By Lori LeBlanc, LMOGA Offshore Committee Director
Rig counts are often used as a gauge of the economic health of America’s offshore oil and gas industry. At the end of November 2018, there were 74 active jack-ups, semi-submersibles and drillships in the Gulf, producing 17 percent of America’s crude oil in the Gulf and supplying refineries and natural gas processing plants with the feedstock to power this country.
A count we don’t often hear, however, is the number of rigs and platforms in the Gulf that have ended production. These structures have the power to generate significant economic and environmental benefits along our Energy Coast too.
What happens to drilling rigs and production platforms when their job of finding, extracting and pumping oil and natural gas comes to an end? In a process called decommissioning, these structures are either dismantled and removed from their offshore location or, in some cases, towed or toppled to begin productive new lives as artificial reefs for thousands of fish and marine animals that make the Gulf of Mexico a fishing and diving paradise.
The Department of Interior mandates that offshore operators dismantle and dispose of oil and gas platforms and return the seafloor to its pre-lease condition within one year of the end of the operator’s lease. This decommissioning process also includes plugging all wells supported by the platform.
According to a Boston Consulting Group study entitled Preparing for the Next Wave of Offshore Decommissioningin April 2018, “No area in the world has more experience with decommissioning than the Gulf of Mexico. Since the late 1980s, operators have removed structures at a rate of 150 to 250 a year.” But that rate is expected to increase substantially in the near future.
It is estimated that there are 2,000 platforms that will need to be removed over the next several years, and 9,000 wells that will need to be plugged. That translates into a huge business opportunity for support companies that provide these services, along with increased jobs and tax revenue in our coastal communities.
This new “wave” of decommissioning is also increasing complex, as the industry is faced with much larger aging structures located in deep and ultra-deep waters, according to Boston Consulting Group. While earlier decommissioning activity may have included 600-ton structures at depths of 300 feet, platforms on the decommissioning horizon may weigh as up to 11,000 tons and be located in depths of 1,000 feet or more. For the operators of some of these structures, the Rigs to Reefs program may be an alternative.
The National Fishing Enhancement Act of 1984 laid the foundation for the Rigs to Reefs Program, which provides a way for obsolete platforms to be considered for artificial reef sites as part of decommissioning. Rigs to Reefs is managed by federal and state agencies.
According to DOI’s Bureau of Safety and Environmental Enforcement, 532 platforms previously installed on the U.S. Outer Continental Shelf have been reefed in the Gulf of Mexico. A typical eight-leg structure can be home to 14,000 fish, according to a study by the Coastal Marine Institute, and a typical four-leg structure provides up to three acres of habitat for hundreds of marine species.
Here in Louisiana, the Department of Wildlife and Fisheries (DWF) has managed its Louisiana Artificial Reef Program since 1986, with 71 offshore reefs created from 320 obsolete platforms. These artificial reefs are usually found 30 – 70 miles off of Louisiana’s coast, accessible to fishermen with offshore vessels. According to DWF, the use of these retired oil and gas platforms has proven to be very successful, with the design, longevity and stability of the structures preferable over traditional artificial reef materials.
In addition, companies have donated half of their savings from not fully dismantling and removing those structures to Louisiana’s Artificial Reef Trust Fund, which has also developed 30 inshore reefs.
At LMOGA, we appreciate the economic value of working rigs and producing platforms, but we also recognize the tremendous economic and environmental opportunities that this infrastructure can provide long after the work is done. Louisiana’s oil and gas industry contributes to the Gulf’s standing as our nation’s most productive offshore energy province and its most popular fishing spot as well.