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The offshore decommissioning market is estimated to grow at a CAGR of 7.32% between 2022 and 2027. The size of the market is forecast to increase by USD 2,565.2 million. The growth of the market depends on several factors, including maturing oil and gas fields and aging platforms, strong regulation for offshore decommissioning activities, and the high potential of offshore marginal fields.
This report extensively covers market segmentation by type (shallow water and deepwater), service (well plugging and abandonment, platform removal, permitting and regulatory compliance, platform preparation, and others), and geography (Europe, North America, APAC, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report consists of historic market data from 2017 to 2021.
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Technavio categorizes the global offshore decommissioning market as a part of the global oil field equipment and services within the global oil and gas market. The global oilfield equipment and services market covers products and companies engaged in upstream exploration and production (E&P) operations, production of equipment, or service contracts, and is an important manufacturing sector that caters to the needs of the oil and gas upstream sector. Our research report has extensively covered external factors influencing the parent market growth during the forecast period.
The maturing oil and gas fields and aging platforms are notably driving the market growth, although factors such as the high cost associated with offshore decommissioning projects may impede the market growth. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Key Offshore Decommissioning Market Driver
The maturing oil and gas fields and aging platforms are notably driving market growth. The need for decommissioning an oil field is majorly due to a decline in the production of crude oil or natural gas from the producing well. When the production reduces to the level where the operating cost involved in running the offshore facility is high, and the revenue generated by selling the crude oil is low, the oil well becomes a liability for the oil company as it is no more economically feasible to continue with the operations. The decline in the prices of crude oil will increase the requirement of well decommissioning by abandoning the mature wells. In such a scenario, the offshore facility is required to be decommissioned by plugging and abandoning the well.
Mature oil and gas fields account for around two-thirds of global oil and gas production. Current challenges faced by oil and gas operators are in increasing the returns on existing assets as they need to mitigate the challenge due to the decline in new and major findings of oil and gas reserves. Increasing the hydrocarbon recovery from mature fields involves extending the life of the well through secondary and tertiary recovery methods. However, when the production is low despite the use of enhanced oil recovery (EOR) techniques, it becomes crucial to decommission as the profits from the well deteriorates. Moreover, several aging oil and gas offshore facilities, including the offshore platform, subsea wells, and other related assets, are increasing at a steady rate and are required to be decommissioned during the forecast period. Hence, such factors are likely to boost market growth during the forecast period.
Significant Offshore Decommissioning Market Trend
The advances in post-abandonment monitoring systems and the use of single lifts in decommissioning are emerging trends in the market. The oil and gas industry has been facing difficulties in demonstrating and guaranteeing safe well abandonment and in meeting the monitoring requirements set by environmental regulators. In November 2018, the ShaleSafe consortium initially developed ShaleSafe, a multi-sensor survey system, to alert shale gas operators to contamination risks. The technology since has been used for monitoring abandoned wells. When the system is deployed into shale gas wells, it monitors key parameters multiple times a day to notify shale gas operators whenever the presence of any gas or other unexpected chemical is detected. In addition to working in shale gas aquifers, the technology also helps monitor onshore wells that have been abandoned. Therefore, the advances in post-abandonment monitoring technologies will ensure the safety and integrity of well abandonment, which will drive the growth of the market.
Furthermore, transporting platforms to onshore locations has been a significant concern for shallow water contractors that perform well abandonment. Though dismantling the topsides is one of the most common removal methods, it is time-consuming. Using a single lift for platform removal helps contractors save time. It is also a safe and cost-effective method for the removal and transportation of large decommissioned offshore platform jackets to the shore without any requirement for flat-top barges or heavy-lift crane vessels. Therefore, these factors will boost the global market growth during the forecast period.
Major Offshore Decommissioning Market Challenge
The high cost associated with offshore decommissioning projects is a major challenge impeding market growth. A mature or aging well is like a non-performing asset that produces little or no profits. This is majorly when the operating cost exceeds the revenue generated from producing crude oil or natural gas. As per the OSPAR Convention, the final responsibility regarding the equipment used during offshore operations is with the owner of the offshore oil or gas well. The weight of the materials that need to be removed is one of the major factors on which the cost of the project depends. The high costs associated with offshore decommissioning hinder the growth of the market.
