Mark J. Kaiser
Louisiana State University
Baton Rouge
From 2004-08, five major hurricanes–Ivan, Katrina, Rita, Gustav, and Ike—destroyed 181 structures and 1,673 wells in the Gulf of Mexico.
Today, nearly a decade after the devastation began, 40 hurricane-destroyed structures and 138 wells remain to be decommissioned. Among these structures are the most expensive, difficult, and potentially hazardous operations to date.
This article reviews the progress and status of hurricane clean-up activity in the gulf, as well as the difficulties and cost concerns of decommissioning the remaining inventory. It also summarizes current US Bureau of Safety and Environmental Enforcement (BSEE) guidelines for Rigs-to-Reef permitting, a program that was under a moratorium 2009-13 due to the unprecedented number of applications in the wake of the hurricane destruction.
Hurricane recap
Historically, 2-4% of structures exposed to hurricane-force winds in the gulf experience catastrophic failure and destruction, and 3-6% sustain extensive damage.
Hurricane Ivan entered the gulf on Sept. 14, 2004, as a Category 4 storm and passed through the Mississippi River Delta, the area most susceptible to underwater mudslides (Fig. 1a). Seven platforms and 136 wells were destroyed and significant damage to 24 other platforms was reported.1
In late September 2005, Hurricane Katrina entered the gulf as a Category 4 and was quickly followed by Hurricane Rita in October. Hurricane Katrina destroyed 45 platforms and Hurricane Rita destroyed 69 platforms (Figs. 1b and 1c).2
Platforms that lie to the east of a storm's path are more likely to be destroyed because this is where the wind speeds and waves are highest in a hurricane. For Katrina, however, most of the destruction fell to the west, which was attributed to the reduced fatigue-life of structures that survived previous hurricanes such as Ivan and Andrew.
Hurricane Gustav entered the gulf in August 2008 as a Category 4 and exposed about 677 platforms to hurricane-force winds. Hurricane Ike followed 2 weeks later as another Category 4 and exposed about 1,450 structures to hurricane-force winds (Fig. 1d). In the final government tally, 60 structures were destroyed and 124 structures were reported as sustaining extensive damage.3
Risk factors
Hurricanes create the potential for wind speed, wave force, and mudslides that can exceed a structure's design capacity.
In some cases, the deck and topsides may be sheared off leaving the jacket in place. In others, the structure may be leaning and declared destroyed because ther is no economical way to ensure structural stability.
The older the structure, the greater the vulnerability because design capacities and environmental criteria were lower than today. Older platforms generally have lower strength characteristics (weaker joints, less robust bracing patterns, etc.) and lower deck heights, making them more susceptible to wave-in-deck conditions.
A key factor for structures surviving a hurricane is to have a deck elevation greater than the largest waves a storm can generate.
Conductor density and platform orientation are additional risk factors. A high well density will yield greater hydrodynamic forces because waves cannot freely pass underneath the structure. Platform orientation is also important in how wave energy is transmitted to the structure.
Additional considerations, costs
Decommissioning hurricane-destroyed platforms is governed by the same regulations and requirements as conventional decommissioning. However, the work is more complicated and time consuming, and activities need to be performed carefully to ensure the safety of people and property.
In conventional decommissioning, operations generally occur in the reverse order of installation:
• Wells are plugged and abandoned.
• Conductors are cut and removed.
• Deck and topside equipment are lifted.
• Piling is cut and jacket removed.
• Site clearance and verification is performed.
Wells on a hurricane-destroyed platform have to be abandoned without a standing structure, and diver cuts are often required because, when the structure collapses, the conductors bend over and must be cut before the well can be entered for plugging.
Depending on how the structure collapsed, the legs may pull up over the conductors and wells may pull out of the deck. Often, the wells are tangled in debris. Wellheads may be inside the deck structure and inaccessible or accessible but inoperable. Debris often needs to be cleared before accessing the well.
The debris field, visibility at the seafloor, and hazards associated with underwater burning expose divers to risk not encountered in normal operations. It is not uncommon for a toppled structure to be partially buried under mud. In the worst cases, the platform must be cut and removed in pieces to accommodate the capacity of a heavy-lift vessel.
In conventional decommissioning, dry-tree, shallow-water, plugging-and-abandonment operations typically cost $300,000-$500,000/wellbore. Structure decommissioning costs $3-5 million in shallow water and $15-20 million in water deeper than 200 ft.
The cost involved in decommissioning hurricane-destroyed structures is in most cases 3-5 times the cost of conventional operations. This can increase by a factor of ten or more in the most extreme cases.
