The Nickel Report

“Decommissioning” is the process of terminating oil and gas operations at offshore platforms. It includes dismantling and removal of platforms and related infrastructure to restore the ocean and seafloor to pre-lease conditions. As elaborated in a prior post, decommissioning may involve partial structure removal or toppling in place, including the creation of artificial reefs. The U.S. Department of Interior’s Bureau of Safety and Environmental Enforcement (BSEE) estimates that about 3,700 active oil and gas platforms are under its jurisdiction, 40 percent of which are over 25 years old and likely to require decommissioning soon.

BSEE’s jurisdiction in the Pacific Outer Continental Shelf Region (POCSR) extends to the federal waters off Washington, Oregon, California, and Hawaii. Only 23 oil and gas platforms are located in POCSR waters, all offshore of southern California.

Although thousands of Gulf of Mexico platforms have been decommissioned, with over 500 converted to artificial reefs, only one POCSR oil and gas facility has been decommissioned to date.  The “rigs to reefs” program—potentially available via California’s 2010 Marine Resources Legacy Act—has not yet been implemented offshore of California.

Production volumes from the offshore California platforms have decreased over the past 20 years, and most platforms’ operations have exceeded their projected life expectancy. Per BSEE and the Bureau of Ocean Energy Management (BOEM), a lease expires after six months without production absent suspended production approval, and decommissioning must occur one year after lease expiration.

Enter BSEE’s August 21, 2020 “Notice to Lessees and Operators of Federal Oil and Gas Leases In the Pacific Outer Continental Shelf Region” (2020 NTL), superseding a similar NTL issued more than a decade ago.

The 2020 NTL reflects amendments to the decommissioning regulations, clarifying how lessees should communicate and conduct decommissioning plans. Substantively, the 2020 NTL is similar to the 2009 NTL it supersedes, with the 2020 NTL providing additional guidance on decommissioning requirements, initial and final removal applications.

The 2020 NTL encourages lessees and operators to be “pro-active” in developing decommissioning applications, as the initial application is due at least two years before projected cessation of production, unless BSEE approves a different procedure. Applicants are urged to meet with BSEE’s POCSR staff “at the earliest practicable time” during early conceptual design stages, before the initial application is submitted, to identify permitting requirements, timetables, information needs, and environmental concerns.

The 2020 NTL states that lessees’ plans should focus on engineering and safety considerations and methods to assure compliance with the decommissioning standards. BSEE conducts an environmental review of decommissioning plans according to Council on Environmental Quality (CEQ) regulations, and BSEE procedures implementing the National Environmental Policy Act (NEPA). The environmental review involves consultation with various governmental agencies and is made available to the public.

The 2020 NTL also summarizes the regulations describing information that must be included in both the initial and final platform removal applications. Although the required information has not changed since the 2009 NTL was issued, there is no longer a requirement that the final application be submitted within two years of initial application submission. Among other things, the initial removal application must include removal procedures for platforms and related facilities, including pipelines; transportation and disposal plans; a projected schedule; and plans to protect marine life and the environment, including potential environmental impacts and proposed mitigation measures.

The final application must include more detail regarding the information provided in the initial application, as well as the results of any biological surveys conducted in the structure’s vicinity and plans to protect archaeological and sensitive biological features during removal. The 2020 NTL’s guidance on environmental considerations suggests lessees refer to the environmental documents they prepared for their Development and Production Plans (DPP), urges lessees to update their DPP, and notes that when developing measures to minimize and mitigate environmental impacts, “[a]t a minimum, your analysis should address the methods for plugging wells and removing platform topsides and jackets, as well as any subsea infrastructure….”

BSEE’s recent update of its POCSR decommissioning NTL signals renewed interest in the region, as platforms off the coast of California approach end of life.  The question in California is not whether offshore oil and gas platforms will be decommissioned, but when—and how.