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Archive for the ‘decommissioning’ Category

Ørsted’s troubles and Atlantic wind decommissioning

Posted in decommissioning, Offshore Wind, tagged , , , , , , , , on August 14, 2025| 1 Comment »

Ørsted’s stock price plummeted on Monday following the announcement of a $9.4 billion rights issue to fund the Sunrise Wind project. The share price has remained depressed (chart below).

Also, although Ørsted attributes its financial woes to the change in US policies, it’s apparent in the second chart (5 year trend) that the decline in Ørsted’s valuation has been ongoing since 2021.

In March, Fitch downgraded Ørsted’s rating to BBB from BBB+, and its subordinated rating to BB+ from BBB-. Further downgrades would seem to be a distinct possibility.

Meanwhile, decommissioning financing for the 3 Ørsted projects under construction in the US Atlantic is far from assured:

  • Revolution Wind: As they did for Vineyard Wind, BOEM approved Ørsted’s request to defer full decommissioning financial assurance until 15 years after the beginning of construction (see attached letter). This approval was prior to the Renewable Energy Modernization Rule (effective June 29, 2024), which eliminated the need for such waivers.
  • Sunrise Wind: Ørsted is now solely responsible for funding and constructing this project given the company’s failure to find investment partners. Presumably, decommissioning financial assurance was not required given BOEM’s latitude under the so-called “Modernization Rule.”
  • South Fork Wind: As is the case with Sunrise Wind, BOEM presumably allowed Ørsted to defer financial assurance for decommissioning as permitted by the “Modernization Rule.”

According to Ørsted, almost 70% of the turbines are installed at Revolution Wind and the first foundations have been installed at Sunrise Wind. South Fork Wind, 12 turbines and an offshore substation, is complete.

Given Ørsted’s strained finances, will BOEM now opt to require decommissioning assurance as provided for in 30 CFR § 585.517?

Ørsted’s situation is atypical in that the Danish government owns a majority (50.1%) stake in the company and Equinor, which is 2/3 Norwegian govt owned, holds a 9.8% stake. How will government ownership factor into BOEM decisions regarding decommissioning assurance? Note that Norwegian govt lobbying may have been one of the factors influencing the decision to allow the resumption of construction on Equinor’s Empire Wind project.

Meanwhile, two Danish opposition parties are calling for the state to relinquish its ownership stake in Ørsted.

REV_0486_Fin Assur Decom Departure Appr LtrDownload

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Offshore wind: End of the decommissioning free ride?

Posted in decommissioning, Offshore Wind, Regulation, tagged , , , , on August 11, 2025| Leave a Comment »

The Dept. of the Interior is reviewing offshore wind regulations including “the Renewable Energy Modernization Rule, as well as financial assurance requirements and decommissioning cost estimates for offshore wind projects…”

Concerns about offshore wind financial assurance were first raised on this blog in response to a precedent setting waiver of the “pay as you build” requirement. Vineyard Wind was authorized to defer providing the full amount of required decommissioning financial assurance until year 15 of actual operations.  The waiver request, which had been denied in 2017, was resubmitted in 2021 and approved. This questionable decision was consistent with the administration’s enthusiastic promotion of accelerated offshore wind development.

BOEM’s streamlining rule codified the deferred financial assurance option. The rule authorizes the transfer of decommissioning risks from developers to taxpayers and consumers by (1) not requiring any additional supplemental financial assurance at the Construction and Operations Plan (COP) approval stage, (2) not requiring supplemental assurance at the installation stage, and (3) providing for incremental supplemental assurance post-installation (e.g. for Vineyard Wind, the full amount is not due until 15 years after installation). See the rule’s previous and current language in the table below (emphasis added).

