North Sea oil producers told to speed up well closures
North Sea oil producers told to speed up well closures https://www.ft.com/content/673027dc-ab4a-49ea-96d4-55e4dde8c0c2?syn-25a6b1a6=1
https://www.ft.com/content/673027dc-ab4a-49ea-96d4-55e4dde8c0c2?syn-25a6b1a6=1
NSTA has fined one company more than £16mn this year and vows to enforce deadlines
The North Sea is still highly productive but well past its peak. BP put its business in the basin up for sale at the end of July
Oil companies operating in the declining North Sea will have to rapidly speed up the decommissioning of their wells as more fields run down, an industry regulator has said.
Operators have made little progress on 500 old oil and gas wells past original decommissioning deadlines, according to the North Sea Transition Authority, which also warned that higher costs and competition for equipment are hampering progress.
In a report published on Thursday, the NSTA said companies needed to “massively increase” the pace of work to both clear the backlog and shut down a further 1,000 wells due to stop producing over the next five years.
Last year 114 wells reached “final abandonment” status, up from 103 in 2024.
Safely shutting down wells in the North Sea is a growing issue for the basin, which is still highly productive but well past its peak, while several energy majors have turned their attention to other parts of the world.
A rush of North Sea deals had concentrated 80 per cent of the liabilities for these old wells in the hands of just 10 companies, the NSTA said.
BP put its North Sea business up for sale at the end of July, while Shell has shifted its offshore UK fields into the Adura joint venture with Equinor.
“The period to 2032 remains a critical phase for UKCS decommissioning,” NSTA said in its annual monitoring report, referring to the UK continental shelf area.
Earlier this year the NSTA fined EnQuest £16.5mn for failing to decommission 33 inactive wells. EnQuest has appealed against the fine and said it was “disappointed” with the penalty of £500,000 per well because the wells had only been inactive for a few years.
“The increase in decommissioning activity does not mean the North Sea has become a burden,” said OEUK energy operations director Mark Wilson.
Some companies have held on to decommissioning liabilities even as they have sold off assets. BP has funded well closures at fields bought by Serica Energy, while Shell kept some liabilities linked to wells now held by Harbour.
The NSTA forecasts that almost a quarter of spending in the basin over the next five years will go towards shutting infrastructure down, while decommissioning spending will overtake capital spending from 2029.
Many in the industry argue that the decline in investment is being accelerated by onerous tax policies and the ban on new licences for exploration in new fields, initiated by Sir Keir Starmer’s government when he took office in July 2024.
The industry spent a record £2.6bn on decommissioning in 2025, the NSTA added. It forecasts a £600mn rise in spending this year and then a peak of £3.3bn in 2027.
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