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Archive for the ‘decommissioning’ Category

Habitat fire may further complicate California offshore decommissioning

Posted in accidents, California, decommissioning, Regulation, tagged , , , , , , , , , on May 14, 2026| 2 Comments »

At a minimum, the fire will further delay and increase the cost of well plugging operations on Platform Habitat. Per BSEE’s borehole file, 17 wells remain to be permanently abandoned, 3 of which have yet to be temporarily abandoned. These wells are 23-44 years old, and have been inactive for 11 years.

If there is significant platform damage, the remediation delays and costs would be substantial, comparable to those associated with major Gulf platforms damaged by hurricanes. Structural damage could increase the urgency of removing the platform. Given California’s decommissioning quagmire, this would be a major challenge.

Who pays, and what does the financial assurance picture look like? Per the attached BOEM spreadsheet (excerpt pasted below):

  • The 2020 cost estimate for decommissioning Habitat was $44.3 million. That number is optimistic even if platform damage is minimal.
  • $13.6 million in supplemental assurance has been provided.
  • A third party guarantee has been secured.
  • The guarantee was provided by Freeport-McMoRan Oil & Gas (FMOG)
  • Per BOEM, FMOG is the guarantor for all DCOR leases. Unless BOEM has allowed otherwise, the guarantor pays all costs not covered by the lessees. Given the number of old platforms and California decommissioning challenges, the risks for FMOG are indeed large.

Although DCOR LLC is the current Habitat operator, the company owns only a 4.18% share of the project. CHANNEL ISLANDS CAPITAL, L.L.C., a private company about which little is known, holds a 95.82% share.

Should the 2 owners default, BOEM/MMA will look to the guarantor and predecessor lessees (see the chart below). Unfortunately for FMOG, they are both the guarantor and the predecessor lessee. FMOG acquired Plains Exploration & Production (PXP), the operator prior to DCOR. Nuevo Energy was acquired by PXP and thus also tracks back to FMOC. (This may explain FMOC’s decision to be a guarantor!).

Should FMOC fail to fulfill their obligation. Chevron would likely be the next target. The original Harvest partners were Texaco (operator) and Union Oil, both of which were acquired by Chevron.

TEPI=Texaco Expl. & Production. Nuevo Energy was acquired by Plains Expl.&Production (PXP), which was acquired by Freeport McMoRan Oil & Gas (FMOG)


2024-03-27 Pacific Decom and Collateralization InformationDownload

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BOEM extends comment period on the financial assurance proposal, but only by one week!

Posted in decommissioning, energy policy, Regulation, tagged , , , , on May 7, 2026| Leave a Comment »

BOEM has extended the public comment period and will accept comments on the proposed rule through 11:59 p.m. Eastern Time on May 15, 2026. 

Interesting decision, and not the one many of us expected.

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API requests an extension of the comment period for BOEM’s proposed financial assurance rule

Posted in decommissioning, energy policy, Regulation, tagged , , , , on May 7, 2026| 1 Comment »

API’s letter is attached. Key points:

  • Requesting a 60 day extension (double the comment period specified by BOEM)
  • Need more time to:
    • review the detailed proposed changes
    • conduct studies to inform agency
    • analyze the studies and data
    • consider alternatives
    • organize, complete, and review the findings of subject matter workgroups

In API’s favor:

  • Agencies have discretion on extending comment periods.
  • 60 days is typically considered the minimum comment period; 90 days would have been more appropriate for this proposal.
  • API members are clearly affected parties.
  • The BOEM proposal relaxes financial assurance requirements for smaller companies while increasing predecessor lessee risk exposure. Those predecessors would typically be API members.
  • There are divisions within the industry which complicate trade association commenting.

On the other hand:

  • API’s letter is dated May 1, just one week prior to the end of the comment period.
  • The letter was not posted at Regulations.gov until May 6, 2 days before the end of the comment period. Only those tracking the comment letters would have been aware of the request even at this late date.
  • As of early this morning (May 7th), the docket still specifies a May 8 due date for comments.
  • An extension could be viewed as inequitable to other concerned parties who made special efforts to honor the deadline.

