Mariculture and Other Use for Offshore Oil and Gas Platforms

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Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure

By Steve Kolian and Paul W. Sammarco

Eco-Rigs Technical Report

Eco-Endurance Center 12605 South Harrel’s Ferry Road, Suite 3 Baton Rouge, Louisiana 70816 USA

Eco-Rigs is a Louisiana-based non-profi t organization created to preserve offshore oil and gas platforms habitats for mariculture, recreational fi shing and diving, and other eco-technologies that produce economic and environmental benefi ts to the citizens of Louisiana. Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure

By Steve Kolian and Paul W. Sammarco

Cover and Interior Design: Steve Kolian

Library of Congress Cataloguing [Publication Data]

Kolian, S.R., and P.W. Sammarco. Mariculture and Other Uses for Offshore Platforms: Rationale for Retaining Infrastructure.

ISBN#

Cataloguing Information:

Printed in the United States of America

Acknowledgements

We would like to thank Allen Walker, Toby Armstrong, Gregory S. Boland, Josh Collins, and Amy Atchinson for use of photographs. Images provided by Gregory S. Boland are not associated with any endorsement of the contents of this report. Many organizations provided valuable technical information, particularly Apache Oil, ChevronTexaco, Murphy Oil Corp., Advanced Resources International, U.S. Department of Commerce National Oceanic and Atmospheric Administration, and U.S. Department of Energy Ofﬁ ce of Fossil Energy. We would also like to express our gratitude to Chuck Bedell, Dailey Berard, Charles Broussard, Albert Guede, Scott Porter, Charles Reith, John Supan, and Tom Newland for interesting and valuable discussions on the issues covered in the text. Many thanks to Kevan Main (Mote Marine Laboratory), Ken Leber (Mote Marine Laboratory), Donald Kent, (Hubbs-SeaWorld Research Institute), Paula Sylvia (Hubbs-SeaWorld Research Institute), and Jeff Kaiser (Marine Science Institute, University of Texas), for their comments on the manuscript. TABLE OF CONTENTS

Executive Summary ...... 1-1 Section 1: Introduction to Marine Aquaculture (Mariculture) ...... 1-5 Section 2: Current Situation and Future Opportunities ...... 2-1

Offshore Industries in Louisiana are in Decline ...... 2-1

Substantial Future Oil and Gas Resource Potential Exists in the Louisiana Offshore ...... 2-3

Other Potential Energy Opportunities Exist Offshore of Louisiana ...... 2-8 Section 3: The Promise of Mariculture for Louisiana’s Offshore Waters ...... 3-1

Net-Pen Culture ...... 3-1

Oyster Depuration (Relaying) ...... 3-3

Recreational Fishing and Diving ...... 3-5

Ornamental Fish Culture ...... 3-6

Culture of Coral, Sponge, and Medically Valuable Organisms ...... 3-8

Sea Farms ...... 3-11 Section 4: Environmental, Socio-Economic, and Regulatory Issues ...... 4-1

Environmental Stewardship ...... 4-1

Socio-Economic Implications ...... 4-4

Regulatory Assessment ...... 4-7

Section 5: Conclusion ...... 5-1

Bibliography ...... A-1

Appendix ...... A-9

Mariculture and Other Uses for Offshore Oil and Gas Platforms: i Rationale for Retaining Infrastructure ii Technical Report Executive Summary

Purpose of Report

The purpose of this report is to examine the feasibility of utilizing retired oil and gas platforms after their profitable life in minerals production for marine aquaculture. The report examines the potential economic benefits that could result from a mariculture industry in Louisiana, characterizes the potential impact of mariculture on the marine ecosystem in the Gulf of Mexico, and reviews legal and regulatory considerations to establishing a mariculture industry using existing oil and gas platforms. Other potential future uses for retired oil and gas platforms are also identified, including renewable ocean energy production, greenhouse gas sequestration and recovery of “stranded” hydrocarbon resources.

The Louisiana continental shelf is home to nearly 3,600 federal offshore and 2,000 state coastal oil and gas platforms. When production from these platforms becomes unprofitable, under current federal regulations, operators are required to remove the structures (30 CFR 250.112 & LSA RS 30:4). Most offshore fields in water depths less than 600 feet will become unproductive within the next 10–15 years, requiring that 150–200 platforms be removed annually (Pulsipher et. al. 2001). Platform removals are currently costing the oil and gas industry $300–$400 million per year (NRC 1996), and it will eventually cost over $8 billion for the removal of all structures in shal- lower offshore waters. The platforms could be utilized for a number of other applications after their profitable life in minerals production:  Marine aquaculture; e.g., food fish (net-pens), coral and sponges, oyster depuration, ornamental fish  Greenhouse gas sequestration Offshore Louisiana Platforms as of 2004  Wind energy  Ocean energy; e.g., current, wave, ocean thermal, salinity gradients, and bio-fuels  Recreational fishing and diving parks  Cooperative sea farms  Natural gas storage and re- gasification (closed loop)  Pipeline maintenance to help transport deep water oil and gas production. With the anticipated pace of production decline, the speed of platform removal could increase significantly. The removal of offshore platforms and the dismantling of their associated pipeline systems Platforms represent the only hard substrate across much of the Louisiana continental shelf, would economically strand a large vol- a region flooded by sediments from the Mississippi River and other tributaries.

Executive Summary 1- the fields be abandoned and the platforms removed, the feasibility of returning to these fields with improved recovery technology would be economically prohibitive. The potential economic benefits from maintaining this infrastructure could be substantial:  Assuming that the 3.6 billion barrels of stranded oil resources are developed over a 40-year time frame, by 2025, this would amount to: • Incremental oil production of 200,000 to 250,000 barrels per day; • More than 8,000 jobs retained by the Louisiana oil and gas Offshore platforms have an average 17.5 year productive lifespan before they are removed industry; (Pulsipher 2001). At this pace, almost all the existing platforms will disappear in next 15 years. While many platforms are still being installed, the new fields tend to be in deep water • Increased economic activity (>600 ft.), because most of the inshore reserves are exhausted. Louisiana will lose most of the amounting to $500 million per existing platforms by 2020 at the current rate of platform life expectancy. year to Louisiana; and • Increased state and federal ume of crude oil and natural gas that could be revenues of over $250 million produced with emerging oil and gas recovery per year. Under current fiscal technology. An estimated 67 percent of the arrangements, more tha 90 crude oil and 45 percent of the natural gas in percent of this revenue will go to oil and gas fields in state and shallow federal the federal government. offshore waters (< 200 m) will be “stranded” because the cost of extraction will exceed rev- Offshore oil and gas production platforms enues using traditional production practices support one of the most prolific ecosys- (ARI 2005). tems, by area, on the planet. Stanley and Wilson (2000) reported that 10,000– Recovery rates and efficiencies, however, 30,000 adult fish reside around a plat- continuously improve with advances in form in an area about half the size of a technology. An analysis of 99 large state football field. They create the only reef and federal offshore oil fields, represent- habitat across thousands of square miles ing 80 percent of the crude oil resource of generally featureless, sometimes hy- off the coast of Louisiana at < 200m poxic, continental shelf (Sammarco et al. depth, shows that, with “state-of-the-art” 2004). Over 80 species of federally man- carbon dioxide (CO )-enhanced oil recov- 2 aged protected fish, crustaceans, corals, ery (EOR) technology, approximately 4.5 soft corals, sponges, and sea turtles in- billion barrels of incremental oil (28 per- habit and/or forage around the offshore cent of this stranded resource) is tech- structures (Adams 1995, Beaver 2002, nically recoverable, and with appropriate Rademacher and Render 2003, Sam- “risk mitigation” incentives and reason- marco 2004, and Walker 2004). They able costs of delivered CO , as much as 2 are essential habitat to protected and en- 3.6 billion barrels could be economically dangered species. recoverable (ARI 2005). No formal legal structure exists to utilize retired Mariculture could provide an economic catalyst platforms for purposes other than producing to affect the petroleum production economics petroleum. The central economic concern of by preventing platform shutdown of retiring all parties interested in the conversion of these platforms. Mariculture ventures or other appli- platforms to alternate uses is the long-term cations could extend the life of these platforms care and transfer of ownership and liability. until the “stranded” oil and gas becomes eco- Mariculture and other ventures on platforms nomically viable to produce. However, should will have to comply with the same state and

Mariculture and Other Uses for Offshore Oil and Gas Platforms: 1- Rationale for Retaining Infrastructure federal regulations and structural codes that oil The greatest obstacle currently facing offshore and gas operators currently maintain. Several mariculture facilities is the limited availabil- expenses will be germane to any venture uti- ity of marine fish fingerlings for stocking off- lizing retired offshore platforms. These include shore cage operations. Most of the research expenses associated with a platform removal efforts into fish farming in the United States bond, navigational aids, maintenance, liability have been directed toward freshwater species. insurance, and cathodic protection. Unfortu- Elsewhere around the globe, most notably in nately, the high cost of the platform removal Japan, there have been numerous successful bond could well prohibit the economic success efforts to spawn and raise marine species for of many types of alternative applications. net-pen culture and sea farming. Several major Recommendation 1: Revise Outer Continen- technological hurdles exist, however, and the tal Shelf Lands Act (OCSLA) platform removal first important local obstacle is the absence of requirements and adjust codes for alternative a fish hatchery in Louisiana. uses; create OCSLA language to terminate Recommendation 4: Build a state-of-the-art leaseholder’s interest and liability; create clear marine fish hatchery in Louisiana. legal foundation for transfer of ownership; create a federal trust fund to provide liability to the former oil and gas operators to ensure that they will not be sued; provide low interest loans to mariculture ventures and fishermen; and provide general performance bonds to mariculture platforms so that they could be eventually turned into artificial reefs and not blasted out of the water and hauled to shore. Mariculture ventures face a complex array of regulatory and legal obstacles. Mariculture ventures will probably pursue several different culture applications on the same platform. In the 109th Congress, the federal government will propose a National Offshore Aquaculture Act that provides the Department of Com- merce clear authority to regulate offshore aquaculture. The Gulf of Mexico Fisheries Man- agement Council (Gulf Council) is currently drafting a Fisheries Management Plan (FMP) for Marine Aquaculture. Recommendation 2: Endorse the upcoming legislation in the National Offshore Aquacul- ture Act and support efforts by the Gulf Council in drafting and approving their FMP for marine aquaculture. This study focused primarily on five mariculture activities and recreational fishing that could potentially utilize Louisiana offshore platforms for operations. Mariculture activities of focus included net-pen operations, oyster depuration, culture and harvest of ornamental fish, Oil and gas platforms, if they are properly maintained, can last coral, and sponge, and platform sea farming. for hundreds of years. They could be retrofitted to facilitate a number of

The economic feasibility of the various mari- eco-technologies over the years such as greenhouse sequestration (CO2 injec- culture applications on offshore platforms still tion), wind energy, and pollution mitigation; as well as for a wide variety needs to be documented. of mariculture applications. Recommendation 3: Complete a comprehensive study on the economic feasibility and cost- benefits of mariculture and other applications utilizing platforms.

