The global offshore decommissioning market was valued at US$ 5.96 Billion in 2018, according to Offshore Decommissioning Market Report, by Decommissioning Services, by Process, by Water Depth (Shallow, Deep Water, and Ultra Deep Water), and by Region (North America, Asia Pacific, Europe, and Rest of the World) published by Coherent Market Insights.
The global offshore decommissioning market is projected to reach US$ 9.50 Billion by 2027, exhibiting a CAGR of 5.4% during the forecast period (2019-2027). Factors such as decline in crude oil prices coupled with growing number of maturing oil & gas fields in predicted to drive growth for global offshore decommissioning market over the forecast period.
Declining crude oil prices has resulted in a number of companies shutting down or ceasing production, due to high operational costs. Decreasing crude prices has a direct effect on production costs, which in turn results in a reduction in cash flow, rendering numerous oil and gas companies bankrupt. The continued decline in cash flow, coupled with increasing debt, have a negative impact on oil and gas E&P (exploration & production) activities. According to OilPrice’s news published in 2016, the decreasing oil prices resulted in around 67 oil and gas companies in the U.S. filing for bankruptcy in 2015. Decommissioning is mandatory, as abandoned structures and wells can be damaged due to environmental factors such as a hurricane resulting in an environmental disaster. Decommissioning of damaged platforms and wells costs more if they are damaged.
According to regulations imposed by the Bureau of Safety and Environmental Enforcement (BSEE) to lessees and operators in regions such as Gulf of Mexico and the North Sea, structures and supporting infrastructures that have been idle for five or more years must be decommissioned within 5 years from the date of last usage. Hence, players filing for bankruptcy need to decommission their idle platforms, due to regulations imposed by the government bodies.
However, ecosystem risk involved and high cost of decommissioning is expected to hinder the market growth in the near future. Key environmental issues related to offshore decommissioning include potential risks to the marine ecosystem, due to the hazardous substances. This in turn is expected to adversely impact the growth of the decommissioning market in the upcoming years.
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