WATCHING WASHINGTON REMOVING PLATFORMS

With Patrick Crow Although offshore platforms may be a visual irritant to environmentalists, commercial fishermen are more concerned about their permanence. Charles Groat, executive director of the American Geological Institute, Alexandria, Va., told a House merchant marine subcommittee hearing on Outer Continental Shelf issues, "There has been considerable concern by fishermen in the Central Gulf of Mexico about the decommissioning or site clearing procedures for OCS platforms.

Sept. 30, 1991

3 min read

Although offshore platforms may be a visual irritant to environmentalists, commercial fishermen are more concerned about their permanence.

Charles Groat, executive director of the American Geological Institute, Alexandria, Va., told a House merchant marine subcommittee hearing on Outer Continental Shelf issues, "There has been considerable concern by fishermen in the Central Gulf of Mexico about the decommissioning or site clearing procedures for OCS platforms.

"There is substantial evidence that some sites have not been adequately cleared and that debris left on the bottom is a serious impediment to trawling."

DEPLETING LEASES

Minerals Management Service Director Scott Sewell testified, "As the offshore natural gas and oil program matures, resources are depleted on an ever increasing number of leases. For safety and environmental reasons, MMS requires lessees to remove platforms, plug all wells, and clear their lease sites at the end of production."

He said OCS lessees removed an average of 55 platforms/year during 1980-90, but that rate will increase to 100-150/year during the next 15 years, then to 125-225/year by 2020.

Site clearance costs vary with water depth, number of platforms and wells on the lease, and distance from shore.

Sewell said, "Estimates indicate that, at a minimum, the costs of abandoning and clearing a typical developed lease range from a low of about $3 million for leases in up to 50 ft of water to as much as $15 million or more for leases in more than 400 ft of water. Sites with many wells and platforms can cost considerably more to clear.

"Historically, only major companies or very large independents held OCS leases, and corporate resources were seen as sufficient to ensure performance of all lease obligations. However, since the mid-1980s many more small companies have become lessees on the OCS.

"Increasingly, marginal and low production oil and gas leases in the latter stages of development are being assigned by major producers to small independent operators with fewer assets and less experience.

"Several situations have arisen recently in which small independent operators have been unable to meet their obligations. There have been four instances of operator bankruptcy. In one case, a major oil company, which was a colessee, stepped in to complete lease abandonment. In two other cases, MMS was able to release the properties. The other situation is not yet resolved."

ABANDONMENT BONDS

MMS requires lessees to post $50,000 bonds for individual leases or $300,000 for all leases in a region to ensure that operators meet their abandonment obligations.

It has proposed a rule change that substantially increases bonding levels and requires assignees to meet all conditions of the original lease. That rule is under review by the administration.

Sewell said MMS also has started requiring supplemental bonds as a condition of approval of lease assignments to operators without substantial assets.

At the end of last month, about 1,530 lease assignments were pending review and disposition by the MMS Gulf of Mexico region. In 800 to 1,000 of these cases, prospective lease assignees probably will be required to submit supplemental bonds.