Executive Summary 1- All the platforms in the Gulf of Mexico are geo-referenced in a Minerals Management Service (MMS) database with more than 100 descriptive variables that could be combined with physical, biological, chemical, and ocean sediment databases. This information could be programmed into a geo-referenced model to help make decisions on retiring platforms. This could help address the following questions: should decommissioned platforms be used for mariculture or other applications, remain in place or be relocated for biological reasons, or moved for navigational concerns or user conflicts. Many variables could influence the placement of platforms. This GIS model would be the first technology item to help develop a defensible long-term plan for mariculture development in Louisiana’s offshore waters. Recommendation 5: Create an ArcGIS platform computer program interface that will allow us- ers to anticipate the lifespan of platforms in petroleum production and decide whether to relocate or leave the structures once they reach retirement.

Mariculture and Other Uses for Offshore Oil and Gas Platforms: 1- Rationale for Retaining Infrastructure Section 1: Introduction to Marine Aquaculture (Mariculture)

In 2002, the United Nations Food and Agriculture Organization (FAO) reported that most capture fisheries around the world are fishing fully exploited stocks and cannot expect to increase the volume. They predicted a 40 percent increase in fishery product needs by 2020, increasing from 130 million metric tons in 2001 to 180 million metric tons by 2030. They concluded that population growth and an increase of per capita fish consumption will create a 50 million metric ton production gap by 2030 — a gap that aquaculture could potentially fill (FAO 2002). Over the past three decades, aquaculture has progressed to become the fastest growing food production sector in the world (Jia et al. 2001). Aquaculture production processes have expanded, diversified, intensified, and advanced in technology. Petroleum and seafood represent the first and second largest import commodities in the U.S., respectively. In 2002, the United States imported $10.1 billion of edible seafood and $9.6 billion of non-edible seafood, for a total of $19.7 billion on imports — representing an increase of $1.2 billion from 2001. Despite this large and growing demand for seafood, the United States currently only contributes to 2 percent of the worldwide aquaculture production (FAO 2002).

Definition of Mariculture State-of-the-Art of Mariculture “Aquaculture is the cultivation of aquatic Worldwide. Offshore mariculture is animals and plants in controlled or se- expanding rapidly in countries such as lected environments for commercial, Chile, Norway, Ireland, Spain, Taiwan, recreational, or public purposes. Such Korea, Philippines, and in Mediterranean organisms are raised primarily to supply countries such as Greece, Italy, Cyprus, seafood for human consumption, but they and Turkey (Ryan et al. 2004). The can also be used to enhance wild popu- European Union devotes over $400 mil- lations, for breeding programs in public lion annually to the fisheries sector, which aquariums and zoos, rebuilding popula- includes $260 million for aquaculture. tions of threatened and endangered spe- Canada has just dedicated $75 million cies, baitfish production, and to produce (Canadian dollars) to federal research other non-food products, such as phar- and development. Even Vietnam is maceuticals.” (NOAA 2002) financing aquaculture development and diversification (National Marine Fisheries Service, 2002).

“Aquaculture, not the internet, represents the most promising investment opportunity of the 21st century.”

– Peter Drucker, Economist and Nobel Laureate

Photo by Gregory S. Boland

Section 1: Introduction to Marine Aquaculture 1- (Mariculture) Japan. As an island nation with limited United States. To date, the United land resources, Japan has traditionally States has been slow to pursue large-scale focused on the sea for socio-economic mariculture operations off its shores. The development. The Japanese are chang- most promising platform mariculture ven- ing their commercial fishing fleet from a ture on the horizon is the Hubbs SeaWorld “catch fishery” to a “culture fishery” or Research Institute’s Grace Mariculture from “predatory” methods to “sustain- Project off the California coast, utilizing an able” methods (Grove et al. 1994). old oil and gas production platform. The Japan has invested approximately $8 Institute has 20 years experience with billion dollars into an ambitious marine stock enhancement and aquaculture pro- fisheries enhancement program (Grove duction. They are currently engaged in a et al. 1994). In the 1970s, the govern- lengthy permitting process for this facility, ment spent $67 million on research and and expect to be permitted in the autumn planning alone (Bohnsack 1985; Mottet of 2005. Hubbs SeaWorld Research In- 1981). The Japanese employ a variety stitute intends to first raise striped bass of mariculture techniques. One ambi- and, if methods prove successful, they tious project designed and installed an plan to grow white sea bass, California offshore platform specifically for maricul- halibut, California yellow tail, and bluefin ture. Biologists train, release, and feed tuna, as well as invertebrates such as juvenile fish in the open ocean for- even abalone and mussels. They also plan to tual recapture (Grove et al. 1994). Some create an offshore hatchery on the Grace efforts have been more successful than platform (GMP 2004). others. Matsuda and Tsukamato (1998) Gulf of Mexico. Mariculture on platforms reported that the Fukashima Prefecture in the Gulf of Mexico has been explored has achieved a 30 percent recapture rate offshore of Texas to a limited extent inoff- and is experiencing a cost-benefit ratio of shore coastal waters. Several cage sys- more than 300 percent with their ma- tems were tested; cage maintenance and rine stock enhancement program. They production cost made it difficult to achieve also have installed an offshore platform project goals for this first-of-a-kind proj- to clean up a polluted bay using novel and ect (Kaiser 2003). (The one commercial non-carbon producing energy sources venture by SeaFish, Inc. recently lost the (Matsuda et al. 1999). right to use the offshore facility because the owner found new petroleum resources and restarted oil and gas production operations (Kaiser 2003)).

Focus of this Report Photo by Gregory S. Boland The items in the table below on the left were covered in detail in this report. Other applications (to the right) will not be covered in depth here. They are still, however, of interest and may Focus of this Report Not Examined in this Report have potential for development on offshore Net-pen or cage culture Fish sanctuaries platforms. (See www.ecorigs.org for additional related information and videos of naturally oc- Oyster depuration or oyster relaying Artificial upwelling curring fish, corals, and other reef organisms.) Ornamental fish culture Nursery habitat grounds Recreational fishing and diving Offshore fish processing Coral and sponge culture Research platforms Sea farming Fish hatcheries

Mariculture and Other Uses for Offshore Oil and Gas Platforms: 1- Rationale for Retaining Infrastructure SECTION 2: CURRENT SITUATION AND FUTURE OPPORTUNITIES

Offshore Industries in Louisiana are in Decline

Louisiana’s Oil and Gas Production are Declining Louisiana derives a signiﬁ cant portion of its general revenue and an important portion of its economic and employment base from the oil and natural gas sector. However, production in Louisiana’s shallow offshore waters (< 200 m water depth) has been in decline:

Crude oil production has dropped Given the anticipated pace of production from more than 630,000 barrels decline, by 2020, most of the current per day in 1992 to 380,000 platform inventory in the Gulf of Mexico barrels per day in 2003. could be abandoned. Natural gas production has declined from 3.3 trillion cubic feet (Tcf) per Louisiana’s Fishing Industry year in 2002 to 2.3 Tcf per year in is Also in Decline 2003. Each year, more and more fi shing regu- While increases in production from lations are imposed on commercial and the deeper federal waters (> 200 recreational fi shermen in an effort to re- depth meters) have helped offset build the stocks of exploited species. Fed- declines in shallow-water production, eral regulations impose size, trip limits, Louisiana is nonetheless receiving and fi shing seasons on sport fi shermen. decreasing revenues from offshore A recreational charter boat moratorium oil and gas production. and another commercial reef fi sh mora- The Louisiana economy is also highly de- torium are currently in effect in Louisi- pendent on a wide variety of industries ana’s offshore waters. The commercial that depend on offshore oil and gas profi nfi sh sector is experiencing net-bans duction. For example, Louisiana is the and an unyielding series of regulations third largest consumer of natural gas in on harvested fi sh. the U.S., and a large number of chemical industry jobs in Louisiana are highly dependent on the continued availability of adequate volumes of mod- erately priced natural gas. Given the increasing maturity of Louisiana’s offshore fi elds, along with the relatively slow pace of development in the deep-water areas, most analysts forecast a continued decline in oil and natural gas production from offshore Louisiana. Crude Oil Production in Offshore Natural Gas Production in Offshore Louisiana Shallow Water Louisiana Shallow Water (< 200 Meters) (1992-2003) (< 200 Meters) (1992-2003) Source: U.S. Department of Interior, Minerals Source: U.S. Department of Interior, Minerals Management Service and the Louisiana Management Service and the Louisiana Department of Natural Resources Department of Natural Resources

Section 2: Current Situation and 2-1 Future Opportunities A Substantial Portion of Louisiana’s Economic Foundation is at Risk The oil and gas industry and the seafood and ﬁ shing industries are the two most important industries to the Louisiana economy. Unfortunately, for a variety of reasons, both of these industries are in decline.

Oil and Gas Industry Seafood and Fishing Industry

Including the federal outer continental Louisiana continental shelf is home to shelf (OCS), Louisiana is still the largest 90% of the ﬁ sheries in the Gulf of Mexico oil producing state and second-largest (Globec 2000). gas producing state in the U.S. despite Second-largest producer of seafood in the rapidly declining production. U.S. The oil and gas exploration and Generates $2.8 billion/yr in economic production industry directly employs output and directly creates 31,400 jobs 50,000 people in Louisiana. (Southwick 1997). The Louisiana industry facilitates the Saltwater recreational ﬁ shing stimulates transport and distribution of nearly $745 million in economic output and two billion barrels of crude oil and creates 7,786 jobs (ASA 2001). petroleum products and 4.5 Tcf of natural gas annually to consumers throughout the nation.

