OFFSHORE DECOMMISSIONING MARKET ANALYSIS

Offshore Decommissioning Market Size and Trends

The offshore decommissioning market is estimated to be valued at USD 7.52 Bn in 2024 and is expected to reach USD 11.39 Bn by 2031, growing at a compound annual growth rate (CAGR) of 6.1% from 2024 to 2031.

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The aging offshore oil and gas infrastructure has led to an increase in the number of projects for offshore decommissioning. Several fields are reaching maturity with production expected to decline gradually, thereby driving demand for decommissioning services. Furthermore, stricter government regulations regarding the abandonment of offshore assets are also supporting market growth. The offshore decommissioning market is expected to witness significant growth over the forecast period. Rising number of offshore installations reaching end-of-life and growing expenditure by oil firms for decommissioning of aged assets are some of the key factors propelling demand. Additionally, the market will also be driven by evolving policies mandating proper decommissioning of offshore oil platforms. However, high initial investments and long project duration pose a challenge. Nevertheless, growing decommissioning projects worldwide are likely to provide several opportunities for service providers.

Aging Infrastructure and Regulatory Mandates

Many of the oil and gas fields located offshore. For instance, in the North Sea, were originally developed in the 1970s and 1980s. Much of the infrastructure from that time has now reached the end of its productive life. Pipelines, platforms, and other structures are showing increased signs of corrosion, wear and tear after decades of use in challenging offshore environments. There is an increasing risk that aging infrastructure could develop leaks or even fail catastrophically if not properly decommissioned. As the original operators look to reduce their commitments and liabilities, they are starting extensive decommissioning programs to remove old facilities. At the same time, regulatory authorities are putting pressure on operators to properly decommission offshore assets according to established guidelines before relinquishing their licenses. Countries like the U.K. and Norway have introduced stringent regulations in recent years mandating that fields must be cleaned up and any environmental liabilities addressed once production has ceased. Operators are required to set aside financial securities while assets are active so that funds are available for proper decommissioning. Regulators are also keen to remove old infrastructure for safety of navigation and other marine activities. The combination of aging assets and stricter decommissioning requirements means there is now an immense backlog of work for oilfield service companies to remove platforms, pipelines, and other installations no longer needed.

Market Concentration and Competitive Landscape

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Oil and gas companies are always looking for more profitable reserves to sustain and grow their long-term production levels. With the costs of major new field development projects regularly running into the billions of dollars, operators are increasingly choosy about where they invest their capital. One of the key evaluation criteria is the ultimate decommissioning liability which will be incurred decades down the line once the field ceases production. Establishing facilities further offshore or in more challenging environments involves higher upfront costs and results in complex decommissioning operations costing hundreds of millions or even billions of dollars. In many cases, the projected decommissioning expenses for a potential new project are simply too high for companies to accept. As a result, marginal or less profitable resources are left undeveloped. This spurs the demand for new solutions and technology from the decommissioning market to make stripping and removal of facilities more cost-effective. Any reductions in projected end-of-field clean-up bills could help tip the scales in favor or developing some stranded hydrocarbon resources that might otherwise remain untapped.

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Offshore decommissioning faces several challenges as the number of aging platforms grows globally. Stringent environmental regulations have raised costs significantly for plugging wells and removing infrastructure safely. The complex and hazardous nature of the work means projects often exceed budgets and timelines. Additionally, Logistical hurdles in accessing remote sites and navigating inclement weather add further complications. A shortage of qualified contractors and specialized vessels limits capacity to match the workload. Public resistance to onshore waste processing and objections to leaving remnants at sea also threaten timely completion of decommissioning projects.

 Market Opportunities: Innovating Specialized Technologies for Cutting-edge Solutions

The market size for offshore decommissioning is expected to grow substantially in the coming decades as platforms near the end of production life. This sizable backlog presents opportunities for contractors to develop specialized technologies to solve challenging problems. 

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 In terms of water depth, shallow contributes the 46.8% share of the offshore decommissioning market owing to a large installed asset base approaching end-of-life. Mature shallow water fields developed during earlier phases of offshore activity now require comprehensive decommissioning. Ageing infrastructure and changing production profiles accelerate decommissioning projects to be completed within timely schedules adhering to safety and environmental regulations. Moreover, absence of technical complexities compared to deep and ultra-deep operations increase profitability of shallow water decommissioning. Service providers have substantial experience executing large scale removal and disposal projects of installations located near shore areas. Government incentives and financing support for decommissioning also aid activity in shallow waters for job creation and industrial development of coastal regions.

Insights, By Service: Environmental Compliance Drives the Removal, Disposal, and Remediation Segment

In terms of service, Removal, Disposal, Remediation and Environmental Studies contributes the 33.1% share of the market owing to stringent environmental regulations for offshore decommissioning. Governments across major markets have implemented strict norms and guidelines to minimize the environmental footprint of decommissioning offshore infrastructure. For instance, by conducting thorough assessments and implementing mitigation measures, EIA helps reduce the environmental impact of offshore platform decommissioning, promoting a greener and more sustainable future. Operators are mandated to adopt best practices for waste removal, disposal and remediation of contaminated sites. This ensures protection of marine habitats and prevented pollution of coastal waters. The complex requirements for assessing ecological impact and obtaining regulatory approvals for disposal operations have boosted demand for specialized environmental services. Advances in technologies for waste quantification and characterization using analytical modeling techniques help operators optimize removal and disposal processes. Rising spends on monitoring environmental sites and verifying remediation work have also supported the growth of this segment.

