Market uncertainty brought about by the Covid-19 pandemic has led to the postponement of about £500 million ($667 million) of UK North Sea decommissioning work, according to a new report.

At the start of the year about £1.47 billion was expected to be spent between 2020 and 2022 on work to dismantle out-of-use oil and gas platforms and wells.

A recent survey carried out by trade body Oil & Gas UK (OGUK) found that spending is now likely to come in at about £1.08 billion, with hundreds of millions of pounds of work being pushed out into the future.

While many projects have been able to continue, OGUK is also expecting to see reduced activity "across all areas" of decommissioning over the next three years.

However, OGUK’s supply chain and operations director Katy Heidenreich said that despite the challenges the sector is facing it is in no rush where decommissioning is concerned.

“We remain focused on supporting our supply chain through, for example, ensuring visibility of work so that when conditions change, our industry remains competitive," she said.

“The specialist skills now being developed will also help us make the most of the opportunities presented by the energy transition which include low emission decommissioning, supporting the circular economy, re-purposing facilities and contributing to CCS, hydrogen and offshore wind developments.”

Despite the deferral of work, OGUK said 2020 has still been a busy year, with 116 wells, 260 kilometres of pipelines and 15 topsides all being decommissioned in 2020.

Well decommissioning activity was its lowest level since 2016.

Field Development

North Sea operators defer more than $600m of decom work — report