Offshore Oil and Gas Offshore Oil and Gas Infrastructure is Signiﬁ cant Infrastructure is at Risk of and Widely Dispersed More Rapid Abandonment For the approximately 3,600 platforms With the anticipated pace of production that exist in the federal offshore waters decline, the speed of platform removal of Louisiana, more than 700 have been could increase signiﬁ cantly. The removal operating for more than 40 years (Min- of offshore platforms and the dismantling erals Management Service, 2004). With of their associated pipeline systems would cathodic protection, these platforms can economically strand a large volume of maintain their integrity for hundreds of crude oil and natural gas that could be years. Nonetheless, on average, from produced with emerging oil and gas re- 150 to 200 platforms are removed per covery technology. A variety of future eco- year, following federal guidelines written nomic activity in the Gulf of Mexico could in the mid-1970s. To date, over 2,000 take advantage of this infrastructure, if it platforms have been removed (Minerals remains in place. Management Service, 2004). Connected to this production infrastructure are over 26,000 miles of oil and gas pipelines and gathering systems. Moreover, offshore oil and gas production operations support a vast spectrum of other activities in the state, including platform fabrication, drilling and related services, offshore transport and helicopter operations, and gas processing.

2-2 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Substantial Future Oil and Gas Resource Potential Exists in the Louisiana Offshore

The decline of offshore oil and gas production and the increasing maturity of offshore oil and gas fi elds off the coast are Louisiana are causing fi eld and platform abandon- ments that, unless mitigated or reversed, could lead to signifi cant volumes of oil and gas being “stranded,” or left behind, in these fi elds. Tabulation of stranded oil and natural gas volumes in the Louisiana offshore (consisting of the Central Planning Area; < 200 depth meters) in the Gulf of Mexico federal waters and offshore Loui- siana state waters) by the U.S. Department of Energy (DOE) (ARI 2005) shows that 56 percent of the original oil in-place and 33 percent of the original gas in-place will remain unrecovered with traditional technology and recovery practices:

In Louisiana state waters, based on In offshore federal waters, less data from the Louisiana Department than 200 m deep, based upon of Natural Resources and the U.S. Minerals Management Service Energy Information Administration (MMS) data for larger oil and gas (EIA), an estimated 60 percent of fi elds, an estimated 55 percent the crude oil and 44 percent of the of the original oil in-place (and 33 natural gas will remain unrecovered percent of the original gas in-place) with traditional practices. will remain unrecovered without the introduction of improved recovery practices. Stranded Oil Resources in Offshore Important advances are being Louisiana made in oil and gas extraction technologies that could enable the economic recovery of some Original Oil in Place – 28.1 Billion Barrels of this stranded resource endowment. Perhaps the most 15.7 11.4 Stranded Oil Produced to Date promising advancement is (BBbls) (BBbls) CO2-based enhanced oil recovery (EOR). This stranded oil resource represents the “prize” awaiting the application of more advanced recovery practices. 1.0 However, should the fi elds be Remaining Proved Reserves (BBbls) abandoned and the platforms removed, the feasibility of returning to these fi elds with improved technology would be Stranded Natural Gas Resources economically prohibitive. in Offshore Louisiana

Original Gas in Place – 206 Tcf

70.0 119.5 Stranded Gas Produced to Date (Tcf) (Tcf)

16.5 Remaining Proved Reserves (Tcf)

Section 2: Current Situation and 2-3 Future Opportunities Estimates of “Stranded” Oil & Natural Gas in Louisiana Offshore Waters Substantial Portions of This “Stranded” Resource Could Be Economic to Develop and Pro- Crude Oil Natural Gas duce (Billion Bbls) (Tcf) An analysis was made of 99 large state State Federal Total State Federal Total and federal offshore oil ﬁ elds, representing 80 percent of the crude oil resource Original 3.6 24.5 28.1 22.0 184 206 off the coast of Louisiana in < 200 m In-Place depth. This analysis shows that, with

Produced to Date 1.4 10.0 11.4 12 108 120 “state-of-the-art” CO2-EOR technology, a signiﬁ cant fraction of the stranded oil Remaining Proved 0.1 0.9 1.0 1 16 17 in these ﬁ elds — amounting to approxi- “Stranded” Resource 2.2 13.5 15.7 10 61 71 mately 4.5 billion barrels of incremental oil (another 20 percent of the original oil % Recovery, 40% 45% 44% 56% 67% 67% in place, or 28 percent of the stranded Traditional Practices resource) — is technically recoverable, Source: Advanced Resources (2004), based on Louisiana Department of Natural Resource as summarized below. data. The economic recovery potential of this resource was assessed under several “scenarios” incorporating alternative oil

price, CO2 cost, and risk mitigation incentives.

Offshore Louisiana Fields with Future Incremental Oil Recovery Potential

2-4 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Estimates of Currently Recoverable Oil Resources in the Louisiana Offshore Environment

Technically OOIP No. of Fields Recoverable (MM Bbls) (MM Bbls) State Offshore 12 1,100 237 Federal Offshore 87 20,950 4,213 Total 99 22,050 4,450

Under Reference conditions (Scenario Scenario #1B – Public/Private “Risk #1), with oil prices of $25 per barrel, Mitigation”: An assumed risk mitiga- delivered CO2 costs at 5 percent of the tion incentive, reducing risk to investors oil price, and a hurdle rate of 25 percent (15 percent rate of return (ROR) after before taxes (to account for the techni- taxes, achieved through signifi cant fi eld cal/economic risk associated with CO2- demonstration pilot projects), and roy- EOR technology in offshore applications), alty relief on incremental oil produced by no incremental resource is economically CO2-EOR (even when still relying on high- recoverable. er cost “EOR-ready” CO2), would provide To improve the economic feasibility of us- 1.3 billion barrels of economic oil recovery potential. ing CO2-EOR in these fi elds, two “risk mitigation” and cost-reduction options that Scenario #2: When both “risk mitiga- could provide possible routes for better tion” and reduced CO2 costs are com- economic performance were evaluated: bined, 3.6 billion barrels could be economically recoverable. Scenario #1A – Reduced CO2 Costs:

An assumed CO2 emission reduction incentive, combined with improved technology, could allow CO2 to be delivered to the platform at reduced costs (3 percent of the oil price). This action, however, is not sufﬁ cient Impacts of CO2 Costs and Risk Sharing to encourage economic recovery on CO2-EOR Economics from CO2 -EOR.

Impacts of CO2 costs and Risk Sharing on CO2-EOR Economics

Section 2: Current Situation and 2-5 Future Opportunities Economic Beneﬁ ts of Producing Incremental Oil from CO2-EOR

Assuming that 3.6 billion barrels are developed over a 40-year time frame, by 2025 this would amount to: Incremental production of 200,000 to 250,000 barrels per day; Over 8,000 jobs retained by the Louisiana oil and gas industry; Increased economic activity amounting to over $500 million per year to the Louisiana economy; and Increased state and federal revenues of over $250 million per year.

Substantial Stranded Gas No assessment has been performed Resources Also Exist on of the economic recovery potential of Louisiana’s Continental Shelf stranded gas resources in offshore Loui- siana. Nonetheless, given its large po- Substantial volumes of stranded natural tential, production of this latent resource gas resources also exist at < 200 m merits an assessment for potential eco- depth off the Louisiana coast: nomic feasibility. Particular reservoir fl ow conditions, primarily a strong natural bottom Signifi cant Undiscovered Gas water drive, preclude effi cient Resource Potential Exists in Deep recovery and, without a change in Formations off the Louisiana recovery techniques, could “strand” Coast one-third or more of the gas in- place. The MMS estimates that as much as 55 An estimated 70 Tcf is stranded, Tcf of technically recoverable natural gas with 42 Tcf in a series of large exists in the shallow waters off the Gulf of attractive fi elds. Mexico at formation depths > 15,000 ft. MMS has recently announced fi nancial incentives for the pursuit of these resources, providing royalty relief for the fi rst 25 Bcf produced from deep gas wells. Exist- ing platform infrastructure could be utilized to support production of these deep gas resources.

2-6 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Pursuing the Undeveloped The economic risk associated with Offshore Oil and Gas Potential these projects, because of their technological challenges (perhaps It is essential that the infrastructure (plat- infl uenced through government forms, wells, and pipeline system) for risk-sharing programs via fi scal these large offshore oil fi elds and natural incentives to encourage CO -EOR). gas fi elds be maintained until the technol- 2 In addition, more comprehensive assess- ogy and/or economics of enhanced oil ments of this potential are required, and and natural gas recovery improves. This policy makers and industry decision-mak- is essential for conserving this domestic ers must be informed of this potential. hydrocarbon resource endowment. The economic recovery of this undeveloped offshore oil and gas resource will also depend upon: Future crude oil and natural gas prices; Cost of future supplies of CO2 (perhaps infl uenced via incentives

for reducing CO2 emissions, such as the geologic sequestration of

anthropogenic CO2); and

Sub-Sea Wells with Tiebacks to Existing Platforms Could Help Facilitate Deep Gas Development

The concept behind the Canyon Express Project, which focuses on deep water natural gas development, could also be used for deep formation gas development. This ﬁ rst-of-its-kind deep water gas project in the Gulf of Mexico combines a central hub and subsea system with a 500 MMcf/day pipeline system that takes production from three different discoveries and transports the produced gas more than 50 miles to the existing Canyon Station platform for processing and transport to shore.

Canyon “Canyon Express” Project Station Sub-Sea Field Size Water (MP 261) Wells (#) (Bcfe) Depth (ft) Aconcagua (MC* 305) 3–4 300 7,070’

Gas Pipeline Camden Hills 2 500 7,200’ Umbilical (MC 348) Subsea Well King’s King’s Peak Peak 4 100 6,500’ Central Gathering Facility (MC 217) Camden Hills Aconcagua * MC = Mississippi Canyon

Section 2: Current Situation and 2-7 Future Opportunities Other Potential Energy Opportunities Exist Offshore of Louisiana

In addition to oil and gas extraction and mariculture, the existing oil and gas infrastructure in the state of Louisiana could be used for a number of other applications. Some of these opportunities are described below.