Insights, By Process: Process Advancements Drive Well Plugging and Abandonment

 Among process the offshore decommissioning market, well plugging and abandonment contributes 32.1% share of the market owing to ongoing technological developments. Proper well decommissioning according to international standards is critical to avoid the leakage of hydrocarbons into the seabed. It requires highly sophisticated procedures and equipment to efficiently plug and seal wells across various water depths and terrains. The availability of innovative solutions such as expandable and composite cement plugs, coiled tubing conveyed plug systems and deep water capping stacks have significantly improved well abandonment processes. Adoption of advanced monitoring systems also helps verify long term well integrity. Such process enhancements minimize safety and environmental risks, lowering project costs for operators. Investments into research for solutions enabling efficient plugging of ultra-deep high pressure wells will further support segment growth.

Regional Insights

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As the epicenter of offshore decommissioning activities, Europe holds a dominant position in the market, commanding an impressive 45.6% share. This commanding lead is primarily due to the mature offshore oil and gas fields, particularly in the North Sea, where many facilities have reached the end of their productive life cycles. Europe has been at the forefront of establishing decommissioning as a structured industry, with clear regulations, advanced technologies, and a robust service sector dedicated to the end-of-life management of offshore assets

The Asia Pacific region is poised to be the fastest growing region for offshore decommissioning in the foreseeable future. Countries like Australia, China, India, and Indonesia are relatively new to managing the full life cycle of offshore oil and gas developments. However, with major production hubs now over 20 years in operation, decommissioning planning and preparations are ramping up across Asia Pacific nations. While regulatory frameworks are still maturing compared to more established markets, production licenses and economic limits will require increasing numbers of platforms in the region to be decommissioned. Leveraging experience from other regions combined with anticipated industry spending on Asian decommissioning will see international service providers look to establish local capabilities to capitalize on the emerging Asian opportunity.

Market Report Scope

Offshore Decommissioning Industry News

• On March 2024, Houston-based Vaalco Energy is buying Sweden’s Svenska Petroleum Exploration, enabling it to boost its asset collection with an offshore block in Côte d’Ivoire, West Africa.
• In March 2022, Claxton, a UK-based lead brand of Acteon's drilling and decommissioning segment, acquired decommissioning personnel and assets from Oceaneering International for an undisclosed amount.
• In March 2021, Aker Solutions provides the products, systems and services required to unlock energy from sources such as oil, gas, offshore wind and COâ‚‚ capture signed an agreement with Heerema Marine Contractors for decommissioning to the Heimdal and Veslefrikk fields, offshore Norway. The scope includes the reception, dismantling, and recycling of three offshore installations from the Heimdal and Veslefrikk fields.
• In January 2021, Boskalis is a Dutch dredging and heavylift company that provides services relating to the construction and maintenance of maritime infrastructure internationally. Acquired all the shares of the subsea services business of Rever Offshores. Through this acquisition, Boskalis strengthens its current position in the subsea services market in Northwest Europe, Africa, and the Middle East. It has capabilities to serve both the traditional oil & gas market and the rapidly expanding offshore wind market.

*Definition: The offshore decommissioning market involves services for plugging, abandoning, and removing offshore oil and gas infrastructure assets at the end of their operational lives. This includes decommissioning platforms, pipelines, wells and other structures on the seabed. Specialized vessels and equipment are used to safely dismantle and dispose of disused offshore installations. Companies provide engineering, project management and waste disposal for client oil and gas operators to deal with legacy infrastructure and comply with environmental regulations.

Market Segmentation

• Service Insights (Revenue, USD Bn, 2019 - 2031)
  • Removal, Disposal, Remediation and Environmental Studies
  • Modelling and Sampling
  • Waste Mapping and Handling
  • Impact Assessment Program and Decommissioning Plan
  • HAZID (Hazard Identification Study) and Safety Screening,
  • Removal of Equipment With NORM
  • Stress Analysis, Lifting and Rigging Procedures
  • Transportation and Sea Fastening
•  Process Insights (Revenue, USD Bn, 2019 - 2031)
  • Material Disposal Site clearance
  • Project Management Planning and Engineering
  • Permitting Compliance Regulatory Compliance
  • Platform Preparation
  • Well Plugging and abandonment
  • Conductor Removal
  • Mobilization & Demobilization of Derrick Barges
  • Platform Removal
  • Others (Pipeline and Cable decommissioning, etc.)
•  Water Depth Insights (Revenue, USD Bn, 2019 - 2031)
  • Shallow
  • Deep Water
  • Ultra Deep Water
  • Digital Printing
  • Others
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • Israel
    • Rest of Middle East & Africa
• Key Players Insights
  • Acteon Group Limited
  • Topicus Finan BV
  • AF Gruppen ASA
  • Tetra Technologies Inc.
  • Allseas Group S.A.
  • DeepOcean Group Holding B.V.
  • John Wood Group Plc
  • Exxon Mobil Corporation
  • Able UK
  • Aker Solutions ASA
  • AF Gruppen S.A.
  • John Wood Group PLC
  • DNV GL
  • Heerema Marine Contractors (HMC)
  • DeepOcean Group Holding B.V.
  • Royal Boskalis Westminster N.V.
  • Petrofac
  • Boskalis