30 CFR 585.516 – What are the financial assurance requirements for each stage of my commercial lease?

financial assurance required before BOEM will: language prior to 4/24/2024 “modernization” rulecurrent language
Approve your COPA supplemental bond or other financial assurance, in an amount determined by BOEM based on the complexity, number, and location of all facilities involved in your planned activities and commercial operation. The supplemental financial assurance requirement is in addition to your lease-specific bond and, if applicable, the previous supplement associated with SAP approval.There is no supplemental bond requirement at the COP approval stage.
Allow you to install facilities approved in your COPA decommissioning bond or other financial assurance, in an amount determined by BOEM based on anticipated decommissioning costs. BOEM will allow you to provide your financial assurance for decommissioning in accordance with the number of facilities installed or being installed. BOEM must approve the schedule for providing the appropriate financial assurance coverage.A supplemental bond or other authorized financial assurance in an amount determined by BOEM based on anticipated decommissioning costs of the proposed facilities. If you propose to incrementally fund your financial assurance instrument, BOEM must approve the schedule for providing the appropriate financial assurance.

The current financial assurance language is fuzzy enough that BOEM could deny deferred funding requests and require full financial assurance at the time facilities are installed. However, revising the language to clearly require that assurance be fully demonstrated prior to installation would provide clarity and eliminate the deferral option going forward.

The more difficult challenge may be adjusting financial assurance requirements for the projects already under construction. It’s also important to ensure that parent corporations are not shielded from decommissioning and other liability risks.

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MV Times raises more Vineyard Wind transparency questions

Posted in decommissioning, energy policy, Offshore Wind, Regulation, tagged , , , , , on August 4, 2025| Leave a Comment »

MV Times -blade replacement continues

MV Times: “The recent site visit raised questions on the production of the wind farm. The Times has been able to neither verify the report independently nor confirm disparities between visuals on the ground and the Iberdrola report.”

  • Avangrid, an Iberdrola subsidiary and one of Vineyard Wind’s developers, reported that 17 out of 62 turbines were currently sending power to the Massachusetts grid.
  • The MV Times counted between five and nine turbines spinning at different points, and for different intervals, in their two hour visit.
  • BOE comment: Although there are many possible reasons for this discrepancy, it’s reasonable to question the absence of turbine output data. Developers assert that generator specific data are sensitive and could have market implications. However, these turbines are operating on public lands and were in part publicly funded. Output data and other performance metrics clearly have policy implications.
  • Note that Iberdrola “expect[s] no impact from new federal budget legislation, as it doesn’t impact 1,000 megawatts under construction.”

An MV Times photo of a Vineyard Wind substation is pasted below. These substations are large structures. Per the Construction and Operations Plan (COP) for Vineyard Wind, the topsides for a conventional electrical service platform (ESP) (also known as an offshore substation or OSS) are 45 x 70 x 38 m, which is larger in surface area than a typical 6-pile oil and gas platform (~30 x 30 m), and is comparable in size to a large jackup drilling rig.

Decommissioning financial assurance requirements were relaxed to reduce development costs, thus increasing taxpayer liability risks. This policy decision should be reviewed.

Vineyard Wind substation

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Cox legacy operations are GoA violations leaders. Will the lessons from past bankruptcies ever be learned?

Posted in accidents, California, decommissioning, energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , , , , , , on July 29, 2025| 1 Comment »

Background: On February 12, 2024, the bankruptcy court approved the sale of certain Cox Operating assets to Natural Resources Worldwide LLC (NRW), a company that “does not mine, drill, or produce minerals, has no operations, and conducts business solely in an office environment.”

NRW contracted with Array Petroleum to operate the former Cox Assets. Array subsequently sued NRW, asserting that NRW received $78,000,000 in revenue, but disbursed only about $48,000,000 to pay Array’s invoices and those of the subcontractor.

The court filing claimed that NRW failed to pay Array $2.5 million, the subcontractors $10.7 million, and the United States $12 million. A large share of the subcontractor costs were probably for well operations given that 21 Array workover applications were approved in 2024 and 2025. The $12 million due to the Federal government is reportedly for royalty payments. Were any revenues set aside for decommissioning liabilities?

