Onshore-only platform disposition needs exceptions

Jan. 15, 2001
If onshore-only disposition were to become an international standard, some offshore producing areas would incur significantly higher disposition costs and lose opportunities to better utilize and protect their marine resources.
Brent Spar moored at Vats, in Yrkjefjord, Norway, mid-August 1998, ready for decommissioning to start (Fig. 1).
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If onshore-only disposition were to become an international standard, some offshore producing areas would incur significantly higher disposition costs and lose opportunities to better utilize and protect their marine resources.

To date, onshore disposition has been the fate of most retired platforms because that has been the cost-efficient course of action. As platform decommissioning moves further from shore toward deeper waters, onshore disposition is more frequently inferior, from both economic and environmental points of view, to other disposition alternatives.

But onshore-only disposition of retired offshore oil and gas platforms is a core strategic objective for ocean-environmental advocates and policy makers. Although international oil companies oppose an onshore-only requirement in principle, in practice its rejection is no longer a high priority.

The oil company turning point was Greenpeace's rout of Shell UK Ltd., in their fight over the disposition of the Brent spar (Fig. 1), which, apparently, persuaded the industry that conceding the fight before it begins is not nearly as bad as the fight itself.

The UK and Norwegian governments agree. After consistently opposing such a blanket requirement, they reversed precedent by signing the 1998 OSPAR Commission statement in Portugal, calling for onshore disposition of all steel structures in the North Sea.

OSPAR is the Oslo-Paris Environment Ministers organization that deals with maritime pollution in the Northeast Atlantic. Belgium, Denmark, France, Finland, Germany, Iceland, Ireland, Norway, Portugal, Spain, Sweden, Switzerland, UK, and the European Union are its members.

Accepting onshore-only disposition, albeit implicitly and reluctantly, was a rational and prudent response to changes in political attitudes, values, and expectations in Western Europe by both governmental and petroleum industry strategists. Moreover, the OSPAR statement applies only to platforms made of steel and, according to some industry observers, includes other provisions that can be used to avoid extra-onerous applications of the onshore-only standard.

The OSPAR statement, however, does not indicate new scientific information, better engineering practice, or changes in the offshore experience of the oil and gas industry responsible for the change.

Brent spar

In summer 1995, Shell declared defeat and canceled its plan for at-sea disposition of the Brent spar. This decision followed an unexpectedly fierce campaign featuring consumer boycotts, vandalism, a few fire and letter bombs, and a very telegenic boarding of the spar from a helicopter as it was being towed to a disposal site, 150 miles from shore and in 2,000-m water.

Despite Greenpeace's triumph, the analytical dimensions of the issue remain murky, at least to the public. Initially, Greenpeace's principal concern was the residual sludges in the spar's six storage tanks and associated piping. They argued these contained heavy metals that would do unacceptable damage to the marine environment.

As Nature magazine later pointed out, natural vents and seeps in the deep ocean floor at the proposed disposal site were releasing these same heavy metals in amounts many times greater than Greenpeace's original estimate of the spar's load, and, in fact, "the bacteria on the ocean floor would have greeted the arrival of Brent spar as if all their Christmases had come at once."1-2

More relevant for setting offshore platform disposition policy, however, is recognition that the Brent spar was neither a platform nor a rig, but a spar, which is a floating storage tank tethered to the ocean floor. It was used before pipelines were operating in the North Sea.

Today, standard decommissioning practice calls for all tanks, piping and everything else except the bare-steel support structure to be removed before any scuttling takes place. Residual sludge is not an issue with respect to offshore platforms because there is none.

There is no theoretical or empirical evidence that sinking such bare steel or concrete structures will harm the marine environment. On the plus side, however, it is well established that both operating and decommissioned platforms create reef-like habitat for prized reef fish such as snappers and groupers.

These habitats can be very valuable where natural reefs are scarce. Off Louisiana in the Gulf of Mexico, platforms have been estimated, very conservatively, to have increased reef-like habitat by as much as 10%. True, a bit of the sea bottom is unavailable for trawling, but, for example, the 300 or so platforms in the North Sea are insignificant when compared to its estimated 7,000 shipwrecks.3

Further, the ecological risks of widespread trawling are of more concern to most ocean ecologists than any alleged risks from properly sunken platforms.4 It is ironic that when Greenpeace's own vessel, the Rainbow Warrior, was terminally damaged by French navy frogmen in Australia it was disposed of at-sea at an artificial reef site.

