Talos Energy has reported a total US$37.7mn in capital expenditures for plugging and abandonment (P&A) and settled decommissioning obligations for the third quarter 2024.
Besides comittment to end-of-life activities, the company's total capital expenditures for the period stands at US$118.9mn. Its quarterly report also revealed an increase of spending on P&A and decommissioning to US$100-110,000.
Talos' decommissioning services up untill 2028 has been covered by Helix Energy Solutions Group under an agreement signed early last year. This agreement empowers Helix with the first right of refusal involving significant segments of Talos’ decommissioning schedule in the US Gulf of Mexico. Helix will be in charge of leading Talos' abandonment goals, including offshore wells, pipelines and platforms. For the campaign, Helix Alliance, the company's shallow water abandonment wing from Louisiana, will be deployed for structure removals by using its derrick barges, liftboats for plug and abandonment activities, and dive support vessels (DSVs) for pipeline abandonments. The initiative will see multiple offshore supply vessels (OSVs) among a divwerse range of other assets as well.
Speaking of the agreement, Helix’s President and Chief Executive Officer, Owen Kratz, had said, “We are excited to have been awarded this significant framework agreement for well and structure removal and decommissioning. Helix and Talos have worked together on field production, well intervention and decommissioning in the deepwater arena for many years, and this framework expands the relationship onto the shelf, further demonstrating Helix’s position as the preeminent company for full-field decommissioning in the Gulf of Mexico.”
The second and third quarters of 2024 saw significant decommissioning obligations for Talos, during which time the plugging and abandoning of the Sebastian prospect also took place. While operated by Murphy Oil Corporation at a 26.8% interest, Talos holds a 25.0% interest in the prospect. Other partners include Westlawn Americas Offshore at 18.2%, Alta Mar Energy at 20.0%, and Houston Energy at 10.0%.
Drilled in the third quarter 2024, Murphy had to finally plug and abandon the Sebastian number 1 exploration well after only non-commercial hydrocarbons were encountered. This involved the removal of various tubulars and equipment, which can only be initiated once all safety and sustainability measures are put into place.
Talos had eneterd into an agreement regarding the Sebastian prospect in the Mississippi Canyon Block 387 of the US Gulf of Mexico, where drilling began in the later half of August 2024. The drilling aimed to reach a true vertical depth of approximately 12000 ft of the rich Upper Miocene K-1 reservoir situated in the region. There were plans to tie back the Sebastian prospect to the Delta House facility, where Talos holds interests as well.
While initial tests suggested an estimated gross resource potential of 9-16 mn boe with an aticipated early production rate of 6-10 mn boe per day, from this amplitude-supported prospect, post drilling results hardly matched expectations. The well had to be plugged and abandoned even though stakeholders initially considered it as one of the 'tactical, lower-risk opportunities' that can be 'brought online relatively quickly' to aid bigger upstream projects.
To know more about Gulf of Mexico's decommissioning and abandonment scene, click here.
Failure to decommission offshore oil and gas infrastructure on time and in compliance with requirements poses safety, environmental, and financial risks.
Failure to maintain offshore oil structures, while leaving them idle and unused can degrade these structures and pose safety risks to employees and regulators visiting the site. Moreover, a lack of maintenance can restrict access to the platform, requiring them to undergo expensive repairs and further contributing to delays in decommissioning operations. Moreover, poorly maintained structures lack appropriate lighting which can behave as a navigational hazard by disrupting ships that are operating in the area.
Delays and noncompliance with decommissioning requirements can give birth to financial risks, particularly to the US government and taxpayers. In most cases, post-bankruptcy decommissioning liabilities in federal waters have been met by co-owners, previous owners, or new owners. However, some instances have had the government having to use taxpayer dollars to pay the costs of cleaning up after delinquent oil companies. When a current leaseholder is unwilling or unable to pay decommissioning costs, federal regulators can, under a system known as 'joint and several liability,' require any or all co-owners or previous lease-holders to pay the decommissioning costs for that infrastructure. For big oil companies with operations in the Gulf of Mexico, these 'contingent liabilities' could amount to two to six times the amount of their direct decommissioning liabilities. Oil companies often do not report these contingent liabilities on their balance sheets.
Some observers have voiced concern and doubt about the strength of federal joint and several liability regulations and the government’s ability to force previous lease-holders to pay decommissioning costs as more offshore oil and gas facilities reach the end of their productive lives.
Stagnant oil and gas infrastructures in the Gulf of Mexico can be vulnerable to deterioration and decay, thereby becoming a source of pollution. This is because detereoration and decay of these structures can lead to oil spills due to a failure of tanks and pipelines. The resulting release of corroded metal into the water can cause chronic pollution. Generally, offshore wells that are either improperly plugged or unplugged are found to become a source of pollution along with leaky or shallow-water wells or abandoned platforms that could be significant sources of greenhouse gas emissions.