In the immediate aftermath of a storm, when recovery efforts are ongoing, the resources needed to initiate inspections, conduct repairs, and procure material and equipment are usually stretched thin. Day-tripping (working during the day and travelling back to shore each evening) is common.
Conventional decommissioning is low-tech and applies similar technologies to structures that are themselves relatively similar. Unconventional decommissioning is site-specific and labor intensive. Operations are much less homogenous and may require new technological solutions.
Many factors determine the amount of time required to complete clean-up operations, including the work complexity and the time to acquire permits for well abandonment and reefing. Structures with small well inventories in shallow water should be less complex and less expensive to decommission than deepwater structures with larger well inventories.
When a lease stops producing because of a catastrophe such as a hurricane, the term of the lease may be extended if a suspension of production (SOP) or suspension of operations (SOO) has been granted or directed by the Bureau of Ocean and Environmental Management (BOEM).
SOPs and SOOs are granted when circumstances beyond the lessee's control delay lease activity or when clean up and redevelopment are required. The BOEM may issue suspensions for up to 5 years and may grant successive suspension periods depending on each case.
Clean-up activity: 2004-present
In the wake of a hurricane, operators report their damaged and destroyed structures to the federal government, and 2-3 months after a hurricane the BOEM and BSEE release a final, official list of damaged and destroyed structures. This inventory forms the basis of this article's analysis.
The inventory of hurricane-destroyed structures was matched with wellbore and structure data identified from the BOEM borehole and structures databases.4 5 All data reviewed and analyzed in this article were compiled circa January 2014.
Collectively, 112 of the 181 hurricane-destroyed structures since 2004 were producing at the time of the storms that damaged them, 48 structures were idle, and 21 auxiliary structures served in a support role (Table 2).
Auxiliary structures, which have no wellbores, are generally the easiest and cheapest to decommission. Idle and producing structures have wells and are more complicated and time consuming to decommission.
Most of the auxiliary structures have been decommissioned, with only 3 of the 21 destroyed structures remaining. Eight of the 48 idle structures and 29 producing structures are yet to be decommissioned.
Of the 1,673 wellbores that were destroyed, 1,537 have been abandoned (Table 3). All wells require abandonment before a structure is decommissioned unless salvaged for redevelopment. Multiple work seasons normally are required in plugging operations because of the complications associated with well access (Fig. 2).
All the destroyed wells and structures from Hurricane Ivan have been decommissioned except Taylor Energy Co.'s eight-pile structure in Mississippi Canyon-20 Where one structure and 21 wells remain (Figs. 3 and 4). The company's toppled platform stood in a mudslide area and moved several hundred feet from its original location. It was ultimately submerged nearly 75% below the mudline.
Decommissioning the structure has been ongoing since 2005, but the work is slow and cumbersome. Taylor set aside capital to perform its regulatory responsibilities and, after selling all of its other oil and gas assets, ceased oil and gas operations. Once completed, the total decommissioning cost of the project is expected to be $500-$1,000 million.
Hurricanes Katrina and Rita destroyed 114 structures and 1,000 wellbores; 29 structures and 78 wells remain. Chevron Corp.'s mini-tension leg platform, Typhoon, was the most notable casualty. It was subsequently towed from where it grounded to a deepwater artificial reef.
Hurricanes Gustav and Ike destroyed 60 structures and 537 wells. Today, 10 structures and 37 wells remain. Chevron, Apache Corp., Stone Energy Corp., BP PLC, and Marlin Energy Offshore LLC (a subsidiary of Apache Corp.) operated the most destroyed structures. These structures represented about 40% of the total inventory (Table 4).
Well inventories correlate with structure count, and operators with a large number of destroyed structures have a correspondingly large number of destroyed wells to abandon (Table 5). Chevron lost 330 wells, followed by Apache (152), Noble Energy Inc. (137), and BP (111).
Stone Energy, Apache, Chevron, Anglo-Suisse LP, BP, Devon Energy Corp., and EPL Oil & Gas Inc. hold more than half of the structures that remain to be decommissioned (Table 6). Clean up schedules have been greatly extended because of operational complexity, permitting delays, or both (Fig. 5).
Anglo Suisse's complexes 21802 and 20225 have 18 and 14 remaining wells respectively, and Stone Energy's 22012 complex has 10 remaining wells
McMoRan Oil & Gas LLC has reported spending $98 million on complex 23925 in EW 947k to abandon the wells and remove the deck from the structure. Only the jacket remains and plans for reefing have not been settled.
Water depth impacts
Structure decommissioning occurs at a slower rate (Fig. 6) than well abandonment (Fig. 7) because of the need to plug wells before decommissioning the structure. More than two thirds of well abandonments occurred within 3 years of hurricane impact, compared with about 40% of structures decommissioned.
