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Hundreds of Asia-Pacific fields could stop production in the next decade and the industry is unprepared to handle the decommissioning task, analysis finds.
Analysis from consultant group Wood Mackenzie finds it could cost more than $100 billion to take down the estimated 2,600 platforms and 35,000 wells expected to be decommissioned, a "mammoth task" that regional players might not be able to handle.
"With over 380 fields expecting to cease production in the next decade, the magnitude and cost of work can no longer be ignored," Wood Mackenzie's regional exploration and production analyst Jean-Baptiste Berchoteau said in an emailed report.
The report said most of the companies working in the regional offshore sector have experience with retiring aging infrastructure. Supermajors like Chevron and Royal Dutch Shell are working with regional regulators on how to coordinate their activities effectively, however, Wood Mackenzie found most of the government regulations on decommissioning lack clarity.
For the aging infrastructure in the British waters of the North Sea, the government estimates it could cost about $77.3 billion for decommissioning. Some of the smaller rigs have already been dismantled as some of the oil and gas fields in the British waters of the North Sea reach the end of their production lifespan.
In early January, a British trade group said it was already making plans for what to do with the 40-plus years of records associated with offshore work and Wood Mackenzie said players in the Asia-Pacific could take a lessons-learned approach to its sector.
"Through learning from global decommissioning projects, the industry can adopt and adapt practices best suited for Asia Pacific's own set of challenges," Berchoteau said.
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