Offshore decommissioning has been considered a growing and expensive issue in the Gulf of Mexico.
Several analyses conducted to estimate the costs of decommissioning infrastructure in the federal waters of the Gulf of Mexico have shown that it would amount to an estimated US$40bn to US$70bn. According to a 2024 report by the Governmental Accountability Office (GAO), out of a total of 8,000 wells and 1,600 oil and gas platforms, nearly 2.700 wells and 500 platforms are overdue for decommissioning. To be considered overdue, a platform needs to be unoperational on an active lease for more than 10 years or left standing with an inactive lease for well over a year. In case of the latter, the lease may have either expired, been relinquished or terminated.
Shallow and deep water wells are the two main types of wells located in the Gulf of Mexico. While shallow-water wells were initially developed by large oil companies, they were later sold to smaller companies over the years, that lacked the financial resources of major oil companies. Being of minimum economic value, shallow-water wells are often at a high risk of being abandoned by their operators. On the other hand, deepwater wells are newer and relatively more complex that shallow-water wells. Being larger and deeper makes them higher in economic value. Therefore, decommissioning these wells during their end-of-life stage is costlier when compared to shallow-water wells.
According to a report by Ocean Conservancy, decommissioning a deepwater well costs a whopping US$24mn, while a shallow-water well costs only around US$660,000. Currently, there are more than 1,600 active deepwater wells in the Gulf of Mexico, with the cost of decommissioning these wells estimated to exceed US$34bn. Considering subsea pipelines that are often left discarded on ocean floors, the exact cost of their removal has not been estimated, but is expected to have a high cost similar to deepwater well decommissioning.
Conventional plugs can often fail to provide an effective solution when a well environment gets challenging.
This is where comes the high expansion bridge plug (HEX) with its capacity to expand enough to overcome narrow restrictions to reach and successfully seal off larger wellbore diametres. It's far-reaching range makes it a versatile and reliable downhole tool that can function in crucial offshore situations, from zonal isolation, well intervention to well abandonment activities.
No matter what casing size in question, elastomeric or metallic HEX bridge plugs are durable to tackle advanced expansion with heighetened strength for pressure resistance. Downhole positions that determine the mode of operation allow to accordingly select a sealing mechanism, be it elastomeric or metal-to-metal seals. The plug is then directed towards the targetted depth using conveyance methods, such as wireline, coiled tubing, or slickline. The approach to activate the plug expansion is determined by its design, involving hydraulic pressure, mechanical setting or electrical activation, as relevant. Operators can rest assured of unintended fluid migration between wellbore zones, thanks to the solidity of the seal created out of the expanded HEX plug. They are sturdy enough to keep certain areas away from the other so that the flow can be stopped.
While that serves zonal isolation, HEX bridge plugs can also assure permanent isolation of adandoned sections of a wellbore, which ensures environmental safety and regulatory compliance. On the other hand, it can also create temporary barrier to address casing leaks or unwanted fluid challenges in cases of well integrity issues or restoring well performance. Well testing is a crucial part of well intervention that requires operators to safely check pressure controls, and they can rely on HEX bridge plugs for this.
Houston-based oilfield technology company called SLB has to its name a hi-ex retrievable bridge plug which operates in the set-and-retrieve format and is rated up to 4,000 psi and 250 degF. It is specifically designed for through tubing applications, which comes with SLB's segmented-ring technology that boosts internally to create a gas-tight seal.
To know more about the global well intervention scene, click here.
Houston-based oilfield technology company Baker Hughes' Prime Compact Puncher is one of the finalists for the 2025 ICoTA Global Intervention Technology Award, the winners for which will be declared towards March end during the SPE/ICoTA Well Intervention Conference and Exhibition.
The other nominations include TorcCollector by E Plug AS, riserless coiled tubing in a live subsea well from RLWI vessel by TechnipFMC, high resolution dual caliper and slim multielement cement and corrosion tool combination by SLB, and Wellgrab by Welltec.
The Prime Compact Puncher is an advanced electro-mechanical puncher technology that gives way through spaces between two strings of downhole tubing. The puncher comes with an orientation module that directs it to the high side of a pipe where flow is optimal. There it can punch multiple circulation holes at the same depth level, boosting fluid consistency during circulation.
