This year will be particularly challenging for companies serving the Gulf of Mexico (GoM) offshore platform decommissioning market, where 359 oil and gas former production sites are slated by the US government for safe removal within stringent environmental standards.

That’s the message of an in-depth report now available from DecomWorld, a UK firm specializing in the technical and regulatory intricacies of decommissioning complex offshore production facilities.

Continuing demand boom

Demand from rapid modernization in China, India, and other developing nations spanning much of Asia; key portions of the Russian continent from the Atlantic to Pacific oceans; and Latin America keeps galloping ahead, but US thirst for oil and its products remains strong.

And with the US nearing an unprecedented role rivaling the Middle East as the world’s top oil and gas producer, the vital GoM E&P region needs to mobilize for expected continued booming activity as well.

Rigs-to-reefs hopefuls updated

Highlights of the summary report include a breakdown of platforms ready to be turned over to onshore scrap yards or to become friendly new sea life habitats if approved as “rigs-to-reef” candidates:

• The US federal government’s Bureau of Safety and Environmental Enforcement indicates that 813 platforms on the GoM Outer Continental Shelf (OCS) currently fit the criteria of idle iron or are non-producing;

• For rig recycling potential, 432 have enough material to be considered under rigs-to-reefs criteria, with only 156 in water depths that would allow for so-called “reefing-in-place” consideration;

• Only nine removal applications are currently pending with rigs-to-reefs proposals; and

• Six permit applications were nixed outright for rigs-to-reefs potential, including five for toppled/damaged facilities without enough material, (e.g., too close to existing reef sites, etc.), while five of the six denied applications were resubmitted for complete removal/disposal on shore.

So far 386 structures have actually been reefed since 1973 under a state artificial reef plan.

Survey results: hotspots for new work and challenges foreseen

Addressing the major challenges ahead, DecomWorld surveyed 100 offshore experts working in the GoM decommissioning industry and collated the results to provide the following market data and analysis overview stats below:

• GoM decommissioning jobs and hotspots. Look to offshore Louisiana’s GoM as the hotspot for jobs, contractor expertise, service providers, etc., on the current wave of shallow-water decommissioning work, a staggering 72% of survey respondents said;

• Texas remains a big market right next door to Louisiana, but only 24.4% of the surveyed experts felt it was the hottest spot for decommissioning activity; and

• By contrast, the only other markets named – offshore Alabama, Georgia, and California – had only an expected 1.2% of those surveyed viewing these areas as a hot region for decommission work right now.

Regulatory confusion the No. 1 challenge

The biggest challenge for the decommissioning sector in the GoM will be the lack of regulatory understanding and interaction, more than one-third survey respondents said. But there is good news to job seekers, many of whom are finding that conventional jobs elsewhere are getting scarce but are very competitive on operating rig and platform projects.

There is a lack of capital to carry out the work and a shortfall in new technological developments to assist decommissioning, both of which drew concern from 7.9% of surveyed experts, while not enough contractors and poor knowledge-sharing between organizations worries 6.9% of experts over each respective issue.

One ironic finding of the survey indicates that roughly half of the surveyed professionals feel that as decommissioning moves further offshore into deep water, this will pose huge challenges to the industry. Slightly fewer than half felt that the industry, which has been decommissioning offshore structures for years, will find the work relatively straightforward. Only about 4% think deep decommissionings will be an “an easy shift from shallow water.”

The full report can be ordered on DecomWorld’s website at http://www.decomworld.com/gomreport/index.php?utm_source=Portal&utm_medium=EventBlock&utm_campaign=2098.

DecomWorld will sponsor its 5th Annual Decommissioning & Abandonment Summit March 19-21 at the Royal Sonesta Hotel in Houston.

Barbara Saunders, Special to E&P

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