Platform politics

Without a scientific or engineering rationale, the onshore-only requirement rests on aesthetic, political, or moral premises, not ecological, environmental, or scientific premises.

Of course, this does not mean onshore-only proponents are wrong. Political or moral arguments often outweigh scientific or environmental considerations. The protection of oceans and the marine environment properly has a prominent place in popular political ideology and policy.

Individuals with very different views about many other areas of social and economic concern often agree that providing such protection is a quasi-religious, generational responsibility. But it helps to be clear about the terms of the argument.

It was politics, not science or engineering, that put international platform-disposition policy on its present course.

Platform economics

In addition to habitat for reef fish, platforms are important aids to navigation and places of refuge.5

Studies in the Gulf of Mexico show that large numbers of migrating birds (including endangered peregrine falcons) and butterflies use platforms for rest stops as do marine mammals and sea turtles.

Platforms are important destinations for recreational fishing and diving, and charter and party boat expenses imply a value in the high tens if not in the hundreds of dollars per fish caught by the boat's customers.

Several options for platform disposition can reduce both the direct monetary cost to the operator and the indirect, nonmarket costs to other ocean users. An industry-funded study estimated the reduction to range from 30 to 65% of total cost.6

Although it is not a permanent solution, simply giving the operator the option of postponing platform removal can reduce the discounted disposition costs and avoid destroying habitat or other nonmarket benefits.

Creating an artificial reef by towing a platform to a designated site can reduce costs and preserve habitat. Toppling the platform in place or removing the upper portion to a depth sufficient for safe navigation can reduce costs significantly and also avoid site clearance costs that run as high as 17% of total costs in the Gulf of Mexico.

Towing a platform to a deep ocean disposal site would not be a cost-effective option for very many platforms, even if it were allowed by disposition regulations. Towing costs are substantial with day rates for equipment running in excess of $100,000.

Similar to onshore disposal, deep ocean disposal does not preserve any nonmarket benefits nor avoid any site-clearance costs. Deep ocean disposal is likely to be cost effective only for very large platforms located far from shore.

Platform size

Standards set by the International Marine Organization (IMO) are intended to apply when not superseded by jurisdiction awarded by the Law of the Sea's economic zones or other regional agreements.7

Although exceptions are possible, IMO regulations, in effect, require that platforms in less than 55-m water and weighing less than 4,000 tonnes be brought to shore in their entirety while larger platforms can be cut at the 55-m depth and the severed portion brought to shore.

Operators have strong economic incentives to seek at-sea disposition alternatives for most platforms in at least 55-m water, but the 55-m standard, itself, appears to be much too conservative.

For example, the Louisiana Offshore Oil Port (LOOP) is a facility designed to permit direct access to the US Gulf by very large crude carriers (VLCCs) and ultra-large crude carriers (ULCCs). Oil unloaded at LOOP is then piped to shore in a 56-in. diameter line.

The LOOP is 18 miles off the Louisiana coast in about 35-m water. The largest VLCCs and ULCCs require water depths of 85 ft (26 m) for safe operation, which is also the depth at which the U.S. permits platforms to be cut.

The LOOP's 35-m water provides a safety cushion, over and above the 26-m safe navigation standard, of about a 35%. The IMO-comparable implicit safety margin for VLCCs or ULCCs is 112% for platforms cut at 55 m. Even for an engineer, this seems too cautious.

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Table 1 shows the number of platforms in the major offshore producing areas that would meet 55 m, 35 m, and 26 m test. Unfortunately, the data available do not include weight for many of the platforms.

Column 2 lists the number of platforms for which the available data show as exceeding both the IMO's depth and weight criteria.

Column 3 records the number that meets the IMO depth criterion. Available data, however, show a platform weight of less than 4,000 tonnes for only 350 platforms. Weight is not available for the remaining 634 platforms included in the total column.

We would expect that a proportion of the platforms for which weight is not available would satisfy the IMO criteria, but we have not tried to make an estimate.

Column 4 is the number of platforms meeting a 35-m criterion based on the LOOP facility, and Column 5 is the number meeting the 26-m depth at which cutting is permitted by US regulations.

