Analysts predict that crude oil prices could remain at around $50 a barrel for the rest of 2015 as supply continues to outweigh demand.
Whilst this will undoubtedly have a vast, and longstanding, negative impact on the decommissioning industry, for the entrepreneurial minded, there are also significant opportunities.
“There will be cuts in the industry, and they will certainly have a knock on effect. There will be a reduction in future plugging and abandonment (P&A) programs” commented DecomWorld Director Phil Chadney.
“As with the oil price, it’s a supply and demand relationship. The fewer programs on the market will increase competition between suppliers, ultimately lowering the cost to the operators’ themselves.
It’s a fascinating dynamic; soon we’ll see who the business savvy operators are”

Fall of daily rates for rigs in the US
The US is a good indicator for the future of the global industry, and already we are beginning to see the fall in the daily costs for decommissioning rigs.
When you consider that deccommissioning rigs account for roughly 50% of the costs of a P&A project, a drastic fall in these daily rates can result in a highly lucrative opportunity for entrepreneurial minded engineers; the end-cost of these programs can be severely reduced.
“There are no direct benefits to the Operator when planning a P&A project – it’s a regulatory responsibility rather than a business decision” added Phil Chadney “The reaction of the operators in the next 24 months is likely to be highly polarized”.
“The innovative engineers will grasp the opportunity to reduce the organizations P&A liability with more favorable pricing and a significantly stronger negotiating position. On the other end of the scale, some will take a “head in the sand” approach and simply wait for the price of the barrel to recover”.
“Of course the balance sheets and the financial stability of the organization will have a significant impact on these decisions however we will certainly be able to identify the more entrepreneurial engineers as a result”.

The top operators will carry most of the P&A activity
Although the predictions vary from source to source, we’re likely to see the majority of the P&A work being conducted by the top 10 Operators.

Top 20 operators decommissioning activity in GoM (2013):

National Oil Companies will initially aim to maintain revenues through drilling additional wells, opening new revenue streams. Whether this is feasible in the long run depends on how long the slump in oil prices continues.
Ultimately the countries dependence on the oil revenues will become very strained, with the likeliest result being major overhauls in organizations such as Petronas, Petrobras and Pertamina.
It’s within the Independents where the most interesting results will be unearthed. Traditionally the home of entrepreneurs within the industry, the restrictive cash flows within these organizations is likely to significantly limit projects in the next 12-24 months.
For the Independents, those who go against the trends will reveal themselves as the truly forward thinkers.
With daily rig rates likely to drop between 15-30% in the next six months, the immediate reaction of the industry could define conditions for the next 24-30 months.
The postponement of future P&A projects could further squeeze service providers and drive prices down in the medium to long term.