While oil spills from idle or unused oil and gas infrastructure are unlikely to discharge high volumes of material, even small amounts of oil are toxic to marine organisms—from plankton to marine mammals—and can cause adverse impacts to their health or their ability to reproduce.
Moreover, deteriorated infrastructures can be prone to hurricanes and other major weather events, which have been increasing in frequency and intensity due to climate change. The Gulf of Mexico is subject to powerful hurricanes that can destroy equipment such as oil storage tanks, move subsea pipelines, or even topple entire platforms.52 Any of these events can trigger oil spills, either directly from the damaged equipment or through impacts to connecting or adjacent facilities.
Amidst the stringent regulations in place regarding liability in the face of end-of-life assets, and the substantial cost associated with decommissioning activities, the ‘Rigs-to-Reef’ policy the Bureau of Safety and Environmental Enforcement (BSEE) has adopted has presented itself as an attractive option in light of the sheer scope of end-of-life work ahead.
BSEE have previously stated that the policy can help operator’s cut their decommissioning costs by up at least a quarter, while remaining sustainably conscious in a process where concerns have been raised about environmental ramifications associated with decommissioning.
Looking deeper into the reefing process, as outlined in Offshore Network’s Gulf of Mexico Decommissioning and Abandonment 2024 conference (D&A GOM 2024), there are various types of reef constructions. Those consist of:
The process of rigs-to-reef operations include vehement survey and evaluation tests to ensure the rig structure is compatible with reef development (all of which is outlined on the BSEE website). The size of the platforms, structural integrity and locations of the structure of key factors to consider when determining the validity of the project. Thus far within the region, the Department of the Interior has approved approximately 600 rigs-to-reef proposals, with only a handful denied since the policy’s introduction in 1986.
Countless studies have been conducted by the US Government to examine the impact the reefs have both on the structures themselves and the surrounding marine ecosystem. One benefit is that of marine restoration and biodiversity enhancement – the deployment of artificial reefs in areas that have been affected by situations such as coral bleaching and destructive fishing practices allows new habitats to house a variety of marine life and play a significant contribution to ecosystem restoration.
Other benefits can include the enhancement of fisheries around the localised area; a rise in ecotourism, in particular destination diving; added coastal protection from erosion as the rigs act as submerged breakwaters; advancement in marine research; increased maintenance of nutrient cycling and water quality; contribution to environmentally responsible practices; and coral restoration and conservation.
On the other side of the coin, however, there has been some pushback within the industry regarding rigs-to-reef operations due to a number of posed risks associated with the process.
Some of the concerns include habitat displacement as some reefs can alter local marine habitats; the risk of pollution from improperly prepared materials; physical damage to the seafloor if the design or placement of the rig is not appropriate; damage to the surrounding ecosystem if the construction has not been actioned properly; the negative impacts associated with long-term maintenance of the rigs; the economic costs of reef management; and design flaws which may create conflict with the local environmental conditions.
While these concerns remain a continuous reminder about the fragility of rigs-to-reef operations, operator’s must decide whether shouldering the financial burden of fully decommissioning their assets outweighs the benefits presented by the reef policies. Even with these risks in min, the Gulf is currently one of the world’s leading nations for rigs-to-reefs projects, and the future continues to look bright for the environmentally-friendly alternative to decommissioning.
Playing a key role D&A GOM 2024, reefing discussions will once again shine in the spotlight for the 2025 edition of the world’s biggest decommissioning event. All of the details regarding the upcoming conference in April can be found here.
Ultra-deepwater applications require high performance, modular well stimulation services.
The digital control system in Caltex’s Rigless Stimulation Tool (RST) helps in minimising flow path restrictions as its fast response time and seamless integration into a Multi-Purpose Service Vessel (MPSV) with multiple command stations ensure prompt addressal.
The tool can withstand any chemicals used in stimulations and scale treatments, ranging from acids, solvents, paraffin treatments, fines, and asphaltene deposits in production tubing, completions, and reservoirs. Operators can deploy RST to access candidate wells, particularly the ones with limited direct vertical access (DVA) under production facilities, to safely operate interventions as well as other activities.
Caltex’s RST is rated for sub-ambient pressure operations where the well mudline pressure is lower than hydrostatic conditions. The company's instrumentation and conduits are suitable from near 0 PSIA to 15,000 PSIA at 10,000 feet subsea.
Learn more about Offshore Network's well intervention conferences here.
Fishing forms an integral part of even the plugging and abandoning process, besides its significance in drilling, completing or recompleting.