Liquefi ed Natural Gas (LNG) One concern associated with onshore LNG re-gasifi cation facilities is the poten- Some existing offshore oil and gas plat- tial threat they pose to neighboring com- forms could be converted to accom- munities in the event of an accident or modate offshore LNG operations. This terrorist event. Offshore facilities located conversion could utilize existing platform far from population centers pose a much operations to re-gasify LNG. Increasing more limited threat to coastal communi- imports of LNG are seen by most in- ties, however, there is concern that cool- dustry analysts as critical for supplying ing waters may have a detrimental affect increasing U.S. demand for natural gas on fi sh larvae. (NPC 2003). Moreover, as gas production in Loui- Carbon Sequestration siana continues to decline, increased LNG imports could help utilize existing In a CO2-EOR project, once oil production industry infrastructure in the state that declines below a point where the revenues would otherwise be under-utilized, such from this production do not cover the cost as gas-processing facilities and gas-gath- of operations, the project is discontinued. ering and transportation infrastructure. As mentioned earlier, in the case of an In addition, it can help provide continued offshore project, under current federal low-cost natural gas to power generation regulations, the platform and associated and large industrial gas consumers in the equipment would need to be dismantled state. Recent studies have shown that and removed. substantial economic benefi ts could ac- Even after production has been discon- crue to the State of Louisiana from the tinued, this same facility could be used

development of LNG facilities off its coast to take CO2 emissions from onshore in- (Dismukes 2004). dustrial facilities and, using existing infra-

structure, sequester this CO2 back into the geological formations of depleted oil and gas ﬁ elds and perhaps other deep formations, such Power Out astlineline as saline aquifers. An estimated Natural Gas 400 Tcf, or 22 gigatons, potential sequestration capacity exists in oil and gas reservoirs in the offshore Gulf of Mexico. This can allow for

the removal of CO2, a greenhouse gas, from the atmosphere. This use CO2 Captu 2 Pipelin of these facilities for sequestering Facility e CO2 can occur in parallel with off- Powe e CO2 Pipelin shore mariculture operations and Plant would be expected not to interfere Geologicogic Formation with them (ARI 2005).

Greenhouse gases can be utilized to recover “stranded” petroleum (45 –67% ) nor- mally left behind because of mandatory removal. CO2 is captured from power plant emissions and the atmosphere and is condensed and piped offshore and injected into the ground to force up the petroleum.

2-8 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Wind Energy Under most applications, platforms supporting wind energy production could A number of wind energy developers are also simultaneously support mariculture looking to the offshore Gulf of Mexico operations. However, no established as a viable area for wind energy devel- regulatory framework for permitting and opment. Existing offshore platforms are overseeing these offshore wind energy being used as part of this development. facilities currently exists. A recent study by a research group at Stanford University (Archer and Jacob- Ocean Energy son 2003) determined that the offshore Gulf of Mexico environment is character- Several scenarios to harness energy ized by some of the strongest sustained from the ocean have been entertained. winds in the country. Offshore wind energy Ocean Thermal Energy Conversion projects are already on-line in Denmark, (OTEC) processes utilize the heat energy Germany, and the United Kingdom, and stored in the ocean to generate electrici- over 3,000 megawatts (MW) of wind ty. Wave, currents, and salinity gradients energy projects have been proposed off are also sources of energy that could be the New England coast. One project pro- harnessed from the sea. A non-proﬁ t or- posed for development off the coast of ganization, Practical Ocean Energy Man- Massachusetts (www.capewind.org) has agement Systems, Inc. discusses these recently received a positive environmen- energy technologies and lists installa- tal assessment. tions already in operation in the U.S. and The fabrication of offshore wind energy around the world (www.poemsinc.org/ facilities would involve most of the same links.html). These applications require skills and workforce capabilities currently suitable sea states and water tempera- associated with the fabrication of off- tures that may or may not be present at shore oil and gas platforms, providing for platform site. the continued economic vitality for this important Louisiana industry.

Utility Grid System Generator Electrical Sub Station and Shore Sales Meter Line Transformerer

Power

Interface ng Power Cable (Buried Power Pipe Lines) Line

Existing Offshore Platform Field Power Line

Each wind turbine on offshore platforms anticipated to generate 1.5–3.6 megawatts of power (Louisiana Department of Natural Resources, 2004).

Section 2: Current Situation and 2-9 Future Opportunities The Louisiana continental shelf experi- nental shelf that is most suitable for this ences population increases in algae dur- purpose. In addition, a mechanism to ex- ing the spring and summer months. This tract the algae needs to be developed. is a direct result of nutrient enrichment These technologies are also compatible derived from run-off from the Missis- with mariculture operations; many engi- sippi River and other tributaries. These neering and economic issues, however, algae could be harvested and processed need to be addressed prior to implemen- into bio-fuels on offshore platforms and tation. Bottom Line: The economic viability piped inshore using the existing pipeline of the energy development options under system. The efﬂ uent from the system is consideration for Louisiana’s offshore wa- aerated water. Planktonic algae (diatoms) ters, the same as with many of the mari- contain the highest concentration of oils culture applications, are critically depen- (bio-fuel) in the plant kingdom (Sheehan dent on the availability and maintenance et. al. 1998). Waste products (proteins) of the existing energy infrastructure in the could be used to supplement ﬁ sh food in offshore Gulf of Mexico. mariculture operations. There are about 800 platforms located in the hypoxic zone off the Louisiana coast, where these algal population increases occur. This technol- logy is in the developmental stage. More research is needed to identify the species of algae present on the Louisiana conti-

Oil and Gas Mariculture Mariculture Platform Mariculture Platform Platform Platform with CO2 Injection with Wind Farm

Disposal Zone

Oil Reservoir

The oil and gas platforms are built to last 100 years and could be retroﬁ tted to facilitate a number of technologies over the years. Aquaculture could co-exist with a variety of eco-technologies such as greenhouse sequestration (CO2 injection), wind energy, and pollution mitigation.

2-10 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure SECTION 3: THE PROMISE OF MARICULTURE FOR LOUISIANA’S OFFSHORE WATERS

Net-Pen Culture

The depth, current, and clarity of the water at many offshore platform locations (> 100 ft) present ideal conditions for accommodating large-scale mariculture production operations using net-pens. The platform provides a fi xed base of operations for environmental sensors, systems control, and communications. The platforms are suitable for large-scale fi sh production and can be used to distribute food to many fi sh cages. The current limiting factor for long-term success of offshore mariculture is fi ngerling production. If a steady supply of juveniles is available, one offshore platform in 100–150 feet of water was estimated to facilitate nine large net-pens for fi nfi sh (Sea Grant 2001).

Potential Culture Species Current Status of Mariculture in the U.S. The number of species available for mariculture production in Louisiana is current- Seafood is the second largest import ly limited to redfi sh and striped bass (P. item in the U.S. There is great need Picard, pers. comm., Dixie Fish 2004). for fresh, warm-water species, such as Some experimental production of mutton those found in the Gulf of Mexico, and snapper and cobia has occurred in the the commercial fi shermen cannot meet Gulf (Watanabe 2001). Fish farmers in the high demand. Finfi sh are heavily reg- Taiwan have been raising cobia for over ulated in both the commercial and recre- a decade and recently produced 4,500 ational fi shing sectors. In addition to the tons of this species in 2003 (J. McVey, trip limits, size limits, pers. comm.). and seasons, there are Numerous mariculture efforts around the moratoria on commer- world are producing oceanic species at cial reef fi sh permits commercial-scale levels, for species such and recreational char- as mahi-mahi, amberjack, tuna, pompa- ter boats as well as ear no, and grouper (Ryan et al. 2004). The restrictions, net bans, paucity of fi ngerling production in the Gulf and catch prohibitions of Mexico is partly due to technological on important recre- limitations related to larval production and ational species. nutrition. Moreover, unfortunately, there are currently no incentives to produce fi n- gerlings. In fact, at present, it is illegal to possess fi sh in net-pens (Magnuson Act) in the Gulf of Mexico exclusive economic zone (EEZ). This is clearly a regulatory issue that needs to be addressed directly by amending current legislation.

Ocean Spar ﬁ sh net-pens and mariculture facility. The platform would distribute food and maintain nets.

Section 3: The Promise of Mariculture for 3-1 Louisiana’s Offshore Waters Photo by Gregory S. Boland Barriers to Implementation of Role of Platforms in Offshore Net- New Mariculture Initiatives Pen Mariculture Certain barriers are currently inhibiting Because of concern over deteriorating wa- the implementation of net-pen maricul- ter quality conditions and potential harm- ture in the northern Gulf of Mexico: ful impacts of fi sh farming, environmental 30 CFR 250.112-15 currently interests have initiated efforts around the requires oil and gas production globe to move aquaculture activities off- platform to be removed one year shore — away from the sensitive coastal after production ceases. zone (Ryan et al. 2004, Burgrove et al. 1994; Thompson 1996). Large-scale No regulatory framework for offshore net-pen mariculture operations mariculture currently exists. address these environmental concerns Permitting and monitoring are very by placing them in the presence of cur- expensive. rents and suffi cient water column depths No fi sh hatcheries currently exist to to distribute and dilute mariculture wastes support mariculture production/ (Sea Grant 2004; Ryan 2004; Gowen et No liability structure currently exists al. 1989). for the transfer of ownership and long-term care of offshore oil and Vision for the Future gas platforms. The fi rst requirement to initiate offshore net-pen mariculture operations in the Gulf of Mexico is a state-of-the-art fi sh hatchery to provide fi ngerlings. If a steady supply of juveniles is available locally, Louisiana mariculture ventures will have a higher probability of success. Even if one of these mariculture platforms were utilized for stock enhancement, it could potentially to signifi cantly increase the populations of highly regulated fi sh in the Gulf. The Grace Mariculture Project is planning to raise fi n- gerlings on one platform off the California coast. Offshore fi sh hatcheries could over- come many of the technological hurdles facing fi sh larval and fi ngerling production and also maintain a healthy genetic protocol. An enormous gene pool is available right at the platforms’ sites; from 10,000 Water depths of 100 ft. and greater generally provide safe environmental conditions for to 30,000 fi sh reside off each platform open ocean net-pen operations along the Louisiana continental shelf. Zones of hypoxia (Stanley and Wilson 2000). cover portions of the Gulf fl oor during mid-summer and early autumn along the inner continental shelf from the Mississippi River delta to the upper Texas coast (Rabalais 1994). These conditions are not prevalent outside of the 100 ft. contour.

Potential Environmental Concerns Associated with Large Scale Net-Pen Operations

Fish feed and fecal waste; i.e., carbon, nitrogen, sedimentation Escapement of ﬁ sh and genetic integrity Fish disease and therapeutics Operational waste; e.g., paint, grease, anti-fouling agents, etc.

