Mark J. Kaiser

Since 2016, the Bureau of Safety and Environmental Enforcement (BSEE) has collected decommissioning expenditure data from operators in the deepwater US Gulf of Mexico, defined as water depth greater than 122 m, to estimate the decommissioning liability of leases. BSEE uses both statistical tools and work decomposition methods to estimate the decommissioning cost of all active wells, structures, and pipelines on deepwater leases. The purpose of this paper is to evaluate BSEE cost estimates in the deepwater US Gulf of Mexico across four decommissioning stages and to infer unit cost statistics and cost functions in the region. Fixed platforms in 250–500 m water depth are expected to cost between $10 and $80 million to decommission, spars about $55 million, ship-shape floaters around $30 million, and tension leg platforms and their smaller (mini) versions between $18 and $25 million. The deepwater decommissioning market value is estimated at $24.3 billion circa 2022.

The Bureau of Safety and Environmental Enforcement (BSEE) has collected decommissioning expenditure data from operators in the US Gulf of Mexico since 2016 to estimate the decommissioning liability of federal leases. BSEE uses the collected data to estimate the expected decommissioning cost for every active wellbore, structure, and pipeline segment in federal waters but does not otherwise disclose the statistical results of their data collection efforts or methods employed in cost estimation. The task of this paper is to summarise BSEE decommissioning cost estimates in the shallow water US Gulf of Mexico for each of the main decommissioning stages and to infer unit cost statistics and cost functions in the region. Fixed platform removals are expected to cost on average $977,000 in water depth less than 30 m and up to $3.6 million in water depth from 61 to 122 m, about three times more expensive than caisson removals in similar water depth.

Operators have spent $84 billion Canadian dollars in exploration, development, and production offshore Newfoundland, Canada, between 1966 and 2019, and have produced about 2 billion barrels of an estimated 3.3 billion barrels recoverable oil. Four major projects have been developed—Hibernia, Terra Nova, White Rose/North Amethyst, and Hebron—using two development concepts, gravity-base structures and floating production storage and offloading vessels. The region is characterized by severe storm and sea conditions, including the presence of icebergs, which challenge all aspects of exploration and development. From 1998 to 2019, exploration and delineation drilling cost averaged $90.9 million per well and $26,494 per meter drilled. Development wells drilled from mobile offshore drilling units over the same period averaged $91.1 million per producer well and $68.8 million per injector well. Regional development cost was $32.5/bbl since the start of production and is expected to fall to $22/bbl when recoverable volumes circa 2020 have been extracted. Average regional production cost from 2006 to 2019 is estimated at $23.4/bbl and ranges from $16.8/bbl at Hibernia to about $35/bbl at Terra Nova and White Rose. This is the first detailed evaluation of exploration, development, and production cost offshore Newfoundland.

Hydrocarbons are produced offshore in more than 50 countries and contributed about a quarter of world production c.2020, slightly more for crude oil and slightly less for natural gas. All oil and gas projects involve technical, environmental, economic, and financial challenges, but offshore projects are especially sensitive to these factors and often require advanced engineering and innovative technologies to commercialise. Offshore projects may be put on-hold for many years due to technology gaps or technology too expensive to implement. In this review, highlights of the world’s deepest, largest, longest, tallest, heaviest, most complex, most difficult, and most expensive wells, structures, pipelines, and subsea equipment are presented in offshore development and decommissioning projects. Key engineering considerations and technology innovations are described. The perspective of this review is broad and aimed toward the general non-specialist reader bringing many topics together for the first time.