A North American company called Wellbore Fishing & Rental Tools LLC provides operators with these services, with a special emphasis on risks, costs and downtime reduction.
With strategically located yards in Port Fourchon and Texas City, the company's position near the loading docks serve as holding locations for fishing tools, eliminating shipping time, thus in turn, working wonders in bringing down NPT.
Comprising of a workforce with decades-long experience in the industry, the company personnel works on the basis of continued research and development to meet the demands and challenges of an ever-evolving industry. Personnel training in the company is usually driven by exposure to new equipment and process solution. Currently, the team is focusing on adapting real time technology to monitor tool performance parameters and high performance tool properties for extreme deep-water service applications.
To resolve methane emissions challenges during a decommissioning programme, Interwell P&A's RockSolid turns out to be an ideal solution
The company had addressed such an issue during a Canada operation, when it was able to shut in a shallow methane gas source ejecting around 0.55 cu/m per day by installing a gas-tight barrier at 773mKB inside a competent caprock.
The emission was initially isolated and later stopped, enabling a smooth delivery of the decommissioning programme. It was a result of a surface casing vent flow (SCVF) issue in a well, where two different gas sources were identfied following pre-intervention logging. The installation of the RockSolid barrier ensured that it was effectively sealed from the roots, allowing ongoing research to address the shallow source. This was shut off by the installed RockSolid that replaced the casing and cement, obstructing any hydrocarbon flow inside the borehole. As gas pockets above the barrier had bled off, the well decommissioning programme was carried out unhindered.
The RockSolid remains a sustainable plugging alternative.
Click here to register for Offshore Network's Gulf of Mexico Decommissioning and Abandonment conference.
One of the latest industry innovations in the subsea well intervention market is Unity's Subsea Compact Shear-Seal Blowout Preventer.
As a BOP safety head, the CSS can provide critical safety barrier above the subsea tree as part of the landing string.
A result of Unity’s original, field-proven, compact and lightweight surface design, the Subsea CSS comes with a friendly modular interface, ideal for any mode of deployment, be it rig-based, in-riser intervention, or light well intervention open water riser and riserless as well.
Redefining strength and durability in the subsea environment, the Subsea CSS can be classified as a high performing safety barrier which takes less than 10 seconds of closing time. It is 50% lighter than conventional designs, and measures 33.5″ at its widest point, requiring less deck space. Targeted at the shallow water market for standard pressure abandonment and intervention applications, the model requires on additional personnel for operation. It boasts of an universal shear and seal capability, applicable to rods, coiled tubing, wireline, slickline and e-line.
Easily adaptable to dual ram configuration, it is designed for easy access to rams and seals for redress and to replace rams for varying applications.
Check out Offshore Network's upcoming well intervention conferences here.
In December 2024, INEOS Energy acquisitioned the Gulf of Mexico deepwater assets of CNOOC Energy Holidays USA Inc., a subsidiary of CNOOC International Ltd, marking the third major investment for INEOS within the US in the last three years.
The deal includes the acquisition of non-operated assets built around two deepwater early production assets within the Gulf (Appomattox and Stampeded fields), as well as several mature assets and supporting businesses. The additional asset increase INEOS global production rate to more than 90,000 barrels of oil equivalent per day.
Brian Gilvary, Chairman of INEOS Energy, said, “This is a major step for us into the deepwater Gulf of Mexico, which builds on our growing energy business. INEOS Energy is all about competing in the energy transition to provide reliable, affordable energy to meet world demands as the population continues to grow.”
INEOS Energy’s CEO, David Bucknall, added, “The USA is a very attractive place for INEOS Energy to invest. This is our third deal in three years following the 1.4 mtpa LNG deal with Sempra and the acquisition of Chesapeake Energy’s oil and gas assets in South Texas. Total capital spend on energy assets in the USA now exceeds US$3bn, providing a strong platform for future growth.”
The Gulf of Mexico (GOM) is a critical region for offshore oil and gas production, with operators increasingly focusing on mature fields to meet energy demands sustainably.
As new field discoveries slow, industry leaders are directing resources towards maximising the efficiency and recovery of existing assets.
According to industry insights, the GOM accounts for a significant portion of global oil production from mature fields, where advanced well intervention techniques are proving instrumental in maintaining output.
With many platforms and wells in the region reaching the latter stages of their operational lives, optimising recovery has become a cost-effective and environmentally sound approach.
Unlike new developments, interventions on mature fields leverage existing infrastructure, minimising both capital expenditure and environmental footprint.
