Big Business In Oil Rig Decommissioning

Big Business In Oil Rig Decommissioning

OilIt is projected this year oil rig decommissioning will hit a record high of $12bn through 2021 according to Rystad Energy

There are several hundred offshore oil and gas wells could cease production by 2021 in face of today’s bearish oil market. As result of such changes decommissioning obligations in the global oil and gas industry is on the rise to $11.7bn last year to projected at an average of about $12bn.

Last year was a time high record but this year we are going to surpass the record. A challenging oil market outlook placed to many aging fields to rest as diminishing output proved insufficient to cover production costs. A Rystad Energy review of offshore assets shows that some 9,000 wells globally are currently struggling to stay profitable at $60 barrel of Brent crude.

‘This is a relatively high breakeven price that was the Achille heel of many fields in 2018”, Martisen said.

Rystad Energy expects the 9,000 wells will be plugged and abandoned over a series of years but emphasized that the exact timing is still pending.

In 2013 and 2014, when oil prices where high, very few operators-initiated plans to decommission older assets. Instead, they sought to maximize returns from other producing assets. However, as oil prices dropped to painfully low levels in 2015 and 2016, many of these field life extension plans were de prioritized or scrapped altogether. Although oil price has recovered to more sustainable levels, the elusive $100 dollar-barrel still seems like a distant dream for most operators. As a result, numerous operators have begun realizing their obligations to decommission elderly uncompetitive assets” Martisen remarked

UK has been the most active in Europe to decommission on the active market, with a global market of more than 50% for the past few years. It is forecasted UK will spend more than $2 billion annually on decommissioning activities within the next three years. But it is most likely to grow significantly in other parts of the world.

A number of fields are currently in review in Asia, North America and Latin Ame