3-2 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Oyster Depuration (Relaying)

Shellfi sh are known to be carriers of infectious and sometimes dangerous or lethal diseases. Their consumption is risky because they are often eaten raw or partially cooked. The bacteria Vibrio vulnifi cus occurs naturally in estuarine waters and may be found in oysters harvested from the Gulf of Mexico. While most individuals in good health are not affected by the organism, it can induce illness or prove fatal for individuals with compromised immune systems. The presence of V. vulinifi cus is highly correlated with warm water temperature, and virtually all Gulf-harvested oysters contain some concentration of it in the warmer summer months. Research has shown that populations of V. vulnifi cus in oysters can be signifi cantly reduced by running (relaying) them offshore and suspending them in deep water for certain periods of time (Motes and DePaola 1996). Exposure of the oysters to cooler waters beneath the thermocline (>50 feet depth) that are naturally free of this bacterium allow the oysters to purge themselves over a 16-day period (Supan 2004). Oysters could be effectively relayed by containers (Supan 1991; Supan and Cake 1989), a method already approved by the National Shellfi sh Sanitation Program (NSSP) (NSSP 2003). Current State of Oyster vulnifi cus levels are known to Regulations be highest: 1) all oysters are subjected to post-harvest treatment 1. The Interstate Shellfi sh Sanitation to reduce V. vulnifi cus bacteria Conference (ISSC) now requires to a nondetectable level, and 2) states to develop and implement a all oysters are to be labeled for V. vulnifi cus Risk Management Plan shucking by a certifi ed dealer; or (ISSC 2002). 3) shellfi sh growing areas are to 2. The collective goal of these risk be closed for management plans is to reduce the purpose rates of V. vulnifi cus illness by 40 of harvesting percent for 2005–2006, and 60 oysters percent for 2007–2008. intended 3. While the Food and Drug for the raw Administration (FDA) supported this market.” plan, the ISSC has not yet adopted it. Hence, there appears to be some uncertainty about what would happen after 2008 if the above goals are not reached. 4. The industry’s current capability to treat post-harvest oysters would be woefully inadequate if the state mandated treatment for its total This picture shows fi shermen depurating oysters offshore in clean salty oyster harvest, which averages water from inshore waters. Regulations may require oysters to be treated. approximately 200 million pounds Two hundred million pounds of oysters are harvested annually in Loui- of oysters and 12 million pounds of siana. Offshore platforms could provide suitable equipment and facilities oyster meat annually (Supan 2004). to depurate oysters at industrial levels. 5. If the above goals are not achieved, additional measures would have to be implemented (U.S. GAO “The oyster industry is approaching a signifi cant crossroad in 2001). These measures would the next three years.” include, among others, “requiring – Dr. John Supan, that during the months of May 2004 Coordinator of Gulf Oyster Industry Initiative Program through September, when V.

Section 3: The Promise of Mariculture for 3-3 Louisiana’s Offshore Waters Role of Offshore unfortunately compromise the taste of the Platforms in oysters. Offshore platforms could supply Oyster Depura- the industrial equipment required to han- tion dle the massive weight of whole oysters, which yield to about 6 pounds of meat for If the FDA enforces every 100 pounds of shell (Diagne and Ki- V. vulnifi cus regula- ethly 2004). tions, offshore platforms could play a Barriers to Implementation critical role in producing a desirable A number of barriers currently exist that oyster that meets inhibit the implementation of potential Other methods to treat oysters of V. vul- these proposed oyster depuration in the offshore Gulf of nifi cus kill the oyster and compromise the standards. New Mexico. These include: taste. Depuration keeps fresh oysters alive federal regulations The need for FDA approval of oyster and improves the taste. may require oys- depuration at retired oil and gas ters to be treated. Two hundred million platforms, and pounds of oysters are harvested annually The need for economic incentives in Louisiana. The industrial cranes and to implement such activities, unless generators on offshore platforms could the ISSC adopts more protective provide suitable equipment and facilities measures. to depurate oysters at a level to support large-scale commercial production. Vision for the Future Moreover, many feel that oysters taste better after they have been placed in The relatively rapid economic turnover of clean and cool salty water. The alterna- relaying equipment allows quick returns tives to oyster relaying offshore to meet on capital investments and provides a the proposed standards include: 1) hy- more immediate cash fl ow for oyster dep- drostatic pressure, 2) a mild heat treat- uration when compared to other forms of ment known as cool pasteurization, and fi sh farming. Oyster depuration could be 3) cryogenic individual quick freezing; 4) one of a suite of mariculture applications exposure to gamma radiation (Diagne practiced simultaneously at offshore plat- and Kiethly 2004). The fi rst three options forms. Offshore platforms could provide ideal staging areas for offshore oyster relaying a relatively simple and cost-effective mariculture operation (Supan 2004).

“Oyster Depuration” on offshore platforms purges harmful bacteria from coastal oysters by submerging in clean offshore water. Exposure beneath the thermocline of colder Gulf of Mexico waters (>50 ft depth) that are naturally free of V. vulniﬁ cus allows the oysters to purge themselves free of the bacteria over a 16-day period.

3-4 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Recreational Fishing and Diving

Oil and gas platforms are a favored destination of Louisiana sport fi shermen. Approxi- mately 70 percent of the offshore fi shing trips target the structures in the pursuit of fi sh (Stanley and Wilson 1989). The platforms are also picturesque diving spots. As mentioned above, almost all these structures are scheduled to be removed within the next 15 years, and this has already caused some concern among recreational fi shing organizations in Louisiana. Sporting clubs and conservation efforts are interested in preserving these artifi cial reef habitats and promoting sustainable fi shing practices. Retired platforms could potentially be converted into fi shing and diving hotels (Reggio 1989). Large vessels capable of accommodating 100 fi shermen could anchor near dozens of some of the largest artifi cial reefs in the world.

Current State of Artifi cial Reef above, on the whole, there is no immedi- Use for Recreational Fisheries ate incentive for recreational fi shermen to encourage the retention of the plat- Artifi cial reef programs have attracted forms. There are still 3,600 platforms large investments and produced consid- in place and generally open access to erable economic contributions in Flori- them. The loss of platforms has not da’s tourist fi shing industry. In a survey yet inspired a signifi cant response from of southeast Florida citizens (Johns et al. the recreational fi shing sector, although 2001), residents responded that they some fi shermen are beginning to notice are willing to invest $26.63 million/yr platform removals and becoming strong Red snapper caught on an oil and gas to install and preserve artifi cial reefs. advocates of their retention (McNemar platform. Their artifi cial reef program has created 2003). Unfortunately, most inshore plat- a $2.4 billion annual economic impact forms are scheduled to be removed over (Johns et al. 2001). Three cost-benefi t the next 10–15 years. studies from Gulf States on the economic benefi ts of artifi cial reefs indicate sig- Vision for the Future nifi cant fi scal impacts from artifi cial reef Offshore platforms programs. A standing platform, with 20 or 30 large are a paradise in the artifi cial reefs placed around it, would cre- ocean for those looking Role of Offshore Platforms ate an exceptional fi shing spot. The stand- for adventure. All the ing platform could serve as a rendezvous different kinds of fi sh from Artifi cial reef programs for recreational for charter boats, recreational divers, the Gulf of Mexico can be fi shermen and divers in many coastal and fi shermen; and it could be accessed found in one spot. states and around the world invest sig- by helicopter, decreasing lost time in ship nifi cant resources to build and install transit for passengers. Sport fi shing and – Manny Puig artifi cial reefs. The costs average about diving would be more cost-effective and $140/m3 to build and install such comfortable. Recreational park facilities reefs using reef balls, grouper ghettos, could provide live bait, fuel, ice, and op- and sophisticated Japanese artifi cial erational gear to the charter boats and reefs. Considering all Gulf platforms in clients. The standing platform at a recre- waters >50 feet, the collective volume ational park can also provide lodging to is 94,450,807 m3 (July 2004). Using any recreational enthusiast who might be these rates as a guide, the collective suffering from seasickness. value of these platforms is $13.2 billion (Appendix A). Retired platforms clearly Economic Analysis of Artifi cial Reefs represent a valuable resource in the Gulf of Mexico, irrespective of their value as petroleum producers. Annual Economic Area Jobs Source Impact Barriers to Implementation Southeast Florida $2.4 billion 26,800 Johns at al., 2001 In addition to the numerous regulatory Northwest Florida $415 million 8,100 Bell et al., 1998 issues creating an obstacle to the use Mississippi $78 million No data Southwick et al., 1998 of platforms for mariculture mentioned Section 3: The Promise of Mariculture for 3-5 Louisiana’s Offshore Waters Ornamental Fish Culture

Attractive Caribbean fi sh inhabit the upper 90 feet of the blue water platforms. There are about 25 species of obligatory reef and cryptic species (p.v. Walker 2004; Radem- acher and Render 2003), many of which are desirable aquarium fi sh. They are usually wide-bodied “poster-colored” demersal fi sh that reside on the platforms for the dura- tion of their lives. These species are often sold in the U.S. aquarium trade market.

Current State of Fishery cyanide fi shing, an illegal but The U.S. Commission on the Ocean extensively used fi sh collecting (2004) noted that the U.S. is the world’s method in this region (Mackey and largest importer of ornamental coral reef Chau 2001). resources and suggests that we have Some estimates place the a responsibility to eliminate destructive percentage of fi sh cultured in harvesting practices of fi sh and other the ornamental fi sh market is reef organisms. These “resources are ~10 percent, but it is generally destroyed by methods that destroy reefs accepted within the industry that the and overexploit ornamental species.” actual fi gure is considerably lower In U.S. pet stores, fi sh products — somewhere between 2–5 percent remained the most popular category (Mackey and Chau 2001). based on the dollars spent, generating nearly $1.2 billion/yr. in retail sales (1998) (Hellwig 1999). The U.S. imported $45 million (wholesale) in 1998 in ornamental fi sh (Adams et al. 2001). The collection of marine tropical fi shes and invertebrates for the ornamental fi sh industry has caused extensive damage to coral reef environments throughout Southeast Asia. Especially destructive is

Potential culture species.

Water clarity and temperature are important factors in cultivating ornamental ﬁ sh. Suitable areas for raising ornamental ﬁ sh are in the deeper waters offshore of Louisiana >200 ft.

