North Sea operators 'running out of time' to plug old oil wells

NSTA warns that rig operators will seek work overseas if delays continue

North Sea operators have been warned that they could be fined if they continue to delay on the decommissioning of oil and gas wells.

Industry regulator the North Sea Transition Authority (NSTA) said firms were "running out of time" to tackle a backlog of more than 500 wells to be plugged.

The cost - estimated at £41bn - is shared between the private sector and the taxpayer. It said that further hold-ups would cost a further £4bn.

Offshore Energies UK (OEUK) said "policy instability" in the industry had created uncertainty, but said the sector was still committed to decommissioning.

When an oil well comes to the end of its life, its operator has a responsibility to permanently decommission it.

NSTA began an investigation after identifying hundreds that had missed plugging deadlines.

It said that any delays risk rig operators and others in the supply chain moving their vessels out of the North Sea to seek work elsewhere.

The regulator said that this would push up the costs in the long run.

There are not enough rigs in UK waters to carry out the forecast decommissioning work

If the backlog is not addressed, NSTA said there could be more than 1,000 additional wells due for decommissioning by the end of the decade.

Pauline Innes, NSTA director of supply chain and decommissioning, urged operators to act immediately.

She said: "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."

She said NSTA was prepared to help operators when necessary but would "get tough" on those who continually delay.

Significant uncertainty

In 2024, only 103 wells were decommissioned to the final abandonment stage with some form of work being carried out on 223 wells.

But 300 need to be fully commissioned each year if the backlog is to be cleared.

Industry body OEUK said businesses were actively progressing their decommissioning obligations but that it was a complex undertaking.

Decommissioning manager Ricky Thomson said: "Policy instability, including the Energy Price Levy and pauses in the Environmental Assessment process, has introduced significant uncertainty for the sector resulting in project delays and cost increases.

"The sector is working with the government to provide stable regulatory and fiscal frameworks to continue delivering safe, efficient decommissioning essential to the UK's economy, environment, and long-term energy future."