Offshore Investment: The Case for Responsible Production in the GOM

Tags: Offshore

May 25, 2022

Offshore Well Oversight

The U.S. Minerals Management Service (MMS) — the regulatory agency recently renamed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) — is responsible for offshore wells.

The BOEM manages more than 55,000 wells scattered across the 4 regions (Pacific, Alaska, Atlantic, and Gulf Coast) of the Outer Continental Shelf.

Bubbles from the Bottom

Problems in offshore wells parallel onshore issues: deteriorated cement; corroded casing; etc. Sealing leaks in offshore wells is more complex due to challenges related to distance, water pressure, and depth.

Also, similar to onshore wells many older wells weren’t properly plugged and now leak. Federal agencies and environmental groups have pushed for inspections and plugging support, but sufficient funding has not been available.

Methane & Contamination

Why it’s a problem orphan and poorly decommissioned wells negatively impact the environment, society, and the economy. A study on leaking wells in the North Sea estimated that improperly abandoned wells in the region contribute 3,000 -17,000 metric tons of methane emissions annually, the CO2 equivalent of emissions from 16,000 to 91,500 cars.

Permanent Abandonment

Plugging offshore wells is also more expensive. A recent analysis by Columbia University estimated the cost to plug all 32,000 temporarily abandoned wells in federal waters would be approximately $9.8 billion.

Additionally, the cost of permanently plugging the 10,500 active and 3,500 temporarily abandoned wells in the Gulf of Mexico is estimated at $3 billion.

No two wells are the same and thus the process of decommissioning them varies drastically. Some wells can be plugged in just 10 days at a cost as little as $200,000, while complex deep-water jobs can take months to plug and cost millions per well.

Various federal and state agencies are involved in managing offshore energy resources — Department of the Interior, Bureau of Safety and Environmental Enforcement (BSEE), BOEM, and others. For 2022, the BSEE requested $30 million to properly seal orphaned wells and pipelines.

While the Infrastructure Investment and Jobs Act includes over $4.7 billion for onshore plugging, remediation, and restoration of orphaned wells, no such investment exists for offshore wells.

Green Energy in the Gulf

Additional investment in recording, assessing, and decommissioning offshore wells could sustain 10,500 jobs annually over 10 years. Initiatives like the Rigs-to-Reefs program, which repurposes platforms as artificial reefs where natural reefs are lacking, have already proven successful with 573 platforms reefed in the Gulf of Mexico, saving money, creating jobs, and benefiting the environment.

Reliance on overseas energy sources is harmful for the economy, national security, and the climate. Implementing a framework for effectively sealing and monitoring offshore wells will provide quality jobs, protect our waters, and secure a reliable and responsibly produced supply of U.S. energy for years to come.

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