3-6 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Barriers to Implementation Vision for the Future There are no known fi shery regulation The U.S. aquarium trade is an economi- barriers for ornamental fi sh. They are cally signifi cant industry and there is tre- not currently managed by the Gulf of mendous potential for environmentally Mexico Fisheries Management Council friendly sustainable sources of maricul- (Gulf Council). Ornamental fi sh are not ture products. Raising ornamental fi sh included in the Reef Fish Fisheries Man- could occur while cultivating corals, agement Plan for the Gulf of Mexico. growing fi sh in pens, or at platform sea The barriers to implementation that ex- farms. ist in this area no different than those germane to all ventures seeking to use platforms after their productive life in minerals production.

Role of Offshore Platforms Reef dependent fi sh can be found from larval stages to adult stages (Hernandez et al. 2003) They feed, mate, nest, and spawn at platforms. All the necessities for survival are present at the platform. The offshore location provides a clean water source, and the platform offers a number of advantages to the maricultur- ist: Large larval and food supply are available naturally at the platforms; Large numbers of adult fi sh; and Large numbers of juvenile ornamental fi sh. These naturally occurring fi sh could be harvested and separated in tanks and raised to marketable size on the platform.

Potential Culture Species Ornamental fi sh include a variety of angel- fi sh such as the rock beauty, queen angel, French angel, blue angel, and townsend angel. Other species include damselfi sh, blue tang, creole fi sh, black durgon, and many other varieties. Videos taken by A. Walker show about 25 species of obligatory reef fi sh, many of which are desirable in the aquarium trade.

Section 3: The Promise of Mariculture for 3-7 Louisiana’s Offshore Waters Culture of Coral, Sponge, and Medically Valuable Organisms

Platforms could potentially serve as excellent facilities to culture some rare, commercially valuable, deep-water invertebrates, such as deep-water sponges currently being used for producing powerful anti-cancer compounds (discodermalide; Gunasekera et al. 2002; Paul et al. 2002; Lin et al. 2004). Large plates could be seeded with coral larvae in the laboratory, and the spat could be reared to a point where they reach a size-refuge (Sammarco 1982), carrying a higher probability of survivorship to the adult stage (Heyward et al. 2002). They could then be transported offshore and attached on the platform (Sammarco et al., work in progress) at the appropriate depth for op- timum growth for a period of up to 2–3 yrs. Secondly, a large number of reef invertebrates such as sponges, bryozoans, gorgoni- ans (sea fans), soft corals, etc. are known to live on offshore platforms (Gallaway & Lewbel 1981; Driessen 1989; Bright et al. 1991; Adams 1996; Boland 2002). The larvae of these organisms are carried by currents from their natal reefs around the Gulf of Mexico until they ﬁ nd suitable substrate upon which to settle (Lugo-Fernandez 1998; Sanvicente-Anorva et al. 2000; Lugo-Fernandez et al. 2001; Pederson and Peterson 2002). Many of these organisms are the same as those raised and sold commercially world wide in the ornamental aquarium trade (Ogawa and Brown 2001). Coral and sponge culture could simultaneously include both raising target organisms of speciﬁ c value to commerce or research, and harvesting wild organisms occurring naturally on the platform legs.

Current State of Coral Reefs on a temperatures, which induce mass coral Global Scale bleaching, chemical pollution, physical dis- turbance, disease — both bacterial and Coral reefs, and particularly coral popu- fungal (Shinn 2003; Sammarco 1996; lations themselves around the world are Wilkinson 1999; Gardner et al. 2003; suffering high levels of mortality due to Whittingham et al. 2003; McClanahan et over-ﬁ shing, under-grazing, nutrient en- al. in press). The federal protection of cor- richment, deforestation and resultant als from harvest (see Sammarco 2003) runoff, pollution, increased sea surface combined with the international agree- ments not to trade them (Harriot 2003) also restricts their supply to scientists to conduct research on many of the causes of these ill effects and investigate possible mitigation techniques. The mariculture of corals would help to meet the demand for scientiﬁ c research in the U.S. and elsewhere. This would also help to supply a need for corals to be introduced on damaged reefs during reef restoration activities on U.S. coral reefs, particularly in the Florida Keys (Sammarco 1996; Becker and Mueller 1999; Sammarco et al. 1999; Zobrist 1999).

The habitat range of coral on the platforms is believed to be limited to blue water; however, recent investigations reveal that coral is found in more turbid waters closer to shore.

3-8 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Role of Offshore Platforms ment and revenue in the region and the The purpose of culturing marine inverte- nation. The demand brates such as those on platforms would for the organisms al- be three-fold. Firstly, organisms such as ready exists; at this these are in great demand within the or- point, however, most namental aquarium trade. Many, such of the supply is com- as corals and soft corals, are protected ing from overseas from harvest or seizure by federal leg- and represents lost islation. Secondly, they are protected revenue to the U.S. from international trade by treaty. This (Sammarco 2003). is due to the excessive harvesting that has occurred in past years, decimating Potential populations in certain tropical countries Culture Species possessing coral reefs (Bruckner 2001; Daw et al. 2001; Simpson 2001; Tis- In recent studies, it has been determined Diver collecting stony coral colonies. sot and Hallacher 2003). Mariculture of that scleractinian corals are expand- Thousands colonize the horizontal these organisms would provide a domes- ing their geographic range within the transoms. tic supply for them, obviating the need northern Gulf of Mexico (Sammarco et for importation of Indo-Paciﬁ c soft corals al. 2003). In addition, from an ongoing and the like. This would serve an addition- study, it is also known that ahermatypic al function in that there is growing con- corals may be found extensively on plat- cern about the accidental or purposeful forms within 30 km of the shoreline in release of these Indo-Paciﬁ c ornamental the far-western Gulf and within 120 km species into coastal waters (Gulko 2001; of the coast in the central-western Gulf Semmens et al. 2004), with the possible (Sammarco et al., submitted). Platforms impact of introducing yet more harmful at the edge of the continental shelf in the species introductions (Minchin 1999; northern Gulf of Mexico plus those just Englund and Baumgartner 2000; Shi- off the edge of the shelf are now known ganova 2002). Thirdly, the mariculture of to be able to support coral populations. such local organisms would also initiate We know that the biogeographic range of a new industry for the northern Gulf of corals in the Gulf of Mexico for both her- Mexico, creating a new source of employ- matypic (reef-building) and ahermatypic (non-reef-building) corals extends as far west as the Matagorda Island and Bra- zos, South Addition regions, as far north as the inner West Cameron region, and as far south as 210 kms offshore near the Flower Garden Banks region (Sam- marco 2003). The central and eastern regions of the northern Gulf of Mexico are scheduled to be surveyed soon to determine the limits of this group in this region.

Close-up of corals growing on platform.

Section 3: The Promise of Mariculture for 3-9 Louisiana’s Offshore Waters Vision for Future highly effective in the treatment of certain types of cancer, occur in very low concen- The ocean is Earth’s last great untapped trations within their tissues (S. Pomponi, reserve. Many reef organisms possess pers. comm.). In addition, they are so natural chemical compounds which large and complex that it would be prohibi- are unique to a given species (Faulkner tively expensive to synthesize and manu- 2000). These are called complementary facture them, or even make functional de- or secondary compounds (Sammarco rivatives in the laboratory (closely related and Coll 1997). It is from these types of compounds that function in the same way compounds that many valuable pharma- as the original, natural compound, but ceuticals are derived (Shu 1998; Duck- are patentable). Because of this, even the worth 2001; Dey et al. 2002; Haefner testing of these compounds for bioactiv- 2003). Marine coral, sponges, mollusks, ity and potential biomedical use requires algae, and bacteria may possess bioactive quantities of these organisms which are compounds that can make a signifi cant extremely diffi cult and expensive to obtain contribution to the health and nutritional (Duckworth 2001). Nonetheless, they are industries (Pomponi 1999). Simple and required in order to extract appropriate abundant marine algae, let alone a host amounts and this is causing a marke de- of other organisms which occur on the cline in some source populations. platforms, represent potential sources Offshore platforms offer a unique mecha- of pharmaceuticals agents, agricultural nism by which to culture organisms such chemicals, food, industrial chemical feed- as sponges, and could obviate the need stocks, and other useful products. for expensive deepwater harvesting. Some of the organisms that produce bio- Sponges in general are quite easy to grow active compounds, such as certain spong- in their natural environment and could es, occur in deep water, are unreachable easily be cultured at the required depths by SCUBA and occur only rarely in their on these platforms. All of these activities natural environment (Duckworth 2001). would produce revenue in addition to that They require highly expensive equipment derived from fi sh mariculture. In addition, — such as manned submersibles associ- the activities may be conducted in paral- ated with large tender ships. Some of the lel without jeopardizing other mariculture valuable compounds isolated from these activities on the same platform. species, which have been shown to be

3-10 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Sea Farms

The “sea farm” plan is a plan to incorporate the scores of platforms scheduled to be retired (150–200/year) into a large mariculture production system to raise a diverse range of organisms. The decommissioned structures could be submerged as artifi cial reefs or left standing to provide a number of services. The scene below depicts the utilization of standing platforms for fi sh hatcheries and nutrition. They can be used for power, maintenance and supplies, fi sh unloading and transport to shore, and invertebrate culture. Crab, lobster, scallops, coral, sponge, and other cryptic and attaching invertebrates could be raised on the submerged structures at the sea farms. Oyster relaying, ornamental fi sh culture, and net-pens are other mariculture options at sea farms.

Potential Culture Species The location of the system will determine what species are suitable to culture. A sensible sea farming strategy is to diversify the number of culture species and limit the harvest to sustainable levels. Focusing on raising a single species may stress the local ecosystem. If pressure on a particular species becomes too great, stocking and feeding ﬁ sh at the sea farm may supplement the exploited stocks. Japan leads the world in sea farming innovation, and the Japanese are already practicing all the mariculture technologies discussed in Platform sea farms can provide an infrastructure for a variety of mariculture applications. It is an effort to this text and culturing dozens of utilize the thousands of platforms expected to be removed in the next 10-15 years. species (Grove 1994; Matsuda 1998).