Technological advancements are at the heart of this strategy. Companies like Baker Hughes are introducing tailored solutions such as their Mature Assets Solutions programme, designed to enhance production efficiency while addressing sustainability concerns. Light well intervention technologies are also increasingly deployed in the region, enabling cost-effective maintenance and recovery improvements.
The well intervention market in the Gulf of Mexico is projected to grow steadily as operators shift their focus from exploration to maximising output from existing fields. Industry reports indicate increased spending on well interventions, with the region becoming a hub for innovation in this domain.
Challenges remain, including ageing infrastructure and tightening regulations. However, these also present opportunities for service providers and technology innovators. By addressing these issues proactively, operators in the GOM are positioning the region as a leader in sustainable offshore production.
The focus on mature fields in the GOM reflects a broader trend in the energy sector: achieving a balance between meeting current energy needs and progressing towards a more sustainable future. This approach ensures the Gulf remains a cornerstone of global offshore production while contributing to environmental and economic goals.
Blake Habbit has been promoted to Danos’ new Operations Manager to lead the growth and development of the company’s decommissioning services within the Gulf of Mexico.
In his role, Habbit will oversee the business operations and customer support throughout the decommissioning phase while coordinating across Danos’ diverse entity portfolio to ensure safe, seamless and efficient management of client’s end-of-life projects.
CEO Paul Danos said, “Blake’s extensive industry knowledge and proven track record of managing customer accounts make him the perfect fit for this role. We are confident that under his leadership, our decommissioning services will expand, and we will be able to support the changing needs of our customers as they transition to end-of-life.”
Habbit has 25 years of experience within the industry covering offshore production operations, drilling and safety. He joined Danos as a Production Services Account Manager in 2029 and was named Senior Account Manager in 2023.
Danos has previously aided in a series of decommissioning projects within the Gulf of Mexico, including two P&A campaigns for major operators in 2012 and 2017, details of which can be found on its website.
Helix Energy Solutions Group will continue its work in the Gulf of Mexico this year where it will carry out well intervention services as part of a multi-year contract with Shell Offshore Inc., signed in Q3 2024.
In the coming months, and as outlined by the contract, Helix will provide an increased minimum number of days annually with the Q5000 riser-based well intervention vessel, Intervention Riser Systems (IRSs), remotely operated vehicles (ROVs), and project management and engineering services which will cover fully-integrated operations from production enhancement to P&A.
Scotty Sparks, Helix’s Executive Vice President and Chief Operating Officer, said, “We are pleased to announce that Helix has successfully executed a long-term contract with Shell, a valued customer we have safely worked with on numerous projects around the world and with whom we look forward to continuing our excellent relationship. The contract is reflective of improving market conditions and increased demand for Helix’s assets and services, as we continue executing on our strategy by providing best-in-class and global leading well intervention services.”
Proposed legislation would direct the US Department of the Interior to submit an annual public report to congress on the status of decommissioning offshore oil and gas wells, platforms and pipelines.
The Plug Offshore Wells Act was introduced by Oregon Senators Ron Wyden and Jeff Markley before the end of 2024 and seeks to address the growing threat of abandoned offshore oil and gas infrastructure to marine ecosystems and the environment.
“Neglected oil wells off our coasts are a ticking time bomb that threaten our coastal communities and environment in Oregon and nationwide,” Wyden explained. “It’s unacceptable that Big Oil has dodged responsibility to clean up drilling sites and pollution. This legislation will provide the data needed to hold Big Oil accountable and protect the public as well as our waterways and marine life."
“Orphaned wells are an environmental catastrophe waiting to explode," Wyden added. "They pose the possibility of massive damage to the ocean by leaking oil and gas and must be addressed quickly.”
In submitting the new legislation (which was co-sponsored by Senators Peter Welch and Ed Markey), the office of Wyden quoted a recent study by the US Government Accountability Office (US GAO) which expressed that more than 2,700 wells and 500 platforms in the Gulf of Mexico are overdue for decommissioning. The study also found that the Bureau of Safety and Environmental Enforcement and the Bureau of Ocean and Energy Management are unable to effectively enforce decommissioning deadlines and financial assurance requirements.
The study by US GAO recommended steps congress could take to address the current backlog of overdue decommissioning requirements, including the instituting of new reporting requirements from the Interior Department to Congress on the status of decommissioning.
This is what the Plug Offshore Wells Act aims to do while also reducing financial burdens on taxpayers by increasing oversight of Big Oil companies and holding them accountable for the full terms of their offshore oil leases. The proposed legislation – which is supported by numerous organisations including the Center for Biological Diversity, Earthjustice, Natural Resources Defense Council, Oceana, Ocean Conservancy, Ocean Defense Initiative, and the Surfrider Foundation – has now been officially introduced to congress and has been referred to the Committee on Energy and Natural Resources.
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