The offshore decommissioning market is estimated to be valued at USD 7.52 Bn in 2024, growing at a CAGR of 6.1% over the forecast period (2024-2031). Strict governmental regulations regarding environmental safety and carbon emission reduction are majorly driving the offshore decommissioning market growth. Furthermore, decommissioning of mature and expired fields provides opportunities for cost savings to the oil & gas companies.
Market Dynamics:
Stringent government regulations mandating environment-friendly decommissioning of expired offshore oil & gas assets is a key driver spurring investments in the offshore decommissioning market. Many countries have framed laws governing time-bound decommissioning and reuse/disposal of offshore infrastructure. This is positively impacting the market. Additionally, decommissioning of older offshore fields results in significant cost savings for oil companies. It avoids expenditures on maintenance and repair of aged assets. The saved capital can be diverted to newer exploration projects. Thus, the twin benefits of regulatory compliance and cost optimization are leading more oil firms to adopt decommissioning services. This will likely continue propelling the offshore decommissioning market during the forecast period.
Market Drivers
Ageing Offshore Infrastructure Reaching End of Operational Life
A significant number of offshore oil and gas infrastructure and platforms have been in operation for over 25-30 years and are reaching the end of their design life. Many North Sea assets in particular are approaching or have exceeded their initial design life of 25-30 years. As these ageing assets can no longer operate safely and profitably, they will need to be decommissioned according to regulations. This ongoing decommissioning of old offshore infrastructure is a major driver for growth in the offshore decommissioning market.
Stringent Government Regulations for Offshore Asset Retirement
Governments worldwide have implemented strict environmental and safety regulations for the decommissioning of offshore oil and gas infrastructure at the end of their productive lives. Regulations such as the OSPAR Convention and the Italian DM 131/02 require operators to plan and finance decommissioning projects years in advance, utilizing specialized contractor services and equipment. The aim is to ensure environmentally safe and efficient removal of marine structures. Compliance with such regulations is compulsory for industry participants and is helping spur market development.
Market Restraints
High Cost of Offshore Decommissioning Projects
Offshore decommissioning projects typically have high total costs running into hundreds of millions or even billions of dollars depending on the scale and complexity of assets to be removed. The high costs arise due to factors such as labor-intensive offshore operations, use of specialized heavy-lift and diving vessels, waste storage and disposal requirements. The substantial price tag associated with large-scale decommissioning projects poses a major restraint for greater market uptake.
Funding and Financing Challenges
Setting aside adequate funding years in advance to cover future decommissioning liabilities is challenging for many operators. Fluctuating oil prices in recent years have also impacted sector cash flows and profitability, constraining decommissioning budgets. Lack of access to low-cost financing options further adds to difficulties in securing upfront project funding. This funding uncertainty represents a key restraining factor.
Market Opportunities
Growth in Decommissioning of Fields in New Regions
While the North Sea remains a major market for activity currently, regulators and operators are increasingly focusing on decommissioning requirements in other offshore basins such as the Gulf of Mexico and Brazil in the coming decades. Emerging spent field decommissioning needs in regions such as Asia Pacific and Latin America also present new opportunities.
Technological Advancements to Reduce Costs
Ongoing R&D is helping address the issue of high costs through the development of more efficient solutions such as modular construction, digitalization, and robotics applications. Advanced light and flexible structures, new cutting and lifting technologies also promise to lower project costs and environmental footprints over time. Such innovations are expected to have a positive impact on future offshore decommissioning market potential.
In summary, the offshore decommissioning market is driven by the escalating need to remove ageing infrastructure according to regulations, while high project expenses and financing difficulties currently pose challenges. However, expanding activity in new offshore regions combined with technological solutions aimed at decreasing costs provide opportunities for longer term market growth.
Link - https://www.coherentmarketinsights.com/market-insight/offshore-decommissioning-market-885
Key Developments
- In 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 U.K.-based lead brand of Acteon's drilling and decommissioning segment, acquired decommissioning personnel and assets from Oceaneering International for an undisclosed amount
- In January 2021, Boskalis, 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 strengthened 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.
- In March 2021, Aker Solutions provided 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.
Key Players
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, and Boskalis are the major players.
