A New Approach to Decommissioning Cost Estimation Using Settled Liability Data
Cost data in the oil and gas industry are proprietary and obtaining them is challenging; in addition, unless collected across a large and diverse sample, summary statistics are unlikely to be representative of the activity or process it is trying to inform. The purpose of this article is to apply settled liability data to infer private information on the cost of decommissioning in the Gulf of Mexico. The procedure avoids most of the traditional problems associated with cost studies but requires careful normalization and a clear understanding of the limitations of analysis. Using settled liability data from 17 public companies with operations primarily in the Gulf of Mexico, decommissioning cost is evaluated on a regional basis and by operator from 2008 to 2012. The average cost to decommission a structure between 2008 and 2012 is estimated to be $6.4 million in water depth less than 200 ft and $15.6 million in water depth greater than 200 ft. Average cost statistics are suggested as a market index for Gulf of Mexico decommissioning activity.
FERC pipeline decommissioning cost in the U.S. Gulf of Mexico, 1995–2015
Abstract At the end of its useful life or because of a catastrophic event such as a hurricane, offshore pipelines are decommissioned, which normally involves cleaning the line by pigging or flushing, cutting the pipeline endpoints, and then plugging and burying each endpoint below the seabed or covering with a concrete mattress. The vast majority of decommissioned pipeline in the U.S. Gulf of Mexico is abandoned-in-place if the pipeline does not constitute a hazard to navigation, commercial fishing, or unduly interferes with other uses of the seabed. Using a unique data source from the Federal Energy Regulation Commission, decommissioning cost estimates for 28 gas export pipelines in the shallow water U.S. Gulf of Mexico between 1995 and 2015 are evaluated. The average inflation-adjusted pipeline decommissioning cost was $301,000 per mile ($187,000/km) and $47 per cubic foot ($1660 per cubic meter). Hurricane damaged and leaking pipelines are about three to four times more expensive on a unit cost basis than undamaged and non-leaking lines. No time trends or scale economies were observed. Primary cost drivers are identified and discussed.
Evolution of the Production Semisubmersible
Semisubmersibles and FPSOs are the two most common floating production solutions and they compete in many field developments. The first production semisubmersible in 1975 preceded the prototype FPSO by two years. Both concepts were more or less on a par for the next two decades, until the dramatic surge in popularity of the FPSO in the late 1990s. However, the continued adoption of semisubmersibles indicates that they retain advantages over FPSOs in certain situations. Semisubmersibles have seen application in most petroleum provinces around the world outside Australasia. Traditionally semisubmersibles were converted drilling rigs used for EPS and short field life developments. Many are located in only moderate water depths. However, recent semisubmersibles have been adopted for large production facilities. They have also been used in ultra-deepwater, and several semisubmersibles have held deepwater production records. Many of these developments are off Brazil and Norway. These changes in focus have required new-build semisubmersibles with novel hull forms in comparison with traditional drilling units. The early popularity of semisubmersibles over FPSOs is related to their advantages in harsh environments. With the development and advancement of internal turrets, FPSOs have recently seen acceptance in severe North Sea conditions. Today, a principal driver for selection between semisubmersibles and FPSOs is the relative importance of workover capability and infield storage. Other key factors include the opportunity for gas export, the number of risers required and the availability of vessels for conversion. The paper traces the evolution of the production semisubmersible and gives a comprehensive database of applications to date. A comparison of the relative merits of semisubmersibles and FPSOs for different production scenarios is also included.