The offshore decommissioning market involves the process of retiring aging offshore oil and gas production facilities to avoid environmental pollution at the end of their operational life. It includes planning, removal of equipment, pipelines and installations, cleaning of seabed surfaces, and abandonment of wells. These activities are carried out through mobile offshore units such as jack-up rigs, semisubmersibles, and heavy lift vessels. With growing number of aging offshore fields, global expenditure on decommissioning offshore oil and gas infrastructure is expected to increase significantly in the coming years.
The global offshore decommissioning market is estimated to be valued at US$ 7.07 billion in 2023 and is expected to exhibit a CAGR of 5.8% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Increased spending on retiring offshore infrastructure is expected to be the key driver for growth of offshore decommissioning market during the forecast period. As majority of offshore fields across the globe have crossed or are approaching their economic production limit, oil and gas operators are allocating increased capital towards planning and executing decommissioning projects of aging offshore platforms, wells, pipelines and other structures. For instance, according to estimates by Rystad Energy, the total global spending on offshore decommissioning is forecast to reach US$ 78 billion during 2023-2030. In addition, growing regulations regarding seabed cleanup after infrastructure retirement is also necessitating decommissioning activities to be carried out in an environment friendly manner. This is anticipated to further propel the demand for offshore decommissioning services and equipment over the coming years.
The offshore decommissioning market is dominated by the top/deep water segment. With increasing deepwater and ultra-deepwater exploration & production activities across the globe, the volume of structures in deepwater that will require decommissioning is immense. These projects typically involve complex and hazardous operations due to factors like water depth, weather conditions, removal of larger and heavier facilities. Thus, deepwater decommissioning needs specialized heavy-lift vessels and heavy equipment to dismantle structures that are present in deeper waters, making it a high-cost operation and driving the growth of this segment.
Political: Stringent government regulations regarding the plugging and abandonment of wells and removal of offshore infrastructure are driving market growth. Financial provisions by operators for decommissioning ensure adherence to policies.
Economic: Volatility in oil prices can delay decommissioning plans of operators trying to maximize asset value. However, ageing offshore infrastructure requires decommissioning to avoid environment risks.
Social: Safety of workers involved and protection of marine life are priorities. New technologies help carry out plug & abandonment operations from a distance to reduce risks.
Technological: Advancements in robotics, digital twin modelling and AI are improving planning and execution of complex dismantling projects, especially for facilities in deeper waters. Remotely operated vehicles and vessels help minimize human intervention.
The Global Offshore Decommissioning Market Size is expected to witness high growth over the forecast period. The global offshore decommissioning market is estimated to be valued at US$ 7.07 billion in 2023 and is expected to exhibit a CAGR of 5.8% over the forecast period 2023 to 2030.
The Asia Pacific region leads in terms of rig count and offshore infrastructure and will remain the largest as well as fastest growing regional market. The total count of offshore oil and gas facilities worldwide reaching decommissioning age is projected to rise over the coming decade.
Key players operating in the offshore decommissioning market are Oceaneering, TechnipFMC, AOW Decom, DEME Group, AF Gruppen, Acteon Group, Topaz, Proserv, Heerema Marine Contractors, DeepOcean Group. These companies provide integrated and specialized services like plugging and abandoning wells, cutting and lifting of topside modules, and removing jackets and pipelines. Asset life extension through redeployments offers some relief from decommissioning liabilities but several factors necessitate timely and responsible dismantling.
1. Source: Coherent Market Insights, Public sources, Desk research
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