North Sea oil: The end of an industry

North_sea_oil_the_end_of_an_industry

The collapse of oil prices, which faced companies in the sector with a number of difficulties, took another victim. More and more companies stop their production from platforms in the North Sea, which led to a wave of their decommissioning. And that might be the end of one of the most successful industries in the UK for the past 50 years, writes Financial Times.

Complete suspension of the activity of the platforms in the field may cost at least £30 billion

By the mid-50s of this century about 470 platforms, 5,000 wells, 10,000 km of pipelines, and 40,000 concrete blocks will be removed from the North Sea.

Decommissioning happens regularly in other basins, such as the Gulf of Mexico, but so far, there hasn’t been such a huge “clean up” in such a short period anywhere in the industry.

Many people in northern Scotland are hoping that the dismantling could prove vital to the local economy, which has suffered serious blows because of the collapse in oil prices from mid-2014 onwards. It might even turn the region into a center from which to be passed expertise and technology around the world, some say. But if things develop poorly, the cost may rise, valuable parts of the infrastructure may be abandoned, while under the sea there is still oil and the British taxpayer to have obligations of millions of pounds.

“Decommissioning is a bittersweet pill,” said Matt Betts, UK Vice President of Halliburton – the largest oil services company in the world.“Nobody wants to have to close down platforms, but it is inevitable that they will have to.”

For the first time British seaside oil and gas industry is closing and abandoning more wells than its drilling. The production, which has fallen by two-thirds compared to a peak of 4.5 million barrels of oil per day 16 years ago, will cease at more fields than it’s starting.

The industry has always been aware that it will need to scrap aging platforms, but the process has been accelerated by oil prices, which tumbled from $115 in the summer of 2014 to less than $50 today. This prompted half the operators in the North Sea – the most expensive place in the world for oil drilling to work at a loss, according to data of Company Watch, which monitors the corporate financial risk.

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