Time and cost are affected by the water depth in which a structure sits. In water shallower than 150 ft, 84% of destroyed structures have been decommissioned, compared with 74% of structures in 150-300 ft, and 58% in water deeper than 300 ft (Table 7). About two-thirds of the structures in less than 300 ft of water were decommissioned within 5 years, compared with about half of structures in 300 ft or more.
Well abandonments exhibit similar trends to structure decommissioning but the pace of activity is faster and inventories are subsequently smaller (Table 8). In water shallower than 150 ft, 6% of destroyed wells still require abandonment, compared with 8% of wells in 150-300 ft water, and 13% of wells in water deeper than 300 ft.
Reefing economics, policy
In 2009, the US Minerals Management Service (MMS) issued a moratorium on reef proposals outside of established planning areas in response to public criticism and Nongovernemental Organizations' assertions that Rigs-to-Reef program was becoming a de facto ocean-dumping program.6 In 2013, the moratorium was lifted.
In conventional decommissioning, if the cost to donate a structure to a reef program is expected to be lower than the cost to bring the platform to shore for disposal, operators may seek a reefing strategy.
Operators get a third-party estimate of the cost for both onshore removal and offshore reefing. From these estimates, the state and operator split the expected savings. If the expected savings from reefing are positive, operators may choose to reef the structure if they are confident the savings will be realized. Otherwise, the structure will be brought to shore for recycling or storage.
For a toppled structure, reefing-in-place is the operator's preferred option if regulatory approval is granted.
The requirements for a toppled structure to qualify as an artificial reef, such as clearance and structure stability, however, may be difficult to meet without extensive hazards to diving personnel, or long, complicated operations.
In a recently issued update to their reef guidelines, BSEE engineering and environmental reviewing standards for reefed structures reiterate the basic guidelines for approval.7
• The structure must be stable and not endanger nearby infrastructure or protected resources.
• The structure must be free from all potentially hazardous and nonstructural items.
• Reef sites must not hinder future operations.
• Reef sites must not lead to avoidable space-use conflicts as per 30 Code of Federal Regulations (CFR) §250.1703(f).
According to the Rigs-to-Reef Interim Policy Document (2013-07), the BSEE will continue to evaluate reef proposals on a case-by-case basis for adherence to engineering and environmental standards.
The BSEE stated that departures from removal requirements associated with platforms toppled due to strucure failure will not be granted.
The interim policy document does not eliminate storm-toppled platforms from consideration as reefs, but it specifies that no departures from removal requirements will be granted for structures toppled due to structural failure.8
It is, therefore, the operator's responsibility to satisfy all regulatory requirements associated with normal reefing (clearance, debris removal, hazardous material clean-up, structure stability, etc.) for a toppled structure to be permitted as an artificial reef.
The interim policy also removes the mandatory 5-mile buffer zone between reefs, which will provide more flexibility for reef placement and continues to allow for time extensions needed to ensure proper placement in these difficult operations.
References
1. "MMS Updates Damage Assessment from Hurricane Ivan," US Minerals Management Service, Oct. 8, 2004.
2. "MMS Updates Hurricanes Katrina and Rita Damage," US Minerals Management Service, May 1, 2006.
3. "MMS Completes Assessment of Destroyed and Damaged Facilities from Hurricanes Gustav and Ike," US Minerals Management Service, Nov. 26, 2008.
4. "BOEM Well Database," US Bureau of Ocean Energy Management, http://www.data.boem.gov/homepg/data_center/well/well.asp, 2013.
5. "BOEM Structure Database," Bureau of Ocean Energy Management, http:// www.data.boem.gov/homepg/pubinfo/freeasci/platform/PlatformStructuresFixedfn.asp, 2013.
6. Peter, D., "BSEE Rigs-to-Reef Policy Overview," Louisiana Artificial Reef Council Meeting, Baton Rouge, Nov. 14, 2013.
7. "Rigs-to-Reef Policy Addendum: Enhanced Reviewing and Approval Guidelines in Response to Post-Hurricane Katrina Regulatory Environment," US Minerals Management Service, 2009.
8. "2013 Rigs-to-Reef Interim Policy," US Bureau of Safety and Environmental Enforcement, June 2013.
The author
Mark J. Kaiser ([email protected]) is professor and director, research and development, at the Center for Energy Studies at Louisiana State University. His primary research interests are related to policy issues, modeling, and economic studies in the oil and gas industry. Kaiser holds BS, MS, and PhD degrees in engineering from Purdue University.