While it's an autonomous process operating on the basis of inputted parameters, an engineer can still maintain manual supervision if and when required. When it comes to well security, the puncher's anchor system goes on alert mode in cases of power loss, shutting down automatically and tools safely pulled out of the holes.
The punch head and anchor kits can be customised on the basis of the pipe size, and the drilling-bit comes in either 25 mm or 12 mm in OD, creating up to 0.792 inches of flow per punch.
The model's feedthrough wiring supports the deployment of additional technology below enabling single-run, multi-function solutions e.g. punch and cut in a single run.
To know more about the global well intervention scene, click here.
Chevron has recently completed a rigs-to-reef campaign across the former Genesis Platform which was submerged off the cost of Louisiana last year.
In its previous life above the waves, Genesis was referred to as an ‘offshore gamechanger’ with its 705-foot, 28,700-ton steel floating spar which was the first to house both drilling and production facilities.
Now, the platform houses an abundance of marine life after the operator chose to undergo a rigs-to-reef programme. This is not the first time Chevron has repurposed offshore components, in 2022 the Pascagoula Refinery donated equipment to be repurposed into artificial reefs.
Given the sheer scope of end-of-life activities needed across the Gulf for aged assets, the Bureau of Safety and Environmental Enforcement has adopted the rigs-to-reef programme, and it is has presented itself as an attractive option for operators to lessen the financial burden of their decommissioning liabilities.
More information regarding rigs-to-reef programmes across the Gulf of Mexico can be found here and here.
A federal judge in Louisiana has rejected a bid by three US states to block a rule adopted in 2024 that strengthens the financial assurance requirementsfor offshore oil and gas companies to ensure they meet their decommissioning obligations.
The judge declined to issue a preliminary injunction sought by the Republican-led states of Louisiana, Mississippi and Texas along with the Gulf Energy Alliance, Independent Petroleum Association of America, Louisiana Oil & Gas Association, and U.S. Oil & Gas Association.
The 2024 rule was issued by the U.S. Bureau of Ocean Energy Management (BOEM), which noted that since 2009, more than 30 corporate bankruptcies had occurred involving offshore oil and gas companies that did not have sufficient financial assurance to cover their decommissioning obligations, which had highlighted a weakness in BOEM’s current supplemental financial assurance programme. BOEM noted that the new rule finalises amendments to existing provisions and increases regulatory clarity about financial obligations “to better protect the taxpayer from potentially bearing the cost of facility decommissioning and other financial risks associated with OCS development, such as environmental remediation.” The new rule includes the requirement that companies which cannot provide adequate financial assurance have to put up a surety bond.
The three states and industry groups argued that the rule if enforced would result in "potentially existential consequences" for small and medium-sized companies as they would be unable to obtain such bonds.
The judge said that issuing a preliminary injunction was not warranted on the grounds that the threatened harm is not imminent, given that the new requirements are being phased in over three years, and demands for supplemental financial assurance would not be issued until mid-2025 at the earliest.
"While these harms may be likely, a preliminary injunction can only be issued if the threatened harm is also imminent," the judge said.
However he said he would expedite the case so the court can reach a final decision on the merits before the demand letters are issued and plaintiffs incur any resulting costs.
Watch this space!
Deep water well control service provider, Marine Well Containment Company (MWCC), has onboarded W-Industries with a multimillion contract to conduct the engineering, fabrication, and delivery of its new drill-ship deployed containment system.
This will enhance the coverage for potential deep water well control situations that majorly impact the offshore oil & gas industry. MWCC’s new MODU Deployed Containment System (MDCS) will be put into place by W-Industries, involving designing, manufacturing, and integration of its seven key flowback modules. This new equipment will further enhance MWCC’s already extensive capabilities to capture and keep hydrocarbons out of the environment in the event an incident well cannot be immediately shut-in. Designed to operate reliably in challenging offshore environments, the flowback solution will provide dependable performance for up to six months, allowing sufficient time for relief wells to be drilled to permanently plug the well.
“W-Industries is proud to partner with MWCC on this critical project,” said Michael Bain, SVP Integrated Systems at W-Industries. “With our extensive technical experience in offshore automation and modular fabrication, we are dedicated to delivering an efficient and robust solution that will significantly enhance MWCC’s containment response capabilities.”
“MWCC is excited to work with W-Industries on this important enhancement to our current flowback capabilities, a great example of our never-ending focus on continuous improvement,” said David Nickerson, CEO of MWCC. “W-Industries’ expertise in delivering highly automated modular processing systems is exactly what MWCC was looking for.”