Array’s lawsuit was dismissed by the court on January 3, 2025, after a joint motion to dismiss was filed by the defendants. Information on the reasons for the dismissal is not publicly available.

Old platforms: According to BOEM records, Array operates 154 platforms previously owned by Cox. These platforms are in the Ship Shoal, South Marsh Island, and West Delta areas of the Gulf of America. Most are >30 years old and four are more than 70 years old (see chart below). 41 are classified as major structures including 15 of the 26 platforms installed in the 1950s and 1960s. 44 are manned on a 24 hour basis. 79 have helidecks. Massive decommissioning liabilities loom.

Violations: NRW/Array ranks 37th out of 42 companies in GoA oil production (2025 YTD) and 36th out of 42 companies in gas production, but leads the pack in Incidents of Noncompliance (INCs):

  • Array accounted for nearly half of all GoA INCs issued in the first half of 2025 (chart below).
  • Array was issued 9 times more warning INCs (311) than any other operator. Apache was second with 34.
  • Array had more component shut-in INCS (46) than any other operator. W&T, another operator of Cox legacy platforms, was second with 32.
  • Array had more facility shut-in INCs (6) than any other operator. W&T was again second with 5.
  • Array averaged 2.0 INCs/facility inspection vs. a combined average of 0.3 INCs/facility inspection for all other operators.
violation typewarningscomponent shut-insfacility shut-ins
Array311466
all others21116449

Lessons that should have been learned from the Cox, Fieldwood, Black Elk, Signal Hill, and other bankruptcies dating back to the Alliance Operating Corp. failure in 1989:

  • There are many small and mid-sized companies that are responsible operators. Their participation in the OCS program should be encouraged. However, others have demonstrated, by their inattention to financial and safety requirements, that they are not fit to operate OCS facilities.
  • The growth of Fieldwood, Cox, Signal Hill, and Black Elk was in part facilitated by lax lease assignment and financial assurance policies. 
  • Operating companies should have to demonstrate that they can operate safety and comply with the regulations before they are approved to acquire more properties.
  • Despite ample evidence of the importance of compliance and safety performance in determining the need for supplemental financial assurance, BOEM’s 2024 rule dropped all consideration of these factors.,
  • Expect the ultimate public cost of the Cox bankruptcy, in terms of decommissioning liabilities and the need for increased oversight, to be large.
  • The Federal govt (Justice/Interior) should strongly oppose bankruptcy court asset sales that increase public financial, safety, and environmental risks.

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New Rigs to Reefs film

Posted in decommissioning, energy policy, Gulf of Mexico, Offshore Energy - General, rigs-to-reefs, tagged , , , , on July 25, 2025| Leave a Comment »

Linked below is a new Rigs to Reefs film (“Steel to Sanctuary”). Note the commentary on permitting complexity and regulatory fragmentation.

Watch Film

Not mentioned in the film are the extraordinary efforts of the Mineral Management Service’s Villere Reggio in establishing the Rigs to Reefs program. Villere (pictured below), has a most interesting family history as summarized in the caption. See p. 3 of this issue of MMS Today for the complete article.

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Pictures from John Smith’s decommissioning presentation in Santa Barbara

Posted in California, decommissioning, Offshore Energy - General, rigs-to-reefs, tagged , , , , on June 27, 2025| Leave a Comment »

Sharing pictures from John Smith’s excellent decommissioning presentation at the Western States Petroleum Assoc. luncheon in Santa Barbara in May. You can view or download the presentation here.

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Heerema Thialf is attracting attention!

Posted in decommissioning, energy policy, Offshore Wind, tagged , , , , , , , on June 4, 2025| Leave a Comment »

Thialf: a character in Norse mythology who was Thor’s servant.

The Heerema Thialf, a semi-submersible crane vessel (SSCV), is a rather massive presence in coastal waters. The vessel is 661 feet long and 470 feet high, with a lifting capacity of up to 14,200 metric tons, and is the second-largest of its kind.

