Industry News Roundup
OGUK report reveals decommissioning sector will make £15 billion
According to a new report by the OGUK, the decommissioning sector is looking to earn £15 billion in the future. The 2019 Decommissioning Insight Report revealed that decommissioning expenditure will remain consistent over the next decade, at around £1.5bn per year.
This the 10th annual report by OGUK, which found that the decommissioning industry now represents almost 10% of the oil and gas industry’s overall expenditure. Operators across the industry provide data to the OGUK Decommissioning Insight, which plays a key role in contributing market intelligence on activity and cost trends.
Click here to read the report and find out more.
Decommissioning is ‘all in the timing’
According to the Oil and Gas Authority’s latest forecasts, there is a predicted 49 billion price tag attached to dismantling infrastructure offshore UK. In north-west Europe, in this year alone, Rystad Energy expects projects to carry 6.5 billion in decommissioning commitments.
The companies – Fairfield Decom, Well-Safe Solutions, Maersk Decom, Offshore Decommissioning Services, Petrodec, to name a few – have responded to some well-publicised demand. But one of the main challenges for these specialists is knowing when the volume of work will be available.
Operators are being pressed against the MER UK agenda which seeks to maximise recovery of oil and gas, with the effect being that decommissioning can often be deferred for the sake of the national interest.
Read the full article on Energy Voice here.
Fresh change at top of Aberdeen oil services heavyweight
Aberdeen oil services heavyweight Enermech is in line to have its third chief executive in quick succession after being acquired by a US private equity investor last year. Enermech said that sector veteran Christian Brown will become its chief executive in January after leading a successful push for growth at the Kentz oil services business.
Mr Brown will succeed Enermech’s founder Doug Duguid in the top job. Mr Duguid returned to the post in September after the man who replaced him first time round, John Guy, stood down for personal family reasons.
Mr Guy was appointed in July following the acquisition of Enermech by the Carlyle investment business. The takeover announced in October last year was believed to be worth around £450 million.
Enermech said Mr Duguid will leave the business following a planned transition period. The company described Mr Brown as the stand-out candidate to take on the role of chief executive and to drive the business on to the next level of international growth.
It said Mr Brown has an exceptional track record in growing and improving international service-based businesses. Mr Brown grew Kentz from being a relatively small firm into an operation that Canada’s SNC Lavalin was prepared to pay £1.2 billion for in 2014. He became corporate development officer with SNC Lavalin, which went on to acquire British engineering firm WS Atkins for £2.1bn in 2017. Enermech provides services ranging from crane maintenance to valve integrity checking to firms in the oil and gas and infrastructure sectors. It has bases across the world and employs around 3,500 people in total.
Some private equity investors see opportunities to support rapid growth through acquisition and international expansion in what is seen as a fragmented industry. The downturn triggered by the crude price plunge from 2014 encouraged firms that operate oil and gas fields to reduce the number of suppliers they work with. Global demand for oil and gas is still expected to remain strong for years. Skills developed in the oil and gas business can be applied in other industries.
A report by Oil & Gas UK highlighted the scale of the opportunities that will be created in global decommissioning markets in coming years. The industry body found that firms will spend around £15.2 billion on decommissioning North Sea facilities over the next 10 years. The £1.5bn projected annual spend is in line with the forecast made in 2018. However, Oil & Gas UK said mergers and acquisition activity in the area is extending the life of offshore assets and moving decommissioning activity to the future. It reckons efforts to increase the efficiency of decommissioning work are paying off.
Read the full article here.