Clearly, the difference between the IMO's criteria and the criteria used by the US is significant.

The 541 platforms classified as large under IMO's dual depth and weight criteria comprise only about 9% of the total number of major structures. If IMO's 55-m depth requirement, alone, were used as a threshold, 25% of all platforms would qualify.

If the 35-m LOOP standard were used, 2,818 platforms would qualify, which is 47% of the total. If the US' 26-m standard were used, 3,658 platforms or 61% of all platforms would qualify.

Thus, the depth at which onshore-only disposition may be circumvented is a very significant threshold for platform decommissioning and disposition economics. The difference in the total costs incurred under onshore and at-sea disposition would mirror the differences between these four thresholds

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Table 2 summarizes the distribution and vintage of offshore platforms in the major offshore producing areas of the world. As shown in Column 3, assuming 55-m water alone as a minimum criterion to define a large platform, in 9 of the 13 producing regions the proportion of large platforms exceeds that of US Gulf of Mexico, which is often used as a benchmark region.

In five regions, large platforms comprise more than 30% of the total. Further, in only three regions is the median age of platforms less than in the US Gulf.

The median age of large platforms is equal to or greater than the median for all platforms, in seven of the regions. Similarly, the median age of large platforms was equal to or greater than the US Gulf of Mexico in seven regions.

The only region in which decommissioning and disposition decisions are clearly further in the future is the Far East group as a whole.

Thus, the impact of disposition policy will not be limited to a few, mature regions such as the North Sea. Its impact will be very significant in developing areas such as the Indian Subcontinent, Central and South America, Brazil, and Mexico.

Implications

The successful campaign by Greenpeace to prevent the sinking of the Brent spar in the deep ocean not only achieved the immediate goal but secured its claim for environmental leadership in ocean and coastal policy. It also increased the power of the green political parties in Western Europe.

As disposition decisions come closer and the political power of the environmentalist side of the debate strengthens, siding with "ocean dumpers" has become an increasingly uncomfortable position for many western European politicians and oil and gas companies.

This is an observation not a criticism. As a general principle, political response to changing public opinion is a good thing.

Unfortunately in this case, however, "good politics" may lead not only to "bad economics" but to bad management of ocean resources. Disposition of platforms at sea is superior both environmentally and economically in many settings.

The existing IMO criteria for an exemption from onshore disposition appear to be extremely conservative when compared to other such thresholds. IMO's standard would be met by only 9% of all major offshore structures. The US' 26 m minimum, in contrast, would include 61% of all major structures.

Onshore disposition should be an option but not a goal for intelligent ocean policy. If more-realistic criteria are used and the unique conditions and needs of regions in which platforms are located is recognized, the potential savings to companies and consumers are large and the environmental effects can be negligible or, often, positive.

References

  1. "Brent spar, broken spur: Shell Oil's decision not to sink a used oil-rig is a needless dereliction of rationality," Nature, Vol. 375, June 29, 1995, p 708.
  2. Nesbet, E.G., and Fowler, C.M.R., "Is metal disposal toxic to deep oceans?" Nature, Vol. 375, June 29, 1995, p. 715.
  3. Prasthofer, P.H., "Offshore Decommissioning and disposal: background issues and facts," E&P Forum Report No. 10.12/232, London, 1995.
  4. Watling, L., and Norse, E.A., "Disturbance of the seabed by mobile fishing gear: A comparison with forest clear-cutting," prepublished version, Conservation Biology, December 1998.
  5. Pulsipher, A.G., and Daniel, W.B. IV, "Onshore disposition of offshore oil and gas platforms: western politics and international standards," Ocean and Coastal Management," Vol. 43, No. 12, November 2000. pp. 973-95.
  6. Impact on U.S. companies of a worldwide ban on disposal of offshore oil and gas platforms at sea, ICF Resources Inc. report prepared for the API, 1995.
  7. Waste assessment guidance: development of waste-specific guidance, International Maritime Organization report IMO LC/SC 21/2/10.

The authors

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Allan Pulsipher is executive director of the Center for Energy Studies at Louisiana State University, Baton Rouge. He organized and chaired an international workshop on platform decommissioning and disposition for the US Department of Interior's Minerals Management Service and studies the offshore oil and gas industry.

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William Daniel IV is president of C-K Associates, a consulting firm in Baton Rouge.