The Thialf, which set a world record in 2000 by lifting the 11,883-metric-ton Shearwater topside structure in the North Sea, will be driving piles for 54 Vestas 15 MW wind turbines and a substation structure that are part of Equinor’s controversial Empire Wind project.

John Smith tells me that the Thialf is one of the heavy lift vessels being considered for removing California offshore oil and gas platforms. The vessel is too large for the Panama Canal and would have to make the trip around South America or across the Pacific, depending on where it was last working.

The Thialf’s day rate has not been disclosed, but is likely greater than $500k. Equinor claimed to be losing $50 million/week when the project was paused. Thialf costs were presumably a significant chunk of those losses.

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John Smith’s presentation at 5/15 WSPA luncheon in Santa Barbara

Posted in California, decommissioning, energy policy, Offshore Energy - General, tagged , , , , on May 21, 2025| Leave a Comment »

John Smith’s excellent decommissioning presentation at the recent Western States Petroleum Assoc. luncheon in Santa Barbara is attached. John used an amended version of Bob Byrd’s OTC powerpoint, adding slides on the proposed California Marine Legacy Act amendments.

For those who have been following the Santa Ynez Unit story, Harmony, Heritage, and Hondo are the platforms in that unit. Platform Harmony, where production resumed on the date of John’s presentation (5/15), is in 1198′ of water and is one of the world’s largest offshore structures.

Offshore Decommissioning JBSmith 051425Download

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“Idle Iron Decommissioning Offshore California and the Need to Amend Reefing Legislation”

Posted in California, decommissioning, energy policy, Offshore Energy - General, Regulation, tagged , , , , , on May 6, 2025| Leave a Comment »

John Smith shared an outstanding paper (attached) that was presented by co-author Robert Byrd at the SPE Regional Meeting in Garden Grove, CA last week.  

 

John Smith: “My objective in writing the paper is to hopefully spur legislators to recognize the benefits of reefing and the legislative fixes required to facilitate reefing and the removal of aging infrastructure.  The California Department of Fish and Wildlife Habitat Lead was very complimentary of the paper and has distributed it to the Interagency Team which is developing a California Artificial Reefing Plan.”  

John adds: “They are in the process of creating a statewide artificial reef plan and you can sign up for updates and get more information. The California Artificial Reef Program (CARP) Plan won’t discuss the specifics of Rigs-to-Reefs but will be compliant with the National Fisheries Enhancement Act and National Artificial Reef Plan and meet the BSEE requirement of having an adopted state artificial reef plan. The intent is to add an addendum to the plan when resources become available to move Rigs-to-Reefs forward in California. You can check out the latest program update that further discusses the CARP Plan and Rigs-to-Reefs.”

SPE Paper Amended Reefing Legieslation Needed SPE-224190-msDownload

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Why timely well plugging and financial assurance rules must be strictly enforced!

Posted in decommissioning, energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, well control incidents, tagged , , , , , , , on May 5, 2025| Leave a Comment »

Coast Guard photo. Thanks to Lars Herbst for bringing this incident to my attention.

In what the Coast Guard is describing as an “uncontrolled discharge” (euphemism for blowout), an 82-year-old oil well has been spewing oil, gas, and water into the coastal marshes of southern Plaquemines Parish, Louisiana, for more than a week.

In hopes of future production, prior and current owners had elected not to permanently plug the well, apparently with the State’s acquiescence.

The well is currently operated by an affiliate of Spectrum Energy. Typical of these situations, the previous owner, Whitney Oil and Gas, was in bankruptcy.

The Coast Guard has taken over the response and has accessed the Oil Spill Liability Trust Fund.

We don’t need relaxed decommissioning and financial assurance requirements. We need a cooperative Federal, State, and industry effort to ensure that wells are plugged in a timely manner and that financial assurance is provided to protect the public interest.

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