Offshore in depth

After attending the World Oil Forecast Breakfast in Houston, one may be forgiven for believing that low oil prices are causing the demise of the petroleum industry. After painting a gloomy picture for 2015, World Oil’s editors calmed attendees by saying that “industry fundamentals” should return the oil patch to prosperity in 2016. This column’s topic, platform decommissioning, was not inspired by Kurt Abraham’s downbeat U.S. forecast (which reality forced him to deliver). The real story is that platform decommissioning is a necessary step in offshore energy development, and it is being carried out responsibly through coordination between oil and gas companies, and numerous state and federal agencies.

Idle Iron policy. Offshore operating companies know, from the time that they sign an offshore lease, that eventually they will be required to plug and abandon their wells, and remove any structures within a year of the lease’s expiration. Since the first offshore well was drilled off Terrebonne Parish, La., in 1947, more than 7,000 platforms have been installed, and about 4,000 of these have been decommissioned. More than 40% of the remaining 3,000 production platforms on the OCS are more than 25 years old.

The series of hurricanes between 2005 and 2008, including Katrina, Rita and Ike, caused extensive damage to Gulf production facilities. In addition to harming the environment and posing risks to navigation, toppled platforms are 10-15 times as expensive to decommission as undamaged facilities.

In October 2010, the Bureau of Safety and Environmental Enforcement (BSEE) issued a notice to lessees, NTL 10-5, whose objective was to clear away “idle iron” that could litter the Gulf with dangerous wreckage and debris in the wake of future storms. While the notice did not change the responsibility of leaseholders to decommission platforms, it clarified definitions for idle facilities and elaborated on requirements for downhole zonal isolation, and platform and pipeline removal.

The industry has been a responsible partner in implementing the Idle Iron policy. Since NTL 10-5 was issued, 384 “idle” structures have been removed, largely from the South Timbalier area, which has been on the track of numerous tropical storms.

Rigs to Reef. A beneficial use of offshore platforms has been to submerge them in designated areas, to form artificial reefs that provide habitat for marine life, and better fishing and diving for sports enthusiasts. The seabed of the Gulf of Mexico continental shelf is flat, gently sloping and relatively featureless, so fish have no place to concentrate. In the 1950s, the state of Texas attempted to build artificial reefs using construction rubble, automobiles and tires, but these materials could not stand up to storms and heavy sea action. The first successful artificial reefs were established in the Gulf by submerging 12 World War II Liberty ships at five sites.

Platform jackets, which provide habitat for marine life when in operation, make stable and enduring reefs after decommissioning. Amid the protracted energy industry downturn of the 1980s, both the Louisiana and Texas legislatures established artificial reef programs for state and adjacent federal waters, to be supervised by their wildlife and fisheries departments. Mississippi and Alabama created similar programs.

Platform topsides are typically removed, brought to shore and sold for scrap. Jackets are cut at least 15 ft below the mud line, and either toppled in place or transported to a designated reefing location. The reefing process can save operators several hundred-thousand dollars per jacket, compared to onshore scrapping. State programs can vary, but the operating company is typically expected to contribute half the savings to the state’s artificial reef fund. Because of those payments, these programs are self-sustaining and do not require public funding.

Multiple agencies. The Rigs to Reef program also requires the involvement of seven federal agencies. Within the Department of the Interior (DOI), BSEE enforces regulatory requirements for decommissioning platforms, including structures used for artificial reefs. Also in DOI, the Bureau of Ocean Energy Management (BOEM) conducts the environmental review for removal of obsolete structures, and may require actions to mitigate damage at the removal site and the reefing location.

The U.S. Army Corps of Engineers issues permits for decommissioning in affected navigable waters, including platforms decommissioned under the state Rigs to Reef programs. The U.S. EPA reviews proposals to ensure that only acceptable materials are used as artificial reef.

The Department of Commerce’s National Oceanic and Atmospheric Administration (NOAA) implements the National Artificial Reef Plan, based on the best science available, working with state and federal agencies. NOAA gives advice and comment on creation and siting of reefs, and for cleaning and preparation of platforms and other materials to be used as reefs, while charting all reefing locations.

Finally, the U.S. Coast Guard assures that platform decommissioning does not impair navigation, and that submerged structures have a safe, navigational clearance and are marked appropriately.

A notable success. Since 1986, 400 rigs-to-reef proposals have been approved (98.5% of the total submitted). More than 70 operating companies have participated. There are 75 artificial reef sites off Louisiana, 63 off Texas, 21 off Mississippi, and six off Alabama. Twenty more platforms are scheduled, so far, for reefing in 2015. The Coastal Marine Institute estimates that a typical, eight-leg platform structure provides home for 12,000 to 14,000 fish, and individual reefing sites can have several of them. This is a notable success for both the industry and its regulators.

Note: Thanks to Chauntra Rideaux, public affairs specialist, BSEE, for providing background information for this column.

About the Authors

Ron Bitto

Contributing Editor

Ron Bitto has more than 30 years of experience as a technology marketer and writer in the upstream oil and gas industry. RON.BITTO@GMAIL.COM