Removal of Offshore Platforms: Rationale for Retaining Infra-structure, Renewable Resources

EcoRigs, Non-Profit.6765 Corporate Boulevard Suite 1207 Baton Rouge, LA 70809 225-910-0304www.ecorigs.orgDecember 2008

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Removal of Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure to Develop

Offshore Renewable Resources in the Gulf of Mexico

By

EcoRigs and

Louisiana University Marine Consortium

Steve Kolian (1) Paul W. Sammarco (2)

1. EcoRigs Non-Profit Corporation 6765 Corporate Boulevard Suite 1207

Baton Rouge, Louisiana 70809 225-910-0304

stevekolian@hotmail.com

2. Louisiana Universities Marine Consortium (LUMCON) 8124 Hwy. 56

Chauvin, LA 70344 985-851-2876

psammarco@lumcon.edu

December 2008

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Introduction The Gulf of Mexico is home to 3,959 offshore oil and gas platforms (MMS 2008). When production from

the wells becomes unprofitable, federal regulations (30 CFR 250.112) require that the platforms be

removed. Thousands of structures have already been removed and most of the remaining platforms are

scheduled for removal by 2020. Retired structures, if not removed, could be redeployed to harness

energy from the ocean, generate hydrogen and sequester greenhouse gases and they can be used to

culture coral, fish, crabs and oysters. The retiring offshore oil and gas infrastructure can produce an

economic second life to the coastal communities and employ 27,000 citizens (Kolian and Sammarco

2005 & 2006).

Offshore platforms create complex coral reef ecosystems that would otherwise not exist on thousands of

square miles of generally featureless continental shelf (see: Video of Platform). The offshore platforms

create one of the most prolific ecosystems on the planet. Stanley and Wilson (2000) reported that 10,000-

30,000 adult fish reside around a single platform in an area about half the size of a football field. The fish

biomass at offshore platforms is ten times greater, per unit area, than the fish biomass at protected coral

reefs in fish sanctuaries (Flower Gardens) and platforms toppled as artificial reefs (Wilson et. al 2003).

The long-term, unexpected, effect of oil and gas production has been to create critical habitat for federally

managed marine species, such as:

• Loggerhead, hawksbill, and green sea turtles;

• Hermatypic (reef-building) corals, octocorals, black coral, sponges, and bryozoans;

• Fish such as grouper, snapper, jacks, etc.;

• Crustaceans such as lobsters, stone crabs, etc.

Platforms Removed

The platform owners, following federal platform removal regulations, have, to date, removed 1,736 fixed

platforms (see Figure 1) resulting in the destruction of an estimated 2,098 acres of coral reef habitat (LGL

1998). The total volume of the underwater portion of the platforms already removed is 52,398,731m3. Oil

and gas platforms are one of the most effective artificial reefs in the world. Artificial reefs are expensive to

build and install. The size and the construction materials and installation expense affect the cost of

deploying artificial reefs. They are measured in units of volume, usually in units of cubic meters. In

literature review, a range was found between $67/m3 - $320/m3 with $140/m3 the average cost (RB 2008,

Goreau and Hilbertz 2005, Takafumi 2003, Grove 1994). Today’s cost to replace 52,398,731m3 of

artificial reefs at $140/m3 is $7.3 billion.

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Idle Platforms Scheduled for Removal Today

Currently, 744 offshore platforms are idle and no-longer in production and are awaiting removal (see

Figure 2). These platforms contain an estimated 890 acres of coral reef habitat (LGL 1998). The total

volume of the underwater portion of the platforms scheduled for removal is 24,401,169m3. Today’s cost to

replace an equivalent number of artificial reefs at $140/m3 is $3.4 billion.

Existing Platforms

Currently, there are 3,959 fixed oil and gas platforms in the Gulf of Mexico. Most offshore petroleum wells

are productive for 15 years (Pulsipher et. al. 2001). Due to the depletion of petroleum fields, by 2020, the

Gulf of Mexico will lose the majority of the structures in water depths less than 600 feet. There is an

estimated 4,465 acres of coral reef habitat currently existing in the Gulf of Mexico in the form of oil and

gas platforms.1 The total volume of the underwater portion of the existing platforms is 127,712,369m3.

Today’s cost to replace an equivalent number of artificial reefs at $140/m3 is $17.9 billion (see Figure 3).

