The North Sea Transition Authority (NSTA) has warned that operators must immediately start tackling their backlog of wells that are already due for decommissioning “to stop rigs leaving the North Sea and prevent billions of pounds of additional costs for themselves and taxpayers.”

Some companies are showing good performance in meeting their regulatory duty to decommission wells which have permanently stopped producing, but too many have delayed this work and fallen behind, the NSTA said in its Decommissioning Cost and Performance Update.

“A backlog of more than 500 wells which missed their decommissioning deadline has built up and – unless operators quickly ramp up their activities – the figure could grow considerably, with in excess of 1,000 additional wells expected to be due for decommissioning between 2026 and 2030,” said the NSTA.

“Operators face higher costs if they continue to keep the supply chain waiting for work, causing further reductions in rig availability as the rig owners seek opportunities overseas.

“They also risk fines as last year the NSTA opened its first investigations into missed deadlines – and more could follow …

“Currently, there are too few rigs in the UKCS to meet projected demand. If deferrals continue and more rigs leave the UK, then pressure on the market will increase and costs will rise further – potentially by more than £4 billion. Reactivating rigs or attracting vessels back to the UK from overseas will be costly and add further delay.

“While several operators are delivering cost-efficiencies, higher well P&A cost forecasts are the main driver behind the increase in the overall estimate for UKCS decommissioning, which now stands at £41 billion in constant 2021 prices, according to the report. Minimising costs benefits taxpayers by reducing the cost of decommissioning tax reliefs to the Exchequer.”

Pauline Innes, NSTA Director of Supply Chain and Decommissioning, said: “The NSTA is pulling every lever at our disposal to encourage operators to decommission more wells more quickly. We are willing to help operators when that is necessary but, equally, we are prepared to get tough on those who continually frustrate and 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. We need operators to rise to the challenge and use the supply chain before they lose it.”