Current State In Japan, sea farming is commonly practiced. They have embraced sea farming in an effort to transform their commercial fi shing fl eet from a predatory fi shery into a culture fi shery (Grove et al. 1994). In the U.S., Mote Marine laboratory is currently involved in a marine enhancement program that utilizes artifi cial reefs with the stocking of red snapper (Leber et al. 2002). Hatchery-reared snapper are released at the artifi cial reef sites. The release sites are then revisited and examined three months later to determine the fi delity of the red snapper to the artifi cial reefs (Ziemann et al. 2004). Platform farms should be located in mid to deep water (>100 ft.-<400 ft.) to avoid user confl icts The research is still in the experimental with the commercial trawling industry. The majority of the Louisiana shrimp fl eet pursues shrimp stage. in depths less than 60 ft. of water. The site also has to be deep enough to “reef” the structures.

Section 3: The Promise of Mariculture for 3-11 Louisiana’s Offshore Waters The U.S. has (California); summer fl ounder (North Car- quite a few stock olina); cod (Maine); lingcod (Washington); enhancement snook (Florida); and winter fl ounder (New programs and Hampshire). These initiatives, however, most coastal are mostly in the research phase (Nation- states have an al Marine Fisheries Service, 2002; Leber artifi cial reef 2002). program; however, outside of Barriers to Implementation the experimental project in Flor- Sea farming carries regulatory concerns ida, there are that are beyond the scope of this report. no sea farming The question of ownership fi sh in the wa- operations that ter column is of keen concern to fi shery combine these managers. Harvest quotas are also a technologies. constant source of contention in the fi sh- The largest U.S. ing community. The issue of “ownership” Stanley and Wilson (2000) reported that 10,000-30,000 adult stock enhance- comes to the forefront, because wild fi sh fi sh reside around the platform in an area about half the size of a ment project is can easily swim into a culture area and football fi eld. Alaska’s salmon culture fi sh can swim out. stock-enhancement program which receives $156M/yr in governmen-

tal funding (McIIwain 2003) and which Potential Environmental reportedly produced $270M in commer- Concerns Associated with Large cial landings of salmon in 2001 (National Scale Sea Farm Operations Marine Fisheries Service, 2002). In the U.S., cooperative stock enhancement projects between the public and private Fish feed waste sectors are pioneering practices for red Escapement of fi sh and genetic drum (in Florida, South Carolina, and Tex- impact on wild populations as); Pacifi c threadfi n, mullet, and snapper (in Hawaii); red snapper (Alabama, Florida, and Mississippi); white seabass

The Japanese are world leaders in sea farming technology and they are striving to transform their fi shery from a “capture fi shery” to a “culture fi shery” (Grove 1994).

Sea farms would preserve these fertile habitats on the Louisiana continental shelf.

3-12 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Role of the Platforms Platform jackets are 10 times larger and stronger than the best Japanese artifi cial reefs. The platforms are durable and could easily be modifi ed in numerous ways to accommodate many different mariculture applications. Reg- gio (1989) reported that, if left as is, the structures should last 300 years as artifi cial reefs on the ocean fl oor. They could remain standing indefi nitely if ca- Platforms produce some of the most prolifi c ecosys- thodic protection and structural integrity tems, by area, on the planet. Sea farming systems were maintained. However, they would could transform our fi shing techniques from preda- have to be repaired after hurricanes tory methods to sustainable methods of harvest. (ChevronTexaco, pers. comm.)

Vision for the Future The sea farm could create a foundation upon which a multitude of different fi shery management operations could fl our- ish. The commodities that are commercially viable today may be insignifi cant to the discoveries that will be found in the future. A great deal of research and planning is needed to fully assess the implementation of a platform sea farm. They will be developed gradually over the years as decommissioned structures become available in the area.

Endangered species, coral and sponge and protected ﬁ sh and crustaceans colonize the platform’s submerged structure.

Section 3: The Promise of Mariculture for 3-13 Louisiana’s Offshore Waters 3-14 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure SECTION 4: ENVIRONMENTAL, SOCIO-ECONOMIC, AND REGULATORY ISSUES

Environmental Stewardship

Environmental and Ecological Issues The following is a list of general environmental and ecological concerns associated with mariculture.

Fish feed and fecal waste. The Fish disease. Introduction of decomposition of feed and organic diseases from hatchery-produced wastes, fi sh respiration, and fi sh to wild fi sh can occur. Naturally nitrifi cation of metabolic wastes occurring diseases, toxic alga can lower dissolved oxygen levels blooms, stress from low oxygen, in the water column in and down cold stress, nipping, or degraded current of the net-pens. Dissolved feeds can all potentially cause oxygen and organic enrichment mortality of fi sh reared in cages. are interrelated in that organic Use of wild caught fi sh to feed enrichment fuels bacterial culture fi sh. Harvesting populations decomposition and results in oxygen of ground fi sh or menhaden to depletion. The decay of solid waste feed culture fi sh may add fi shing may also result in alterations in the pressure on wild fi sh. Louisiana benthic community due to burial and shelf is home to the Mississippi chemical changes affected within “fertile crescent” where 90 percent the sediments. of the fi sheries in the Gulf of Mexico Escapement of fi sh and genetic (GLOBEC 2001) are located, integrity. The principal problems including large populations of ground that have developed are: 1) fi sh and menhaden. displacement of indigenous species by the introduction or escapement of non-indigenous species into the wild (Blankenship and Leber 1995; Stickney 2002; Leber 2001 and Blaylock et al. 2000); and 2) the threat of altered natural gene pools from the introduction Photo by Gregory S. Boland or escapement of hatchery- produced fi shes with limited genetic diversity into the wild (NRC 2002; Blankenship and Leber 1995; Trinigali and Leber 1999; Traniguchi 2004). Use of native indigenous species. It is recommended to culture only indigenous species. A sound genetic protocol of indigenous species Platforms provide offshore habitat for marine turtles. addresses many of the genetic Their forage and prey organisms are readily available integrity concerns with escapement all over the platforms. and stock enhancement (Leber 2002). Section 4: Environmental, Socio-Economic, and 4-1 Regulatory Issues Effects of mariculture on What to Do About Environmental communities associated with Concerns platforms. The factors of concern include discharges from large net- A number of relatively straightforward ac- pen operations that could exert tions could be pursued to help alleviate environmental stress on the fi sh and or minimize many of these environmental invertebrates already resident on concerns. These include: the platform. Culture only native fi sh; Operational waste. These types Establish Best Management of wastes fall into two categories Practices (BMPs) and safety — routine discharges of sanitary and environmental protocols for waters, and potential spills of mariculture operations; and materials such as fuels, paints, and Move mariculture activities to anti-fouling compounds, etc. sites offshore to deep water, swift currents, and far from land, to minimize impacts to environments nearer to shore.

Environmental Benefi ts Associated with Leaving Offshore Structures in Place Mariculture Applications Leaving offshore platforms and oil and gas infrastructure in place, rather than remov- Mariculture ing these platforms within one year after Potential Problems State of Knowledge System the cessation of production, could result in a number of environmental benefi ts, Net-pen culture TSS, NH , BOD, thera- Disease and 3 both locally and globally. peutics, chemical agents, pollution problems decrease with genetic integrity of wild increased depth, current, and These platforms and their associated stocks, operational waste, distance from shore pipeline infrastructure could provide and site selection the foundation for facilitating the permanent sequestration of as much Ornamental fi sh By-catch Offshore culture is non-existent, all as 22 gigatons of greenhouse gases aquaculture has occurred inshore into depleted oil and gas formations, Coral and sponge Species competition Widely practiced in Florida with additional potential capacity in Oyster relaying TSS, fecal, and site selec- The relaying or depuration process deep saline aquifers (ARI 2005). tion is approved by FDA, however, Existing platforms and infrastructure relaying to offshore platforms will could provide low-cost facilities probably require FDA approval to support a number of non-CO2 Sea farm TSS, genetic integrity Commonly practiced in Japan but producing energy sources, such as of wild fi sh, operational virtually unknown in the U.S. wind, current, ocean thermal, wave, waste, site selection bio-fuels, etc. TSS=total suspended solids The mariculture of corals would assist in the restoration of damaged NH =ammonia 3 natural coral habitats. It would also BOD=biological oxygen demand help to protect coral reefs elsewhere in the world from exploitation and The table above examines each of the destruction by reducing the demand fi ve mariculture applications. The for importation of ornamental assessment identifi es the problems, re- organisms for the aquarium trade, views the state of knowledge, and makes simultaneously reducing import recommendations on the environmental demand and bolstering domestic concern. revenue sources.

4-2 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure These structures could help support Many of these platforms can the development of offshore LNG provide facilities for a wide range re-gasiﬁ cation facilities, remote of future viable industries, each from coastal communities in area of which could carry substantial of reduced threat from accidents or environmental beneﬁ ts with them, security risks. both locally and globally. In the future, it is possible that In this light, the current federal these platforms would be made requirement that offshore platforms available again to recover stranded be removed within one year of the offshore oil resources and increase cessation of production requires domestic petroleum supplies, a close look at re-drafting and reducing the need for petroleum amendment. imports.

Need for Action Oil and gas platforms represent a source of hard substratum in the euphotic zone in shallow water in the northern Gulf of Mexico, which otherwise would be extremely limited. At present, 150–200 platforms are being removed each year. These artifi cial reefs provide habitat for endangered species such as sea turtles, coral, and federally protected fi sh and invertebrates. This Sperm Whale was fi lmed next to a platform. The whale was sighted swimming around a deep-water fl oating structure in 1,000 m of water among a large school of squid (Walker 2004).

The Hawksbill Turtle has been on the endangered species list since 1970.

Section 4: Environmental, Socio-Economic, and 4-3 Regulatory Issues Socio-Economic Implications

The domestic oil and gas industry currently spends on the order of $300 to $400 million per year removing offshore platforms (NRC 1996). It will eventually spend over $10 billion to remove and haul to shore all platforms currently in the Gulf of Mexico.