Solution to Platform Removal

The retired structures can be redeployed for alternate uses: see: EcoRigs Technical Report. Most

platforms become unprofitable long before they lose their structural integrity. If cathodic protection is

maintained and the structure does not encounter a catastrophic weather event, they will last indefinitely

as long as the sacrificial anodes are replaced and maintenance is performed on a regular schedule

(Chevron 2004). The retired offshore platforms can be used for alternate uses such as:

• Production of renewable energy derived from wind, current, wave, geo-thermal, salinity gradients,

and bio-fuels;

• Hydrogen production, (i.e. extraction of hydrogen from seawater via electrolysis);

• Marine aquaculture (mariculture; e.g. of coral and sponges, oyster depuration, ornamental and

food fish, etc.);

• Artificial marine habitats;

• Recreational fishing and diving parks;

• Culture of pharmaceutically valuable organisms;

• Sequestration of greenhouse gases.

1 LGL 1998 calculated the average underwater surface area of typical oil and gas platform, the sample size included 290 different oil and gas structures in the Gulf of Mexico. This publication utilized LGL data for the average area per platform, however, the authors of this publication found a significantly larger number of fixed platforms in the Gulf of Mexico. LGL found 2,309 fixed platforms in 1998 and the authors found 3,959 fixed platforms in 2008. LGL reported 2,891 acres of surface area in 1998 and the authors calculated 4,465 acres in 2008.

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Scientists in Japan have similar ideas about producing energy and seafood from the ocean and are

pursuing an ambitious project to build offshore platforms to without the benefit of petroleum reserves and

an offshore engineering infrastructure: See: Japanese Platform Technology

Economic Significance of Offshore Oil and Gas Infrastructure

The oil and gas companies have invested $200 billion building and installing the petroleum infrastructure

in the Gulf of Mexico (API 2004). The oil and gas industry in the Gulf of Mexico directly employs 55,000

people annually. The decline of offshore oil and gas production and the increasing maturity of the oil and

gas fields will lead to a loss of offshore production platforms and a reduction of oil and gas related jobs.

The petroleum fields on the continental shelf are depleting and platform removals are currently costing

the oil and gas industry $500 million per year. Decommissioning and removal of all the platforms will

eventually cost the oil and gas operators in the Gulf of Mexico over $15 billion.

The platforms are used extensively by fisherman and divers, and they currently generate $324 million

annually in economic impact and create 5,560 full-time jobs in the marine sport fishing and diving

industries (MMS 2006). If the retired platforms were properly managed to maximize their potential for

alternate uses, the new industry could directly employ 27,000 citizens in our coastal communities (Kolian

and Sammarco 2006).

Two independent socio-economic studies on the impact of artificial reefs in Florida and a third in

Mississippi indicate the substantial economic impact that artificial reef programs can have on coastal

communities.

Table 1. Summary of the socio-economic impact (revenue and employment) from the introduction

of artificial reef programs in Gulf of Mexico.

Area Annual Economic Impact Job Creation Source Southeast Florida $2.4 billion 26,800 Johns et al., 2001 Northwest Florida $415 million 8,100 Bell et al., 1998 Mississippi $78 million No data Southwick 1998 Offshore platforms $324 million 5,560 MMS 2006

The 3,959 offshore oil and gas platforms across the northern Gulf of Mexico represent $17.9 billion worth

of highly productive artificial reefs in the form of oil and gas platforms. They constitute the largest

collection of artificial reefs in the world; however, they will be destroyed in the next 10-15 years. Please

go to www.ecorigs.org to learn about platform biological communities and alternate uses of retired

platforms. We bring these matters to your attention to inform you about the benefits of retaining the

offshore oil and gas platforms.

www.ecorigs.org

www.ecorigs.org

www.ecorigs.org

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Who to contact about this issue: Walter Cruikshank, Deputy Director of MMS: 202-208-3500 or walter.cruikshank@mms.gov Senator Mary Landrieu: 202-224-5824 http://landrieu.senate.gov/contact/index.cfm Representative Charlie Melancon: 202- 225-4031 http://www.melancon.house.gov/ Governor Bobby Jindal: http://www.gov.la.gov References Bell, F.W., M.A. Bonn, and V.R. Leeworthy 1998. Economic impact and importance of artificial reefs in

northwest Florida. Of?ce of Fisheries Management and Assistance Service, Florida Department of Environmental Administration, Report, Contract Number MR-235.

Chevron 2004, Personal communication with ChevronTexaco engineer during a LDNR Platforms for Mariculture Task Force Regulatory Work Group meeting. A platform engineer said that “as long as the cathodes are replaced, the structure should last indefinitely”.

Goreau, T. and Hilbertz, W., 2005. Marine Ecosystem Restoration: Costs And Benefits For Coral Reefs World Resource Review Vol. 17 No. 3, pp. 375.