This partnership reinforces W-Industries’ leadership in offshore energy innovation, particularly in supporting industry safety initiatives and regulatory requirements. By contributing to MWCC’s continued advancements in well control capabilities, W-Industries is demonstrating its commitment to operational safety, regulatory compliance, and offshore risk mitigation. This positions the company as a trusted partner for offshore and subsea energy solutions, ensuring that well containment technology continues to keep pace with developments in offshore drilling practices.
To address the challenges associated with offshore oil and gas decommissioning, the Ocean Conservancy has recommended the following actions to be taken to set the stage for long-term success:
The Bureau of Safety and Environmental Enforcement (BSEE) should develop mandatory decommissioning plans, under which operators are able to clear their decommissioning backlog within a set timeline. For offshore wells and platforms located on expired, terminated, or relinquished leases, the BSEE must enforce appropriate decommissioning deadlines and ensure that they are up-to-date. In case of uncertainities regarding the enforceability of BSEE sanctions, the agency should issue clarifying guidance or set up new or revised guidelines.
For idle wells and platforms located on active leases, the BSEE should codify its decommissioning deadlines for such infrastructure. It should also shorten deadlines to ensure that idle wells and platforms are cleaned up promptly, while ensuring that these wells and platforms are decommissioned within one year. Furthermore, the BSEE should be cautious of granting decommissioning waivers for potential future use of wells or platforms. In case it does grant a future use waiver, the agency should require operators to provide supplemental financial assurance that will cover the full cost of decommissioning. The BSEE should also increase its use of sanctions to compel compliance with decommissioning deadlines.
When a pipeline no longer proves useful, the BSEE should require its owner to remove it from the seabed. Regulations need to be revised and the agency needs to permit decommissioning in place only in rare circumstances, during which operators need to monitor the condition and location of the pipeline over time to ensure that it remains secure. Moreover, a fee needs to be paid to combat the impact of the discarded pipeline. The BSEE operators are also required to perform site clearance activities and ensure that the agency steps up its observation, inspection and verification, so that it does not entirely rely on self reported data provided by the operators.
The Bureau of Ocean Energy Management (BOEM) should also consider implementing a system that would require each lessee to establish a dedicated account, into which the lessee would invest funds sufficient to satisfy estimated decommissioning obligations. The main advantage of this system is the absence of bonding requirements. Funds should also be made available to the lessee during the conclusion of lease operations. Most importantly, the BOEM should ensure minimisation of US taxpayer exposure to decommisioning liabilities.
The BSEE and BOEM need to establish 'fitness to operate' standards to ensure that lessees and operators are qualified to conduct business on federal offshore oil and gas leases. Factors such as past compliance, and lease permit terms and the financial health of lessees and operators need to be considered. A formal rulemaking process needs to be undertaken to ensure that the standards are enforceable. During this process, agencies must disqualify existing or potential lessees or operators that fail to meet the required fitness standards.
Both the BSEE and BOEM need to increase their commitments to transparency and data sharing in regard to offshore oil and gas decommissioning operations. By expanding their dashboard with additional details on status and ownership of wells and pipelines, they can ensure that publicly available data is more accessible and understandable. The dashboard could also be made more elaborate and user friendly by adding more details about the disposition of structures, including the reuse of platforms and rigs-to-reeds status. Furthermore, it could also disclose estimated and final costs for decommissioning activities.
To strengthen government oversight and enforcement of offshore oil and gas decommissioning activities, the Congress can pass legislation mandating any of the above policy solutions and also to achieve outcomes that are beyond the existing authority of administrative agencies. Additionally, job training programmes can also be facilitated to train those oil and gas workers who are interested in transitioning to work on renewable energy projects or offshore decommissioning work.
Nauticus Robotics has announced the signing of a definitive agreement to acquire subsea robotics expert SeaTrepid International.
The strategic acquisition, which is projected to be completed by May 2025, underscores Nauticus’ commitment to innovation and revenue growth in 2025. By integrating Nauticus’ AI-driven autonomy software ToolKIT into SeaTrepid’s existing ROV fleet, the combination will showcase strong advancements in power efficiency and operational performance.
The ability of ROVs and Aquanaut to communicate at depth unlocks new service opportunities which enable the two autonomous systems to collaborate in delivering cutting-edge underwater solutions.
