3. OFFSHORE:

Idled Gulf rigs a growing issue for industry

Published:

HOUSTON -- Offshore oil and gas rig decommissioning workers see a tough road ahead as hundreds of idled or abandoned platforms litter the Gulf of Mexico.

Many sit idle because they have expired leases. And some of those that are not waiting for operators to breathe new life into them can remain as fish habitat under state and federal rigs-to-reefs programs. But those that don't qualify will eventually need to come down.

The Bureau of Safety and Environmental Enforcement, which oversees the offshore energy industry's environmental performance, says 813 platforms in the Gulf of Mexico are idle or nonproducing. Of these, 359 are scheduled to be removed next year.

But contractors who do this work are voicing concern that they may not have enough assets or skilled workers to get the job done. And the tricky business of tearing down an offshore rig is only getting thornier as decommissioning moves to deeper waters, they say.

A survey of more than 100 decommissioning experts was made public by DecomWorld, an industry intelligence group owned by London-based FC Business Intelligence Ltd. The survey took a sampling of opinions and attitudes from industry insiders across the United States, most based in Texas and Louisiana.

The survey results suggest the industry is excited about the growing opportunity for decommissioning contract work in the Gulf. But there's also evidence of concern that growing demand for decommissioning services could be straining companies' ability to keep up.

Uncertainty over regulations, workforce shortages and business economics rank as the top concerns for the industry. More than 35 percent said a lack of clear understanding of existing and evolving regulations and inadequate communication with regulators will cause them their biggest headaches next year.

About 20 percent said they believed the decommissioning industry's biggest problem moving forward is a "lack of trained and experienced staff."

Rig decommissioning workers also seem evenly divided on how the move toward tearing down platforms at ever-increasing water depths will change the nature of their work.

More than 50 percent answered that the deeper realms of the Outer Continental Shelf will prove "a huge new challenge for the industry to overcome." Still, 45 percent of their peers disagree, telling DecomWorld that the move will turn up a few new challenges but will otherwise end up being a straightforward transition.

Almost all agree that, with 359 Gulf platforms slated for removal in 2013, opportunities for business next year will abound. But there are doubts as to whether all the work can actually be completed.

"Idle iron will be with us beyond 2013, and I do not feel there are adequate assets to handle the projected removals for 2013," said one anonymous respondent.

Offshore Louisiana will be the dominant playground for platform tear-down work. Seventy-two percent of the work is located there, industry insiders report, while offshore Texas holds around 24 percent of the volume of work available for next year.

The industry also sees the rigs-to-reefs debate becoming louder as decommissioning advances. Offshore platforms sometimes lead to the formation of coral reefs that become vibrant habitats for aquatic species. Marine scientists and recreational fishermen often advocate in favor of keeping idle platforms in the Gulf to facilitate biological diversity.

Nearly 70 percent of the workers polled said rigs-to-reefs will be a big issue next year.