Grove, R.M., Nakamuro, H. Kakimoto, and C. Sonu (1994). Aquatic Habitat Technology in Japan. Bulletin of Marine Science 55(2-3): 276-294, 1994.

James Spurgeon (1999). The Socio-Economic Costs and Benefits of Coastal Habitat Rehabilitation and Creation. Marine Pollution Bulletin, Volume 37, Issues 8-12, December 1999, Pages 373-382.

Johns, G., V. Leeworthy, F. Bell, and M. Bonn. 2001. Socioeconomic study of reefs in southeast Florida: Final report, Oct. 19, 2001, for Broward County, Palm Beach County, Miami-Dade County, and Monroe County. Florida Dept. Fish and Wildlife Conservation Commission, National Oceanic and Atmospheric Administration, Wash., D.C.; Hazen and Sawyer (editors), Hollywood, FL, in assn. w. FL State University and NOAA, 2001.

Kolian, S. and P.W. Sammarco. 2005. Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure. Technical Report, Eco-Rigs of Eco-Endurance Center, Baton Rouge, LA.

Kolian, S. and P.W. Sammarco. 2006. Job Creation and Marine Aquaculture. Technical Report No. 2, Eco-Rigs of Eco-Endurance Center, Baton Rouge, LA. Web address: http://www.ecorigs.org/JobCreationEcoRigsWebsite_6_1_06.pdf

LGL Ecological Research Associates, Inc. and Science Applications International Corporation. 1998. Cumulative Ecological Significance of Oil and Gas Structures in the Gulf of Mexico: Information Search, Synthesis, and Ecological Modeling; Phase I, Final Report. U.S. Dept. of the Interior, U.S. Geological Survey, Biological Resources Division, USGS/BRD/CR-- 1997-0006 and Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA, OCS Study MMS 97-0036.vii+ 130 pp.

Minerals Management Service (MMS), 2006. Ocean Science The science & technology journal of the Minerals Management Service. Vol. 3 Issue 3, May/June 2006.

MMS 2008, Minerals Management Service (MMS) 2008. Gulf of Mexico OCS Region. Platform/Rig Information and Data. Data Last Accessed: November 2008. http://www.gomr.mms.gov/homepg/pubinfo/freeasci/platform/freeplat.html

Pulsipher, A.G., O.O. Iledare, D.V. Mesyanzhinov, A. Dupont, and Q.L. Zhu. 2001. Forecasting the number of offshore platforms on the Gulf of Mexico OCS to the year 2023. Prepared by the center for Energy Studies, Louisiana State University, Baton Rouge, LA. OCS Study MMS 2001-013. U.S. Department of Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA. 52 pp.

Reef Ball Foundation (RB) 2008. Website: Last Accessed, 12/5/08. http://www.reefball.org/index.html. Reggio, V.C., comp. 1989 Petroleum structures as artificial reefs: a compendium. Fourth International

Conference on Artificial Habitats for Fisheries, Rigs to Reefs Special Session, November 4, 1987, Miami, Fla. OCS Study/MMS 89-0021

Sammarco, P.W., A. Atchison, and G.S. Boland. 2004. Expansion of coral communities within the Northern Gulf of Mexico via offshore oil and gas platforms. Mar. Ecol. Prog. Ser. 280: 129-143.

Southwick Assocs. 1998. Statewide economic contributions from diving and recreational fishing activities on Mississippi’s artificial reefs. Southwick Assocs., Fernando Beach, FL, 42 pp.

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Spurgeon, J.P.G. Lindahl, U. (2000) Economics of Coral Reef Restoration Cesar HSJ (ed) Collected Essays on he Economics of Coral Reefs, pp 125-136.

Stanley, D., Wilson, C. 2000. Variation in the density and species composition of fishes associated with three petroleum platforms using dual beam hydroacoustics. Fisheries Research 47 (2000) 161-172.

Takafumi, N. 2003 Per.comm. size and cost of Japanese artificial reefs in the Artificial Fish Reef Project Kyoei Sangyo Ltd Matsuoka, Taira

Wilson, C.A., A. Pierce, and M.W. Miller. 2003. Rigs and Reefs: a Comparison of the Fish Communities at Two Artificial Reefs, a Production Platform, and a Natural Reef in the Northern Gulf of Mexico. Prepared by the Coastal Fisheries Institute, School of the Coast and Environment. Louisiana State University. U.S. Dept. of the Interior, Minerals Mgmt. Service, Gulf of Mexico OCS Region, New Orleans, LA. OCS Study MMS 2003-009. 95 pp.