Bob Christ, SeaTrepid’s previous CEO and now President of SeaTrepid Operations, said, “We look forward to combining with Nauticus to extend ROV capabilities and enhance execution on a global scale."
David Huber, current SVP of Ocean Minerals, commented, “SeaTrepid is a long-time reliable subsea services provider to the deepwater companies I have worked for over the past several decades. With the combination of Nauticus' autonomous cutting-edge controls technology coupled with SeaTrepid's deep knowledge of subsea services, I see this as a breakthrough development for the offshore sector."
While subsea pipelines that are not in use are considered obstructions and need to be cleared by operators from the seafloor, there are a number of gaps in regulations governing the decommissioning of subsea pipelines.
For example, when the BSEE staff refuses to find a pipeline as obstructive, they may proceed to clear the inside of the pipeline, secure its ends, and leave it on the seafloor. This is considered an exception which has resulted in nearly 97% of disused pipelines to remain on the ocean floor. According to the Governmental Accountability Office (GAO), operators had left around 18,000 miles of disused pipeline at the bottom of the Gulf of Mexico, as of 2021. Although these structures might go on to become an obstruction over time, their removal has been largely unsuccessful in most cases, due to a lack of funding mandate allocated towards pipeline removal.
Another notable loophole is the absence of fixed decommissioning deadlines within existing regulations. Verification regarding the absence of obstructions on decommisioned pipeline sites are also not mandatory. Moreover, BSEE regulations do not require operators to monitor and report on decommissioned-in-place pipelines, nor does BSEE itself monitor decommissioned-in-place pipelines. There is also no fixed data on the extent to which the industry is actually complying with any of the agency regulations that have been laid out.
Last month, LLOG Exploration, a US-based privately owned oil and gas company, initiated development studies for two hydrocarbon-bearing wells following a successful three-well exploration and appraisal campaign in the Gulf of Mexico, now rebranded as the Gulf of America.
This is according to a report by Offshore Energy.
The campaign, which included the Who Dat East and Who Dat South wells, has yielded promising results, prompting further evaluation of potential development options.
The Who Dat East well, drilled in late April 2024 using Noble’s Noble Valiant drillship, revealed a hydrocarbon-bearing aggregate net pay thickness of 44 m measured depth (MD), with 31 m MD within two discrete reservoir units.
The joint venture partners—LLOG (operator, 40%), Karoon (40%), and Westlawn (20%)—are now conducting development concept studies to assess the technical and commercial viability of the Who Dat East prospect.
Karoon has revised its net revenue interest (NRI) for Who Dat East’s 2C contingent resource upward by 190%, from 5.4 million barrels of oil equivalent (boe) to 15.7 million boe, based on data from wireline logs, fluid samples, and subsurface studies.
The Who Dat South well, drilled in the fourth quarter of 2024 using Seadrill’s West Neptune drillship, reached a total depth of 7,014 m MD.
Preliminary interpretations indicated hydrocarbon-bearing sandstone intervals with an aggregate true vertical thickness (TVT) of 67 m, exceeding pre-drill estimates of 40 m.
Initial analysis of formation pressure measurements and fluid samples confirmed the presence of high liquid yield gas-condensate fluid.
The well has been suspended as a potential future producer pending further joint venture studies.
In contrast, the Who Dat West well, drilled in late December 2024 and reaching a total depth of 7,147 m in January 2025, did not encounter significant hydrocarbon-bearing intervals and has since been plugged and abandoned.
The Who Dat field, located in 800 m of water offshore Louisiana, has been in production since 2011. The field produces a mix of 60% oil and 40% gas from nine wells, processed through the Who Dat floating production system (FPS) and transported via common carrier pipelines.
Gross production in Q4 2024 averaged 29,576 boe per day, a 3% decline from the previous quarter due to an extended 18-day maintenance shutdown caused by Hurricane Rafael and a gradual 10-day ramp-up period to restore full production.
Average realised prices for Who Dat liquids, including oil, condensate, and natural gas liquids (NGLs), fell by 9% to US$68.44 per barrel, reflecting global oil price trends. However, the average realised gas price increased by US$83.07 per thousand cubic feet (mcf), driven by higher seasonal demand during winter.
