Offshore Decommissioning Market Booming with Increasing Focus on Aging Offshore Platforms

The oil-producing companies nowadays are investing more in offshore projects rather than onshore owing mostly to the exhaustion of onshore reservoirs. The other reason for this shift is the abundance of less explored offshore potential. The onshore activities are expected to decrease by 10% in the North American region alone in 2019. The increasing number of abandoned wells and the presence of large mature fields is expected to drive the offshore decommissioning market.

The global offshore decommissioning market size is expected to grow from an estimated USD 5.2 billion in 2021 to USD 8.0 billion by 2027, at a CAGR of 7.4%. Aging offshore oil & gas infrastructure and maturing fields are driving the offshore decommissioning industry. Low oil prices of the past couple of years have made it even more difficult to maintain low production mature reserves, driving companies to accelerate decommissioning plans for such oil & gas fields.

According to Oil & Gas UK, in decommissioning insight 2019, overall, 2,624 wells are expected to be decommissioned in the North Sea during 2019–2028. Furthermore, increasing government focus on well plug & abandonment activities is driving the market for offshore decommissioning services. For instance, in April 2021, the US House of Representatives Democrat introduced a bill authorizing USD 8 billion to plug and clean up abandoned oil wells nationwide, a measure aimed at creating jobs for oil and gas workers and reducing climate-warming emissions. Thus, increasing need for well plugging & abandonment is driving the market for offshore decommissioning market.

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Europe is expected to be the largest market for offshore decommissioning. In Europe, over 950,000 tons of topsides are scheduled for removal across the North Sea, out of which more than 605,000 tons will be from UKCS. The UK is expected to spend about EUR 15.3 billion on decommissioning, over the next ten years. Approximately, 2,400 wells are expected to be decommissioned across the whole North Sea and West of the Shetland region, by 2027.

The offshore decommissioning market in North America will also play an important role in driving demand for offshore decommissioning. North America is the biggest market in terms of the number of platforms decommissioned per year. Most offshore decommissioning takes place in the US Gulf of Mexico, where the Rigs to Reef policy have been in practice for a long time.

Key Market Players:

The key players operating in the offshore decommissioning market include Heerema Marine Contractors (The Netherlands), Royal Boskalis Westminster N.V. (The Netherlands), Petrofac (Jersey), Oceaneering International (US), Baker Hughes Company (US), Halliburton (US), and Schlumberger (US).