Tag Archives: oil drilling platforms

The Trillion Dollar Mess: Taking Down the Oil Infrastructure

Some of the world’s largest oil companies have been ordered to pay part of a $7.2 billion tab to retire hundreds of aging wells in the Gulf of Mexico that they used to own, capping a case that legal experts say is a harbinger of future battles over cleanup costs.

A federal judge ruled last month that Fieldwood Energy a privately held company that currently controls the old wells and had sought bankruptcy protection, could pass on hundreds of millions of dollars in environmental liabilities to prior owners and insurers of the wells as part of its reorganization plan. Exxon Mobil,  BP, Hess , Royal Dutch Shell and insurance companies had objected to the plan. The dispute, litigated for months in federal bankruptcy court in Houston, centered over who should bear the enormous costs of capping and abandoning wells, primarily in the shallow waters of the Gulf of Mexico where an oil spill could wreak havoc. The companies could still appeal the ruling…

Jason Bordoff, founding director of Columbia University’s Center for Global Energy Policy said that the expenses to decommission oil-and-gas infrastructure world-wide will in the trillions of dollars. “Who bears the costs?” he said. “There will be people who want to pass the buck.”

BP and Shell have pledged to reduce their carbon emissions to zero by 2050. To accomplish that, those companies will have to sell off some oil-and-gas wells to get their related emissions off their books, say energy analysts. But such asset sales present huge risks for big oil companies because many of the buyers are smaller, privately held firms, like Fieldwood, which may not have the financial wherewithal to bear cleanup costs, Ms. Usoro said. This was Fieldwood’s second bankruptcy in two years.

These smaller companies buy the wells for pennies on the dollar and assume the cleanup expenses in the hope that they can reduce the assets’ cost structure and squeeze out the remaining barrels of oil profitably. “I’ve always questioned this business model,” said Ms. Usoro. “Are these guys able to take care of the end of life?”

Excerpts Christopher M. Matthews, Oil Companies Are Ordered to Help Cover $7.2 Billion Cleanup Bill in Gulf of Mexico, WSJ, July 6, 2021

Gambling with the Environment: Shell’s Decommissioning Plans in the North Sea

Giant oil firms have spent more than four decades pumping billions of pounds worth of oil from the seabed. But now decommissioned rigs in the North Sea are at the centre of an environmental storm with an oil giant under intense pressure to rethink plans to leave some of the platforms in the sea.

Several hundred oil drilling platforms in the waters off Scotland are due to be decommissioned over the next three decades as they approach the end of their operational lifetime.  Due to the cost and difficulty of dismantling the structures – each of which can be as tall as the Eiffel Tower – Shell proposed removing only the topside of its four Brent platforms, leaving the huge concrete legs in place.

A natural gas platform in Norway. Almost all of the 600KT structure will be submerged.

That resulted in the controversial suggestion that oil mixed with sediment in 42 out of 64 concrete storage cells – each up to 66 feet in diameter and 200 feet high, around the height of the Scott Monument in Edinburgh – should remain on the seabed. These could remain for up to 500 years after the platforms have been decommissioned.

Chevron oil platform

The plans have raised alarm in some quarters over the impact of leaks from the estimated 11,000 tonnes of raw oil and toxins remaining in the base of the four Brent installations – Alpha, Bravo, Charlie and Delta, all put up in the East Shetland basin in the 1970s.  It has emerged that a report of an expert evaluation group commissioned by the Dutch government has provided a critical analysis of the position and recommends a clean-up be carried out as agreed more than 20 years ago in international treaties.   See Brent Decommissioning Derogation: An evaluation. The special treaty known as Ospar, which was adopted in 1992, states that rigs, including their contents and pipelines, must be removed from the sea after decommissioning.

The experts said that removing all contaminated materials “presents the most certain solution”.  They say staying true to Ospar “not only avoids passing on potential problems to future generations” but also prevents “large amounts of negative public attention as was the case in the decommissioning of Brent Spar in the 1990s”.  When Shell proposed sinking the Spar oil storage buoy in 1995, it prompted protests by Greenpeace, petrol boycotts in Germany and a falling share price. The company was eventually forced to back down and find a more environmentally friendly plan.

In October 2019, Greenpeace activists from the Netherlands, Germany and Denmark boarded two oil platforms in Shell’s Brent field in a protest against the plans. They scaled Brent Bravo and hung banners saying “Shell, clean up your mess!” and “Stop Ocean Pollution”.

The 2019 report revealed that an earlier independent review group(that took place in 2017)said that a “leave in place” solution with appropriate navigational markers and safety zones gave “a risk in relation to shipping impact that Shell regarded as acceptable”.  The report added: “However, although the estimated probabilities of a collision may be low on a per annum basis, the consequences could be catastrophic and result in major injury and loss of life or serious marine pollution.”

Excerpts from North Sea oil decommissioning: pressure grows on Shell to back down, the Herald, Oct. 20, 2019