THE total bill for decommissioning the oil and gas assets in the North Sea could be around £9 billion less than expected according to a review by the regulator.

The Oil and Gas Authority has cut its estimate of the cost of the North Sea clean up exercise by 15 per cent to £51 billion from £59.7bn in 2017.

The organisation said the change reflected the progress made by the industry towards reducing the cost of an exercise that will involve removing hundreds of platforms and miles of pipelines as well as plugging thousands of wells.

“The reduction has been primarily driven by continued improvement in planning and execution practices,” said the OGA, highlighting advances in areas such as subsea infrastructure removals.

Read more: North Sea oil and gas clean up costs alarm MPS with bill for taxpayers set to top £24bn

The change in the estimate may be welcomed by politicians amid concern about what the clean up will mean for taxpayers.

While tax officials have estimated the bill for providing relief in respect of decommissioning work could total £24bn, MPs have warned taxpayers may have to pay much more.

Even at the reduced level decommissioning could provide a lucrative source of work for oil services firms for decades to come.

The OGA appears confident the latest report confirms the industry is well on the way towards meeting the target it set in 2016 of reducing the cost of decommissioning by 35 per cent.

New oil and gas facilities have been installed in the North Sea since then.

The OGA noted that firms that operate oil and gas fields have learned more about the practicalities of decommissioning in recent months following work on fields that have reached the ends of their economic lives.

Shell has removed two of the giant platforms used on the Brent field.

Read more: Bumper North Sea contract highlights scale of decommissioning challenge

The OGA’s Head of Decommissioning, Nils Cohrs praised operators for being innovative and for sharing their learning with others.

He noted: “Better capability and experience is providing greater certainty of actual UK decommissioning costs with several operators already achieving significant cost savings through adopting different approaches, learning and sharing with others, and challenging previous norms.”

Mr Cohrs also highlighted the part firms in the supply chain have played in the cost reduction effort by providing new solutions in terms of pricing structures, business models and technology.

The appeal of the market increased amid the slump in spending on new North Sea facilities that followed the plunge in the oil price from 2014 to early 2016.

While the increase in the crude price from late 2016 has encouraged operators to increase spending the supply chain remains under pressure.

Industry body Oil & Gas UK said: “The UK will be the largest market for decommissioning spend over the next decade, providing the supply chain with a steady workflow and the opportunity to develop competitive capabilities exportable to the global market.”

The organisation’s decommissioning manager Joe Leask noted: “As we become more practiced in decommissioning we have a better understanding of the detail of projects and therefore our cost estimates are becoming more certain.”

Read more: Decommissioning firms plan floating port for Firth of Forth

The OGA estimate includes assets currently in place in the North Sea and those that it expects will be added in future.

In March MPs on the Public Accounts Committee noted the £24bn estimate of the cost of decommissioning to taxpayers was based on the middle of the range of estimates prepared by the OGA in 2018. The OGA said then the costs could total £45bn to £77bn. The committee said the OGA needed to bring greater certainty to its cost estimates.

It is understood the total cost of decommissioning is now expected to be between £40bn and £67bn.

The OGA estimate includes assets currently in place in the North Sea and those that it expects will be added in future.

Significant North Sea players see potential to build big decommissioning businesses.

Oil services tycoon Alasdair Locke has provided backing for Well-Safe’s attempt to win a big share of the market for well plugging and abandonment work.

Last month the company won a contract to help decommission two North Sea fields which was understood to be worth tens of millions of pounds

It was appointed to decommission up to 21 wells on the Schooner and Ketch gas fields by Norway’s DNO.

The UK Government confirmed in 2013 that tax relief would be provided on the cost of decommissioning oil fields in a move industry leaders said would help encourage firms to buy assets other businesses had lost interest in.

The OGA said yesterday the estimated cost of decommissioning the assets in place in 2017 had reduced by 17% to £49bn.