Page 17: of Offshore Engineer Magazine (Jul/Aug 2024)

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MARKETS DECOMMISSIONING he safe, timely and cost-effcient decommission-

Diving into the US GoM Abandonment Landscape ing of offshore infrastructure is one of the big

The US GoM is one of the areas most impacted, ac- challenges faced by the oil & gas sector. We es- counting for almost US$40 billion of the global bill –

T timate that the liability currently stands at over around 80% of this is attributable to deepwater projects. $300 billion (real terms), and this will only increase as The major cost item is subsea well abandonment. While companies continue to make and develop new discoveries. most facilities can be foated off and sold for scrap, the

Key offshore producers Brazil, the US Gulf of Mexico (US wells must be dealt with in-situ and require the use of ves-

GoM), the UK, and Norway face the largest bill at almost sels to plug and abandon the wellbore. Per reporting to $150 billion combined.

BOEM, this cost averages $28 million per well.

A key concern for governments is ensuring the sector is

According to the regulator, there are almost 100 com- able to cover these abandonment obligations, and the costs panies with some type of liability in the US GoM. The don’t end up with the taxpayer. Several high-profle off- majority of the liability (around 70%) is associated with shore bankruptcies in recent years have revealed regulatory the top 15 E&Ps, all sizeable companies with large bal- weakness that left the taxpayer on the hook. Countries ance sheets and major participants in deepwater projects. have been working to tighten their rules, most recently The most exposed are the three big legacy producers (bp, in the US where the regulator (BOEM) introduced new Chevron, Shell), along with Talos Energy given the large rules for the US Outer Continental Shelf (OCS) that have infrastructure-based portfolio it has built through its placed the topic front and center.

M&A strategy over the last few years.

JULY/AUGUST 2024 OFFSHORE ENGINEER 17