Trends in plug and abandonment cost in the Gulf of Mexico, 2002 2007

Decommissioning represents the end of the production life cycle of offshore structures, when wells are plugged and abandoned, infrastructure is removed and the site is cleared of debris. Decommissioning operations are generally routine, involving standard, low-technology methods, over distinct stages and relatively short time horizons. The removal of the topside facilities, deck, conductors, piles and jacket is the core of all decommissioning projects and typically the most expensive stage. In this paper, we examine the cost of removal operations in the shallow-water Gulf of Mexico for operations performed by Tetra Applied Technologies LLC between 2003-2008. Our data set consists of 120 projects representing $178 million in expenditures and is the largest group of decommissioning operations to be analysed in the Gulf of Mexico. We summarise cost statistics for removal operations and describe the factors that impact cost. We examine preparation, pipeline abandonment, and removal cost across several levels of categorisation and develop first-order regression models for the cost of removal. [

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“…For further details on plugging cost see Kaiser and Dodson (2008). For further details on plugging cost see Kaiser and Dodson (2008).…”

Section: Discussionmentioning

confidence: 99%

An update on the cost of decommissioning in the Gulf of Mexico, 2003-2008

Kaiser

Dodson

Foster

2009

IJOGCT

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“…Kaiser (2006) described the decommissioning regulatory requirements in the GoM and subsequently developed cost functions for shallow-water decommission application in the GoM. Kaiser and Dodson (2008) assessed the trend of plugging and abandonment cost in the GoM using data from 1156 wells obtained during 2002 and 2007. Kaiser et al (2009) examined the cost of platform removal operations in shallow waters in the GoM.…”

Section: Gulf Of Mexico (Gom)mentioning

confidence: 99%

Decommissioning of deep and ultra-deep water oil and gas pipelines: issues and challenges

Koroma

Animah

Shafiee

et al. 2019

IJOGCT

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In the offshore oil and gas industry, when production facilities reach the end of their economic life, field owners need to decide whether to replace, extend the life of, or decommission assets. Although life extension is a popular choice among end-of-life (EOL) management strategies, decommissioning of assets is inevitable. The decommissioning of deep and ultra-deep water pipelines used for the transport of oil and gas products has become a serious issue in recent years because it is a complex process and presents challenges to stakeholders. The current paper presents the experiences of pipeline decommissioning in different regions of the world, and then highlights issues and challenges related to decommission of pipelines in deep and ultra-deep waters. These issues and challenges can be broadly categorised into technical, financial or economic, health and safety legislation, environmental, and human or organizational aspects. Technical challenges are associated with the selection of appropriate decommissioning procedures for handling hazardous pipelines. Asset managers are also under pressure to reduce the costs associated with pipeline decommissioning operation as it involves huge financial commitments to companies. The decommissioning of deep and ultra-deep water pipelines may involve dangerous activities, which could adversely affect the immediate environment; therefore, asset managers must ensure that the impact of decommissioning processes on the environment is minimized. Human resource issues, such as lack of requisite skills, knowledge and experience about deep and ultra-deep water pipelines decommissioning, as well as their safety, are another challenge. In order to address the challenges identified in the study, some directions for future research are suggested.

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“…P&A average-cost and standard-deviation data are summarized for independents and majors in Tables 3 and 4, respectively. Cost data for independents is described in Kaiser and Dodson (2008). Cost data for majors was provided by BOEMRE.…”

Section: Panda Bonding Tableau Model Assumptionsmentioning

confidence: 99%

A Risk-Adjusted Method for Determining OCS Lease Abandonment Liability in the Gulf of Mexico for BOEMRE Supplemental Bonding

Kaiser

Kruse

2011

SPE Economics &Amp; Management

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In recent years, because of widespread hurricane destruction in the Gulf of Mexico (GOM) and unprecedented losses to the offshore industry, concern has been raised by the federal government that small operators may have difficulty in completing their decommissioning requirements. Hurricane-destroyed infrastructure is significantly more expensive to decommission than normal operations, and small operators are at risk to financial liability and potential bankruptcy. If a company goes bankrupt and there are no capable working-interest owners or previous leaseholders, the financial liability may fall upon the US government. To ensure that the government is adequately protected from incurring costs associated with offshorelease abandonment, Minerals Management Service (MMS), recently renamed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), requires operators to post a supplemental bond if at least one working-interest owner on a lease does not satisfy a minimum financial capacity. A supplemental-bonding formula was developed by MMS in the early 1990s that is based upon the estimated cost of decommissioning. In recognition of the long period of time since the supplemental-bonding formula was developed, an updated risk-adjusted bonding mechanism is presented in this paper. Our purpose is to update the 1990-legacy formula and present riskadjusted alternatives to incorporate the uncertainty inherent in the implementation of formula mechanisms. The philosophy of making rational tradeoffs between cost and risks is common throughout the offshore industry, and this paper describes the selection of bonding levels that balance the need of the government to minimize its decommissioning exposure at an acceptable level of risk.

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Trends in plug and abandonment cost in the Gulf of Mexico, 2002 2007

Cited by 16 publications

References 0 publications

An update on the cost of decommissioning in the Gulf of Mexico, 2003-2008

An update on the cost of decommissioning in the Gulf of Mexico, 2003-2008

Decommissioning of deep and ultra-deep water oil and gas pipelines: issues and challenges

A Risk-Adjusted Method for Determining OCS Lease Abandonment Liability in the Gulf of Mexico for BOEMRE Supplemental Bonding

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