Comments:

  • This is why it’s best to specify a reasonable comment period at the time the regulation is proposed, and make it clear that there will be no extension. That way, everyone is treated the same.
  • For this proposal, 90 days would have been reasonable.
  • Given the number of significant issues that need to be addressed, the best outcome for this rule would be a re-proposal. See the comments submitted by John Smith and me.
BOEM-2025-0042-0014_attachment_1Download

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My comments on BOEM’s proposed revisions to decommissioning financial assurance requirements

Posted in Offshore Energy - General, California, Regulation, Gulf of Mexico, decommissioning, energy policy, tagged , , , , , , , on May 6, 2026| 1 Comment »

Attached are my comments on BOEM’s proposed revisions to the decommissioning financial assurance regulations. These comments were submitted to Regulations.gov yesterday (3 days early 😀). Bud

Concluding Remarks

  1. MMA’s highest priority must be assuring that facilities are safely decommissioned without public funding. Supplemental financial assurance determinations and lease assignment approvals must be consistent with that priority.  
  2. Predecessor liability is an important financial assurance principle, but legal boundaries and administrative procedures must be clearly established. 
  3. Safety and compliance are inextricably related to financial performance, and must be considered in determining supplemental assurance requirements. 
  4. Using reserve estimates to reduce supplemental assurance exposes taxpayers to geologic and accounting risks. 
  5. Unacceptable public risks have resulted from financial assurance decisions intended to advance offshore wind development.
Comments – BOEM financial assurance ruleDownload

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John Smith’s proposal to facilitate the decommissioning of California platforms

Posted in Offshore Energy - General, California, Regulation, decommissioning, rigs-to-reefs, tagged , , , , , , , on April 23, 2026| 1 Comment »

Looking up towards Platform Gilda from a depth of 100 feet, juvenile bocaccio rockfish swirl around the anemone-covered crossbeams (photo by Dr. Milton Love) 

Dr. Jeremy Claisse, Cal Poly Pomona: “The oil and gas platforms off the coast of California are the most productive marine habitats per unit area in the world.” 

Dr. Milt Love, UCSB: “Even the least productive platform was more productive than Chesapeake Bay or a coral reef in Moorea.”

John Smith has made the case for reefing California platforms. He is now proposing a change in the regulations that could facilitate such partial removals of offshore structures. His full proposal is attached.

As background John notes:

“In contrast to the Gulf of Mexico (GOM), where more than 600 decommissioned platforms have been converted to artificial reefs, the State of California does not have reefing legislation considered workable by industry, nor does it have an approved or State funded artificial reefing program which is a prerequisite under MMA (formerly BSEE and BOEM) OCS oil and gas regulations (30 CFR § 250.1730) for waiving platform removal requirements which allows conversion of the structure to an artificial reef.“

He further informs that “operators of the platforms have not expressed any serious interest in reefing OCS platform jackets because they consider the California Marine Resources Legacy Act unworkable in its present form due primarily to its liability provisions, inequitable 80% cost-savings sharing requirement, and the requirement for the first reefing applicant to fund the setup costs for the artificial reefing program.“

John’s proposal is intriguing because it allows qualified 3rd parties to accept title and liability for reefed structures. This would create interesting business opportunities. A company, consortium, nonprofit, or entrepreneur could, for a fee, acquire submerged structures and obtain insurance or other financial protection in accordance with their business plan. Reef preservation and enhancement studies, and other marine research could also be conducted at the sites. Marine ecosystems would be protected, and the cost and efficiency of decommissioning operations would be significantly improved.

“So, you disconnect the jacket… you kill all the fish. There’s an awful lot of animals that die,” said Dr. Love. As our world has become dependent on fossil fuels, so too have these millions of animals become dependent on the structures that pump them from beneath the sea floor. “As a biologist, I just give people the facts, but I have my own view as a citizen, which is I think it’s criminal to kill huge numbers of animals,” said Dr. Love.

John’s proposal warrants serious consideration.