To ensure maximum reduction in the operational cost associated while decommissioning an oil field, the major focus should be on disconnection and removal as they account for the majority of the project cost. The exact determination of decommissioning costs is difficult to calculate due to several fluctuations, such as a material change in condition, estimated risks, market volatility, loss of key personnel, industry experience, supply chain inflation, information management systems, and technical data. Additionally, communication between the industry and the government is crucial, along with regular consultation with other relevant stakeholders. Therefore, the high cost associated with offshore decommissioning projects is likely to challenge the growth of the market during the forecast period.
Key Offshore Decommissioning Market Customer Landscape
The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Offshore Decommissioning Market Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
DNV Group AS - The company operates under one segment. The company under this segment offers supply chain, data management, technical assurance, software, and advisory services. The key offerings of the company include offshore decommissioning services.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market share growth by the shallow water segment will be significant during the forecast period. Traditionally, shallow water was classified as being between 300 and 400 feet (91 and 121 meters) deep, but presently, anything less than 1000 feet (305 meters) is considered shallow water. Jackup rigs, submersibles, and drill barges are used in the shallow water portion.
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The shallow water segment was valued at USD 4,368.10 million in 2017 and continued to grow until 2021. The most popular rig created and utilized for shallow water is the jack-up rig. The choice of a jack-up rig would depend on factors such as the rig's age, specs, location, and possible weather conditions. Furthermore, due to the need for its structure to rest on the seabed, submersibles are employed in shallow water. Their buoyancy tanks are drained of water and filled with air before being transferred, making them float and allowing tugboats to pull them. Only very shallow water can be employed for submersible rig operations. For extremely shallow water, drill barges are another choice. They are towed along by a tugboat and lack the clearance above the ocean's surface to endure severe storms. Only extremely safe environments, such as inland lakes, will be appropriate for the usage of a drill barge. Therefore, such factors are expected to drive the growth of the shallow water segment of the global market during the forecast period.
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Europe is estimated to contribute 55% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
In 2022, the key countries contributing to the market in Europe were the UK, Norway, and Denmark. Decommissioning opportunities in Europe are extensive owing to the increasing number of mature offshore infrastructures in the basins of the North Sea and the stringent regulatory environment in major oil and gas-producing countries of the region, such as the UK and Norway.
Moreover, several oil and gas fields are likely to be decommissioned during the forecast period. The vendors in the region are awarded contracts for decommissioning oil and gas fields. For instance, in June 2020, AF Gruppen was awarded a decommissioning contract by Shell UK Ltd for dismantling and recycling the Curlew floating, production, storage, and offloading unit, which operated in the North Sea. Such an increase in the number of contracts for offshore decommissioning activities will drive the growth of the market in the region during the forecast period.
Additionally, the market is driven by alliances between many oil and gas companies. Several oil and gas companies in Europe formed an alliance aimed at creating a UK hub for the North Sea decommissioning. The companies aim to provide an integrated service for oil and gas installation decommissioning as the use of fossil fuels has been declining in the energy industry. Such collaborations are also expected to drive the growth of the market in Europe during the forecast period.
In 2020, the outbreak of COVID-19 negatively impacted the growth of the regional market, as the price of crude oil decreased globally due to a decline in demand. However, the initiation of vaccination drives led to the lifting of lockdown restrictions in the region in 2021. Vendors in the automobile industry resumed their investment and production in the region. In addition, the revival of aviation, construction, railways, and other industries will boost the demand for fuel, which, in turn, will drive the regional market during the forecast period.
The report forecasts market growth by revenue at global, regional & country levels and analyzes the latest trends and growth opportunities from 2017 to 2027.
Offshore Decommissioning Market Scope |
|
Report Coverage |
Details |
Page number |
175 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 7.32% |
Market growth 2023-2027 |
USD 2,565.2 million |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
6.5 |
Regional analysis |
Europe, North America, APAC, South America, and Middle East and Africa |
Performing market contribution |
Europe at 55% |
Key countries |
US, China, UK, Germany, and Denmark |
Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
Key companies profiled |
Able UK Ltd., AF Gruppen Norge AS, Aker Solutions ASA, Baker Hughes Co., DeepOcean Group Holding BV, DNV Group AS, Halliburton Co., Heerema International Group, John Wood Group PLC, Oceaneering International Inc., Perenco, Petrofac Ltd., Ramboll Group AS, Royal Boskalis Westminster N.V., SAIPEM SpA, Schlumberger Ltd., Subsea 7 SA, TechnipFMC plc, Weatherford International Plc, and Allseas Group SA |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by Service
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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