BSEE: Offshore decommissioning accelerates in Gulf of Mexico

Nina Rach
Friday, July 26, 2013

The Bureau of Safety and Environmental Enforcement (BSEE) has jurisdiction over decommissioning of “idle iron” wells and structures, pipelines, and the Rigs-to-Reefs program. According to BSEE, there were about 2,996 production platforms on the US Outer Continental Shelf (OCS), as of March 2013.

About 27% of the existing platforms (813) are non-producing or otherwise fit BSEE’s definition of “idle iron,” which means there are plentiful opportunities for companies that specialize in removing structures and seabed debris. According to Dean Murphy, DecomWorld, the decommissioning market is valued at US$30-40 billion.

Idle Iron directive

On 15 September 2010, then-Secretary of the Interior Ken Salazar and Bureau of Ocean Energy Management, Regulation and Enforcement Director Michael R. Bromwich announced a new Notice to Lessees (NTL) requiring companies “to set permanent plugs in nearly 3,500 nonproducing wells … and dismantle about 650 oil and gas production platforms.” NTL 2010-G05 went into effect 30 days later, on 15 October, and companies were allowed 120 days to submit plans for decommissioning. Subsequently, 2011 was a record year for decommissioning activity in the Gulf of Mexico.

DecomWorld reported that 2012 was the second largest market for structure removal ($835 million), and the fourth largest year for revenue generated through well abandonment ($737 million). Decommissioning strategy is driven not only by the Idle Iron NTL, but also by the threat of hurricane activity, operator’s aversion to risk, and expanded budgets.

Michael J. Saucier, field operations supervisor in BSEE’s Gulf of Mexico OCS regional office, noted that some facilities topple during hurricanes, risking pollution, and that it costs significantly more to clean up, plug, and abandon a toppled well. Saucier said that BSEE received 97 idle iron plans, covering:

  • 3092 idle wells (96 %) of 3233 total idle wells.
  • 1056 expired wells (85 %) of 1246 total expired wells.
  • 600 idle platforms (97 %) of 617 total idle platforms.
  • 259 expired platforms (89 %) of 292 total expired platforms.

Regulations

Decommissioning activities in US waters are governed by Title 30 (Mineral Resources) of the Code of Federal Regulations (30 CFR) Part 250, Subpart Q and the following subparts:

§250.1700 Definitions

(a) Decommissioning means

(1) Ending oil, gas, or sulphur operations; and

(2) Returning the lease or pipeline right-of-way to a condition that meets the requirements of regulations of BSEE and other agencies that have jurisdiction over decommissioning activities. (b) Obstructions mean structures, equipment, or objects…or marine growth that, if left in place, would hinder other users of the OCS.

(c) Facility means any installation other than a pipeline…that is permanently or temporarily attached to the seabed on the OCS. Facilities include production and pipeline risers, templates, pilings, and any other facility or equipment that constitutes an obstruction such as jumper assemblies, termination skids, umbilicals, anchors, and mooring lines.

§250.1703 What are the general requirements for decommissioning? When your facilities are no longer useful for operations, you must:

(a) Remove all platforms and other facilities.

§250.1711 When will BSEE order me to permanently plug a well? BSEE will order you to permanently plug a well if that well:

(a) Poses a hazard to safety or the environment; or

(b) Is not useful for lease operations and is not capable of oil, gas, or sulphur production in paying quantities.

Notice to Lessees (NTL) 2010-G05 defines “No longer useful for operations” which is used in the regulations for:

Wells with no production for 5 years or no plans for future operations; and

Platforms that have toppled or have not been used in past 5 years for operations associated with exploration, development, or production of oil/gas.

NTL requirements:

Idle wells must perform one of the following within 3 years of making the idle iron list:

PA the well in accordance 250.1712 -.1717; or TA the well in accordance 250.1721; or Provide the well with downhole isolation. Within two years of setting downhole plugs, they [operators] must either PA/TA the well.

Idle platforms must be removed as soon as possible, but not longer than five years after it became no longer useful.

Implementation

BSEE is tracking companies’ compliance with their submitted idle iron abandonment plans.

Inventory of idle iron at time of NTL issuance (9/15/2010):

  • 3233 total idle wells
  • 617 total idle platforms

Current Inventory of idle iron (as of 2/22/2013):

  • 2016 total idle wells (including 260 newly idle since NTL)
  • 400 total idle platforms (including 62 newly idle since NTL)

Platform removal permits approved since Oct. 15, 2010:

  • 770 total platform removal permits approved since the NTL
  • Major structure – Platform containing at least 6 completions or contains more than 2 pieces of production equipment.

Well abandonment permits (APMs) approved since Oct. 15, 2010: TA Approved 2388 (51%); PA approved 2324 (49%) = 4712 total TA/ PA permits approved since the NTL.

Pipelines

Decommissioning pipelines is governed by 30 CFR §250.1750- 250.1754. Pipelines may be decommissioned when they do not constitute a hazard or obstruction…unduly interfere with other users of the OCS, or have adverse environmental effects. Pipelines must be removed if the Regional Supervisor determines that the pipeline is an obstruction.

Saucier acknowledged that BSEE will have to increase staff to meet enforcement challenges, and expects that continued development on the OCS will lead to more decommissioning activity.

Table 1: Gulf of Mexico Pipelines
Status Miles
Active 24,126
Abandoned 12,628
Proposed to be installed 2409
Proposed to be abandoned 2264
Out-of-service 2425
Table 2: Pipeline permits, Jan. 1, 2010-March 19, 2013
Permits for: Received Approved
Installation 369 546
Decommissioning 1367 1369
Repairs 638 610

Note: Some data drawn from presentation by Michael J. Saucier, BSEE Gulf of Mexico OCS Region, at 5th Annual Decommissioning & Abandonment Summit, March 2013, Houston.

Categories: North America Decommissioning Gulf of Mexico Regulations

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