Revised Proposal to Amend MMA OCS Decom Regs 042126.docxDownload

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BOEM proposed financial assurance rule – good comment letter from Univ. of Arizona students

Posted in decommissioning, Offshore Energy - General, Regulation, tagged , , , , , , , , , , , on April 17, 2026| Leave a Comment »

Decommissioning financial assurance regulations are “instrumental in ensuring both environmental and fiscal responsibility.“- .natural resource management students

The first public comments on BOEM’s proposed revisions to the decommissioning financial assurance requirements have been posted. A good comment letter (attached) was submitted by natural resource management students at the University of Arizona. The students oppose the proposed revisions. Among their concerns (additional thoughts added in parentheses):

  • Increased environmental risks. (Accidents, hurricanes, and other events may introduce decommissioning risks that require both immediate and longer term attention and financial resources. Such incidents typically increase decommissioning costs by orders of magnitude, and can even bankrupt financially sound companies. See “Sad End for Taylor Energy.”)
  • Firms with lower credit ratings would no longer have to hold as much capital in reserve and would have a lower bar of entry into projects. (See comments by John Smith.)
  • The possibility of cascading economic impacts in the event that bankruptcy does occur. (Which predecessors will be affected and how? What about contractors? How long will bankruptcy litigation delay resolution of claims? Will bankruptcy court asset sales increase public financial, safety, and environmental risks?)
  • Taxpayers would be facing a portion of the risk. (Predecessors are only accountable for the facilities they installed, so holding predecessors liable doesn’t free the taxpayers from all financial risks.)
  • The entire energy sector faces increased risks when operating companies fail. (Prominent failures damage the reputation of the industry and the OCS program, with implications for the economy and national security.)

Before relaxing financial assurance requirements, BOEM should consider the role that lax lease assignment and financial assurance policies had in the growth of Fieldwood, Cox, Signal Hill, Black Elk, and other failed companies.

BOEM-2025-0042-0006_attachment_1Download

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John Smith Makes the Case for Reefing California Platforms

Posted in California, climate, decommissioning, energy policy, Offshore Energy - General, Regulation, tagged , , , , , , , on April 16, 2026| Leave a Comment »

HHH platforms
Herrema Balder SSCV

The Case for Reefing California Platforms by John Smith

Environmental groups like the Environmental Defense Center and Get Oil Out continue to oppose converting the jackets of California oil and gas platforms to artificial reefs despite scientific studies (Claisse et al. 2014) showing “oil and gas platforms off the coast of California have the highest secondary fish production per unit area of seafloor of any marine habitat that
has been studied.”

Another important factor environmental groups and the 2023 BOEM Programmatic EIS for Decommissioning failed to consider and acknowledge is the huge amount of air emissions that would be released by world-class heavy lift vessels like the Thialf or Balder Semi-submersible Crane Vessels (SSCVs) that would be required to safely and efficiently remove the large federal OCS platforms like Harvest, Hermosa, and Hidalgo (HHH). The HHH platforms are in waters depths ranging from 430-675 feet and have combined deck and jacket weights ranging from 20,000 – 25,000 tons. In comparison, the wrought iron structure of the Eiffel Tower weighs about 8,000 tons.

The SSCVs and accompanying Anchor Handling Tugs (AHTs) used to remove the HHH platforms will likely to be mobilized from distant locations like the North Sea or Gulf of America where they typically operate. Because SSCVs like the Thialf and Balder are too large to enter the Panama Canal, this would involve a 20,000 nautical mile roundtrip voyage around the tip of South America.

Three to four campaigns, and separate SSCV and AHT mobilizations and demobilizations, are projected to be required to fully remove the HHH platforms because the challenging oceanographic conditions offshore Point Arguello restrict heavy lift operations to a 150-day period between May and October.

Four campaigns by the SSCV and AHT would consume about 300,000 metric tons (mt) of marine diesel oil and release approximately 470,000 mt of CO2 and 11,000 mt of NOX emissions. To put these numbers into context, 470,000 mt of CO2 and 11,000 mt of NOX are:

  • the amount of CO2 emissions released by providing electrical power to 97,600 homes annually (the city of Santa Barbara has about 38,000 housing units).
  • the amount of CO2 emissions released by burning 1.1 million barrels of oil.
  • the amount of CO2 emissions released by 102,000 gasoline burning cars annually.
  • the amount of NOX emissions released by four large oil or coal-fired power plants annually.
  • the total annual NOX emissions in Santa Barbara County.

And this is only the emissions released during mobilization and demobilization of the SSCV and AHT. If full removal is required, an additional 50 days of operational time by the SSCV and AHT is estimated to be required to remove the topside and jacket of each HHH platform. This could be reduced to about 15 days per platform if the jackets are converted to artificial reefs. Only one SSCV and AHT campaign may be required if the HHH jackets are reefed, compared to the four campaigns required for the full removal scenario. This would result in a 75 percent reduction in CO2 and NOX emissions.

