Bud's Offshore Energy (BOE)

A recent Washington Post (WP) article, based in part on a March 2021 General Accountability Office (GAO) report, raises interesting pipeline decommissioning issues, but might benefit from some additional context, which I have attempted to provide below:

• Decommissioning liability issues are not simply a matter of “companies trying to get out of that obligation.” Much of the complexity is associated with decades-long chains of lease ownership and the respective responsibilities of prior lessees. Pertinent questions include the following:
  • If a company sold a lease decades ago and there have since been multiple owners, to what extent is the original owner still liable for decommissioning lease facilities? (Note that guidance from the Federal government has not been entirely consistent over the decades.)
  • If current leaseholders fail to fulfill their obligations, who is next in line and why?
  • To what extent are prior lessees liable for wells and structures constructed subsequent to their ownership?
  • Knowing that decommissioning costs can vary significantly, what amounts of security should be required? How should these funds be protected or managed? Should an assigning company also collect funds to protect their interest?
  • How do inconsistent Federal policies and financial assurance requirements, and improper practices by subsequent owners, affect the liability of prior lessees? In that regard, the case of Platforms Hogan and Houchin in the Pacific OCS Region is interesting and pertinent.
• Per the WP, “Federal regulations require the removal of offshore pipelines once they are decommissioned, but the rules are rarely enforced.” This statement is doubly incorrect.
  • 30 CFR § 250.1750 provides for decommissioning pipelines in place when the Regional Supervisor (BSEE) determines that the pipeline does not constitute a hazard (obstruction) to navigation and commercial fishing operations, unduly interfere with other uses of the OCS, or have adverse environmental effects. The consensus opinion of the regulators’ engineers and scientists has been that the safety and environmental risks associated with pipeline removal were significantly greater than those for decommissioning in place in accordance with the procedures specified in 250.1751.
  • The comment about enforcement is unfounded. BSEE and its predecessors have strictly enforced decommissioning requirements despite the challenges related to inconsistent policy direction, industry downturns, and hurricane damage. BSEE has an effective program to ensure that idle wells are plugged and platforms are removed in a timely manner. For this reason, 3315 platforms have been removed since 2001; 1933 since 2010. Only about 1800 platforms remain. This very significant loss of habitat is a concern to fishing organizations, another factor that complicates decommissioning policy.
• In situ decommissioning of buried or trenched offshore pipelines is the standard throughout the world. The seafloor disturbance and safety risks associated with the removal of such pipelines are universally viewed as unwarranted. The pipeline decommissioning procedures followed elsewhere are similar to those described in 30 CFR 250.1751. In the Gulf of Mexico, pipelines installed in less that 200′ of water are typically buried (30 CFR 250.1003) to minimize interference with commercial fishing and other activities.
• The decommissioning of wind turbines, which are typically more densely located and closer to shore, and their attendant power cables and substructures, will also be challenging. In their 9/16/2019 Congressional testimony, the Responsible Offshore Development Alliance expressed concern about the practice of leaving structural foundations when turbines are abandoned.

In remarks to the WP, Syed Khalil, a coastal restoration geologist for the State of Louisiana, commented that they have enough sand to meet their short term needs, but future needs were a major concern. The Gulf of Mexico Offshore Sand Management Working Group would seem to be the best mechanism for timely action and a workable, long-term action plan. The minutes of their meetings are quite instructive. Rulemaking is not a solution unless the parties want to tie their fate to both the 25 year pipeline rule rewrite (draft published in 2007, another draft coming? final?) and the contentious and similarly interminable financial assurance rule.

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