Dr Julian Fowles, Karoon’s CEO and MD, said, “In the US, the Who Dat gross production for the quarter was 3% lower than in 3Q24, primarily due to the planned annual platform shutdown and gas compressor maintenance. As a mature asset, without interventions Who Dat production, is expected to naturally decline by approximately 15% pa on average.
“During 2024, natural decline was largely offset by well interventions, sidetracks and production system optimisations. 2025 production will also benefit later in the second half from two well interventions, in line with our long term aim to offset decline rates through periodic infield activities.”
The Shenandoah floating production system (FPS), a key component of Beacon Offshore Energy’s deepwater project, has reached the Gulf of America following its journey from South Korea.
Built at HD Hyundai Heavy Industries’ shipyard in Ulsan, the 26,050-metric-ton FPS was transported aboard the semi-submersible vessel Xin Yao Hua and arrived at Kiewit Offshore Services’ fabrication yard in Ingleside, Texas, on 10 February 2025.
The unit is now undergoing final preparations and regulatory inspections before its installation at the Shenandoah field in the Walker Ridge area.
With a nameplate capacity of 120,000 barrels of oil per day (bopd), the FPS is set to play a pivotal role in the Shenandoah Phase 1 development.
Mooring pile installation has already been completed, with infield pipelay activities scheduled for the first quarter of 2025.
The project’s 102-mile SYNC oil export pipeline and upgrades to the CHOPS GB 72 platform are also finished, paving the way for first oil production in the second quarter of 2025.
Located approximately 230 miles from New Orleans in water depths of up to 5,500 feet, the Shenandoah field is a major deepwater venture for Beacon Offshore and its partners.
The company has also sanctioned Shenandoah Phase 2, which includes drilling two additional wells, expanding the FPS capacity to 140,000 bopd, and installing a subsea booster pump to enhance hydraulic efficiency.
These activities, planned between 2025 and 2028, are expected to add 110 million barrels of oil equivalent (MMBOE) in resources.
To support the expanded development, Beacon Offshore and its partners, including HEQ Deepwater and Navitas Petroleum, have secured an additional US$mn in debt commitments, bringing total project financing to over US$1.2bn.
In parallel, Beacon Offshore is advancing plans for the Shenandoah South discovery in Walker Ridge 95. This project, located in water depths of 5,800 to 6,000 ft, will leverage the existing Shenandoah FPS infrastructure via a three-mile subsea tieback.
Initial production from Shenandoah South is anticipated in the second quarter of 2028, with an estimated 74 MMBOE of resources. A final investment decision for Shenandoah South is expected by mid-2025.
A recent report on the North America Decommissioning and Closure Service market by Verified Market Reports forecasts that the market will reach US$14.8bn by 2030, growing at a CAGR of 6.9% from 2024 to 2030.
This is driven by factors such as ageing infrastructure, stricter environmental policies and the increasing cost-effectiveness of decommissioning technologies, with key advancements including improved safety standards, automation of certain decommissioning processes and enhanced waste management techniques.
Ageing infrastructure is a major driver with older plants requiring decommissioning and closure as they reach the end of their life cycle, to ensure compliance with safety and environmental standards, such as the BSEE regulation that stipulates that wells must be plugged and abandoned within three years of being deemed ineligible for further work, and platforms must be removed within five years of being no longer useful for operations.
Increasingly stringent environmental regulations and policies related to waste disposal, emissions control and site remediation are pushing companies to engage in responsible decommissioning practices and improve the environmental footprint of their operations, which is vital for safeguarding public health and the environment.
Trends such as the emphasis on environmental sustainability and the integration of circular economy practices also play a significant role in shaping the market’s future, with an increasing focus on repurposing and recycling decommissioned assets.
Technology plays a critical role in improving the efficiency, safety and environmental impact of decommissioning services. The integration of advanced technologies such as AI, drones, robotics and automation in the decommissioning process has significantly improved efficiency, reduced human exposure to hazardous environments, and lowered operational costs. Furthermore, advancements in data analytics and AI help companies manage decommissioning projects more effectively by predicting potential risks and improving decision-making.
Challenges highlighted by the report include ongoing supply chain disruptions, particularly in the materials needed for decommissioning projects, which can result in delays, necessitating the improving of supply chain management and diversification of sources of materials. Navigating complex regulatory environments can also delay projects, with increased collaboration between service providers and regulatory bodies needed to streamline approval processes. Pricing pressures are also a constraint, driving the leveraging of technology to reduce operational costs and improve overall efficiency.
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