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John Smith comments on BOEM’s financial assurance proposal

Posted in decommissioning, Offshore Energy - General, Regulation, tagged , , , , , , , , on April 14, 2026| Leave a Comment »

John Smith’s decommissioning presentation in Santa Barbara

John Smith‘s excellent comments on the BOE post about the proposed revisions to decommissioning financial assurance regulations warrant a separate post. John’s comments are pasted below.

It’s clear the proposed rules have been designed to reduce financial burdens on OCS oil and gas operators, especially small independents. The proposed rules do this by:

  1. Waiving the requirement of the operator/lessees to obtain supplemental financial assurance to cover decommissioning obligations if jointly and severally liable predecessors are determined to have the financial capability to cover the obligations.
  2. Lowering the credit rating threshold BOEM uses for evaluating the financial health lessees and grantees from BBB- to BB- from S&P Global Ratings (S&P) or Baa3 to Ba3 from Moody’s Investor Service Inc.
  3. Revising the level of BSEE probabilistic estimates of decommissioning cost used for determining the amount of supplemental financial assurance required from P70 to P50.

I don’t see any rationale for lowering the credit rating threshold, which would apply to both current and predecessor lessees.  A BB- and a Ba3 rating is considered “non-investment grade” or “junk,” meaning the company is more vulnerable to adverse economic conditions, such as a downturn in oil and gas prices.  Current market estimates place the 3-year probability of default for a BB- rating at approximately 12.5% to 13%. Lowering the credit rating significantly increases the risks of default by lessees and transfers the risk to the federal government and taxpayers.

Reducing the BSEE probabilistic criteria for determining the amount of supplemental financial insurance required from P70 to P50 means there is a 50% chance BSEE cost estimates for decommissioning are underestimated further increasing risks borne by the federal government and taxpayer.  

BOEM should reverse course and maintain the current credit rating threshold (BBB- and Baa3) and the P70 criteria.

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Vineyard Wind and GE Renewables clash heightens decommissioning financial assurance concerns

Posted in Offshore Wind, Regulation, decommissioning, energy policy, tagged , , , , , on April 11, 2026| Leave a Comment »

Three wind turbines, including one with a damaged blade, at the Vineyard Wind offshore site in November 2024. Credit: Eleonora Bianchi / The New Bedford Light.

Yet another chapter in the Vineyard Wind saga:

New Bedford Light: Vineyard Wind on Wednesday sued its turbine supplier, GE Renewables, in civil court in Boston, alleging GE is breaching its contract and planning to abandon the project by April 28 — during the critical final stage of coming fully online.

According to the complaint, GE filed a termination notice with Vineyard Wind in late February for its contracts to supply wind turbines and service and maintain them, citing more than $300 million in claims unpaid by Vineyard Wind.

If GE exits, Vineyard Wind says, the project “will likely fail, leaving the windfarm stranded.”

The New Bedford Light provides more details on the litigation.

Remember, BOEM waived the “pay as you build” decommissioning financial assurance requirement for Vineyard Wind and subsequently relaxed financial assurance requirements for all offshore wind projects.

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Offshore Data Centers: Rigs-to-Resistors!

Posted in decommissioning, energy policy, tagged , , , , , on March 30, 2026| Leave a Comment »

Linked-in: solving what matters most

The Rigs-to-Resistors category in our World Famous Rigs-to-Reefs +++ list has been expanded to include offshore data centers, a concept that is attracting investor interest (see attached brochure).

Advantages of offshore data centers include power availability (natural gas, hydro-kinetic, wind, solar), cooling water, sovereignty, and growth potential.

Alternative uses of OCS facilities were authorized by an OCS Lands Act amendment drafted by the Minerals Management Service and attached to the Energy Policy Act of 2005 by Congresswoman Barbara Cubin. The amendment authorized:

“use, for energy-related purposes or for other authorized mariner elated purposes, facilities currently or previously used for activities
authorized under this Act,”

The attachment summarizes plans to install modular data centers on existing offshore platforms. The advocates see “using fixed platforms ready for decommissioning as a low-cost solution with simpler execution.” Are they a bit too optimistic? 😉

Japan has some interesting offshore data center ideas, including the concept pictured below.

ExecSummary-FenrirInfrastructurePartnersDownload

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