UK: North Sea oil firms warned with fines for delays

The North Sea Transition (NSTA) states that different oil firms are “running out of time” to address a backlog of around 500 wells that need to be plugged, as reported by The National Scot via BBC on July 10th.

The estimated cost for this project for decommissioning these wells will cost $55.7 billion, a project where the cost is split between the private sector and taxpayer money, according to BBC reports.

The NSTA also warns that further delay towards these projects could add up to $5.4 billion to the total cost which brings it up to $61.1 billion. When an oil reaches the end of its productive life, the owners are responsible for decommissioning these wells.

This report came after the NSTA launched an investigation, after identifying hundreds of wells missing their plugging deadlines. The regulator states that the delays could risk rig operators and supply chain companies relocating their equipment and personnel to other regions.

If these delays happen, the regulator believes future decommissioning work in the North Sea would cost more than it does now. Currently, there are not enough rigs in the UK waters to carry out all the estimated decommissioning works.

However, if these delays continue, the NSTA warns that 1000 additional wells will require finishing by the end of 2030.

Pauline Innes, the NSTA director of supply chain and decommissioning, called upon different companies to act without further delay.

“The stark reality is that operators are running out of time to get to grips with the backlog as more contractors consider taking their rigs abroad, which damages the supply chain’s ability to meet demand and remain cost competitive,’’  director Innes said. She further adds that whilst NSTA is willing to support firms. However, it will “get tough” on persistent delays.

In 2024 alone, only 103 wells were decommissioned to the final abandonment stage, alongside some work completed on 223 wells. However, 300 wells per year need to be fully decommissioned to clear the backlog.

Industry body Offshore Energies UK states that businesses are working towards meeting their obligations; however, challenges remain.

The National Scot via BBC, Maghrebi.org