North Sea decommissioning costs are likely to be double the UK government’s target.
The Intergenerational Foundation think tank says £39 billion to shut down infrastructure is a “serious underestimate”.
It has instead stated that costs are likely to be more than £80billion for decommissioning installations, pipelines and plugging and abandoning wells.
The organisation says the higher figure would be an equivalent to a bill of up to £3,000 handed to each child in the UK.
The Oil and Gas Authority (OGA) has estimated decommissioning costs could be as much as £59.7million, however that would reduce to £39billion if the industry reaches its shared 35% cost reduction.
The report – Rigged: How North Sea oil and gas will cripple younger generations – argues that a 35% overspend is more likely, as a global average for mega-projects in the power sector.
Author Andrew Simms said: “The government is allowing these companies to break the principles of the Energy Act 2004, whereby builders and operators are “responsible for ensuring that the installation is decommissioned at the end of its useful life, and should be responsible for meeting the costs of decommissioning.”
“The next generation is expected to prop up an uneconomic industry harmful to their future that is trying to shirk responsibility for clearing up its own mess.”
However, the comments have been disputed by the Department for Business energy and Industrial Strategy (BEIS).
A spokeswoman for BEIS said: “The law is clear that offshore oil and gas operators are required to decommission their infrastructure once a field reaches the end of its economic life. This means that companies who have benefitted from oil and gas production bear the cost and responsibility for decommissioning rather than the taxpayer.
“The Oil and Gas Authority (OGA) is working with industry to ensure that decommissioning costs are minimised without compromising standards, and has set a target for industry to achieve a 35% cost reduction.”
Recommended for you
