every element of the decommissioning supply chain, touching everything from talent to vessels, rigs and equipment. There is a general recognition that demand will likely exceed supply.

More strategic planning around resources including how and when decom and CCUS work can be executed not just in the UK but in Denmark, the Netherlands and Germany – all of whom have significant storage ambitions – is a must. Could a pan-North Sea Pathfinder help guide this process?

Tax and talent

A running theme throughout discussions was the availability of talent. As well as physical resources, the poor visibility of pipeline and growing demand in other markets could be a potential drain on North Sea skills.

One route to arrest that is the closer linking of decommissioning and CCS. This would offer a transition-aligned route for drillers, well engineers, petrophysicists and geologists who will be essential both to plugging old oil and gas wells and repurposing or drilling new ones for carbon storage.

Underlining all these discussions were concerns that a continually shifting fiscal and policy landscape did little to foster confidence in the sector. This extends to the personal – varying levels of income tax between UK regions was seen as a disincentive for a workforce who may be drawn elsewhere – and to the wider industry, as the extension and potential revision of the Energy Profits Levy (EPL) again dampened the UK’s outlook across the upstream and CCS industries.

Related Content