The Role of Platforms in Supply The potential economic beneﬁ ts from Future Domestic maintaining this infrastructure could be Energy Requirements substantial: Assuming that the 3.6 billion barrels With the advent of new drilling technol- of stranded oil resources are ogy, leaving the infrastructure in place developed over a 40-year time frame, for mariculture could provide future op- by 2025 this would amount to: portunities to recover oil and natural gas resources that are currently stranded, • Incremental production of as well as natural gas reserves found at 200,000 to 250,000 barrels depths greater than 15,000 feet below per day; the sea surface (Minerals Management • More than 8,000 jobs retained Service, 2003). Leaving the existing by the Louisiana oil and gas 26,000 miles of pipeline in place could industry; provide a conduit to service potential fu- • Increased economic activity

ture LNG re-gasifi cation facilities and CO2 amounting to $500 million per sequestration operations, while simulta- year to Louisiana (ARI 2005); neously reducing the concentration of and atmospheric gases attributed to global • Increased state and federal warming. In addition, offshore facilities revenues of more than $250 could provide some of the infrastructure million per year, with greater to support future offshore energy produc- than 90 percent, under current tion from wind and OTEC power generat- fi scal arrangements, going to the ing systems. federal government. A recent study by the Louisiana State University Center for Energy Studies showed a potential $2.2 billion impact associated with the construction of LNG facilities in Louisiana and the Gulf of Mexico, with nearly 14,000 jobs created from the construction of these facilities, and 1,600 associated with their operation. Annual economic benefi ts could be on the order of $220 million per year (Dismukes et al. 2004) Benefi ts could also be derived from developing stranded and deep undiscovered natural gas resources, as well as from the development of offshore wind and OTEC power generation systems.

The retired sulfur mine on Main Pass 299 is preparing to be retroﬁ tted to store natural gas.

4-4 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Potential Economic Benefi ts from costs revealed that an initial investment Mariculture Operations of $12 million would be required to ex- ecute the project as outlined in the feasi- Mariculture ventures on platforms will bility study. The base-case evaluation esti- have to comply with the same state and mated employing over 20 individuals and federal regulations and structural codes a net cash fl ow of $17 million by year that oil and gas operators currently main- seven. tain, not to mention navigational aids required by the U.S. Coast Guard. Several expenses will be germane to any venture utilizing retired offshore platforms. These include expenses associated with a platform removal bond, navigational aids, maintenance, liability insurance, and cathodic protection. Unfortunately, the high cost of the platform removal bond could well prohibit the economic success of many types of mariculture applications. Cost-sharing of these expenses with companies sponsoring activities other than mariculture could help to offset these expenses and make mariculture operations economically viable. The recent publication “Farming the Deep Blue” (Ryan 2004) described many suc- Japanese reefs are large and designed to last 30 years. cessful international open ocean mari- Platforms are 10 times larger and stronger and we culture ventures; at present, however, spend about as much money removing platform as the there are very few of these operations in Japanese spend installing artifi cial reefs. U.S. waters. A few offshore mariculture sites are currently operating in the state Ornamental Fish Culture waters of Hawaii, Puerto Rico, and New Hampshire (Bridger and Reid 2001). The opportunity for environmentally Mariculture on platforms in the Gulf of friendly mariculture products in the Mexico has been explored in Texas off- U.S. aquarium trade is substantial. The shore waters. Several cage systems have U.S. imported $45 million (wholesale) been tested there, but cage maintenance in 1998 in live ornamental fi sh (Adams and production cost made it diffi cult to et al. 2001). More research is needed, achieve project goals (Kaiser 2003). In however, to determine the economic fea- one case, a commercial venture (Sea- sibility of ornamental fi sh culture. Fish, Inc.) lost its right to use the plat- Ornamental Coral Culture form because it was brought back into Hundreds of coral colonies are now production again (Kaiser 2003). known to exist on many offshore plat- Net-Pens forms (Sammarco et al. 2004). Some of In the U.S., limited economic literature these can be harvested directly. In addi- exists for mariculture operations in the tion, by using an onshore breeding facil- open ocean environment. One particular ity, thousands of small colonies can be study of interest (Waldemar Nelson Int. cultured on settlement plates deployed 1998; NOAA-Sea Grant College 2001), on the platform and harvested annually reported that the use of offshore produc- or semi-annually on a rotating basis (Sam- tion platforms for net-pen culture of red marco, work in progress). The proceeds drum would be technically feasible. In an from this could range from $120,000 to economic analysis of raising fi sh in net- $1.2 million annually (Porter 2004). pens, the construction of a fi sh hatchery was essential to project viability. An evaluation of start-up, capital, and operating

Section 4: Environmental, Socio-Economic, and 4-5 Regulatory Issues Oyster Depuration Economic Impact of Mariculture The cost of offshore oyster relaying is still on Local Commercial Fishermen unknown. If the costs are >$10 per sack, Mariculture production will almost certain- the economic feasibility would be ques- ly be more evolutionary than revolutionary tionable, based upon the costs of cur- in nature. That is, the fi rst such opera- rently available systems. Comparison of tions will be experimental in nature and costs alone, however, may be misleading. will require an environmental adjustment That is, all available post-harvest systems period (Gramling 2004). alter the product (i.e., kills the oyster); and Economic Analysis of Artifi cial Reefs the industry has expressed con- Annual Economic Area Jobs Source cern that this Impact may reduce the Southeast Florida $2.4 billion 26,800 Johns at al., 2001 demand for this type of seafood. Northwest Florida $415 million 8,100 Bell et al., 1998 Relaying of oys- Mississippi $78 million No data Southwick et al., 1998 ters to offshore facilities would not kill the product and may indeed in- Net-pen mariculture production of cobia, crease its value (Kiethly 2004). redfi sh, and mutton snapper would have little effect on the commercial fi shermen. Sea Farming Redfi sh are illegal to possess in the Gulf The Japanese spend approximately Exclusive Economic Zone (EEZ) and cannot $140/m3 to build and install artifi cial be harvested with gill nets in state waters. reefs. Platforms in the Gulf of Mexico are Cobia regulations limit the harvest to two >10 times stronger and larger than these fi sh per trip, and the Louisiana average Japanese artifi cial reefs. Considering all annual landing (1995–1997) of cobia is the platforms in 70,371 pounds (Horst 1998). Mutton waters >60 ft snapper are caught at offshore platforms depth, their col- but are not harvested and sold in signifi - lective value as cant numbers in Louisiana (Horst 1998). artifi cial reefs At this time, commercial fi shermen do could equal not harvest ornamental coral, sponge, nearly $14 bil- and fi sh in Louisiana; thus, the culture of lion (see Appen- these organisms would not compete with dix). Since it is traditional fi sheries. Oyster depuration is a more cost-ef- post-harvest treatment and does not pres- fective to leave ent any threat to traditional oyster fi sher- the structures ies. Sea farming will rely on fi shermen to offshore, a sav- harvest the fi sh, corals, and sponges, and ings on removal The platforms serve as subtrate for many manage the oysters and net-pens. Sea cost would accrue if operators were able benthic marine organisms that farming will present job opportunities for to re-deploy them as artifi cial reefs. The possess novel natural products, sometimes commercial fi shermen. sea farming production system discussed functioning for their own anti-biotic here would be the fi rst of its kind in the protection. Some of these compounds Gulf of Mexico; therefore, any informa- have already been demonstrated to show tion regarding current investment and promise as strong anti-cancer compounds. production represents an estimate only. It may be possible to farm these Three studies performed in Gulf States organisms on the platforms, while on the potential economic benefi ts of ar- simultaneously sampling the abenthos for tifi cial reefs (see table), however, indicate additional candidates. A small few signifi cant economic impacts from artifi - of them can cure cancer and generate cial reef programs. billions of dollars in the pharmaceutical industry.

4-6 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Regulatory Assessment

Obtaining permits to utilize a retired platform for net-pen mariculture will be a chal- lenge. There are currently no legal mechanisms available at the state or federal level to transfer the use of a platform from oil and gas production operations to another application. A single federal jurisdiction over mariculture activities on offshore platforms has not been established.

Regulatory Changes Required to Former Louisiana U.S. Congressman Da- Use Platforms for Non-Petroleum vid Vitter (now a U.S. Senator) introduced Operations in Federal Waters the Rigs to Reefs Act of 2003 (H.R. 2654), which proposed to authorize the Currently, no legal structure currently ex- use of decommissioned offshore produc- ists at the state or the federal level to tion platforms for mariculture purposes permit retired platforms for purposes in the Exclusive Economic Zone (EEZ). other than producing petroleum. The Out- The proposed legislation would exempt er Continental Shelf Lands Act (OCSLA) oil and gas companies from platform re- regulations (30 CFR 250.112) mandate moval requirements and offer tax credit that the owner/operator of an offshore incentives for using platforms for mari- platform removes it and return the site culture. Such legislation could be most to pre-production conditions within one helpful in providing the authority to move year after production has ceased. It is forward with the development of maricul- important to note that, despite this, it is ture operations in the Gulf of Mexico. still currently possible to extend the removal date by submitting a “right of use of easement” to allow utilization of an offshore platform for mariculture purposes under 30 CFR 250.7. The National Fish- ing Enhancement Act (1985) Public Law 98.623, title II (1984) provides for the redeployment of retired platforms for artifi cial reefs. Artifi cial reef sites require a Corps of Engineers (COE) Section 10 permit to install obstructions in navigable waters. Legal issues must be resolved to transfer ownership of an offshore structure from an oil and gas company to a mariculture venture. The OCSLA will have to be modifi ed. Regardless of what method is used to extend the life of an offshore platform for mariculture use, MMS will still require the operator to remove the platform if the company dissolves. The high cost of the surety bond could easily prohibit the economic success of many types of mariculture applications. If a mariculture venture fails, a federal indemnifi cation program is needed to assure that the mariculture facilities are redeployed into artifi cial reefs. Culturing ornamental fi sh and coral seen above The program would alleviate the need to does not require an expensive and time consuming remove the structure and therefore, the permit. platform removal bond.

Section 4: Environmental, Socio-Economic, and 4-7 Regulatory Issues Recommended Actions mariculture, however, have created pro- To address the issues raised above, the cedures allowing a mariculture project to following actions are recommended: commence through the issuance of a one- year Exempted Fishing Permit (EFP). Revise OCSLA platform removal requirements and adjust codes for Sea Farms alternative uses; Sea farms will require the same permits Create OCSLA language to terminate as net-pen facilities. It is anticipated that leaseholder’s interest and liability; there will be many management issues associated with the various types of mari- Create clear legal foundation for culture that can co-occur on sea farms. transfer of ownership; For example, with respect to stocking and Create a federal trust fund to cover feeding fi sh, how would cultured fi sh be liability exposure for the participating distinguished from the wild stock? With oil and gas operators. In addition, no method to distinguish the organisms, limit the liability to further deter ownership is impossible to demonstrate. frivolous suits. What regulations and operational proce- Provide low interest loans to dures would be needed for recreational mariculture ventures and fi shermen and commercial harvesters at such a fa- and provide general performance cility? bonds to turn default mariculture Ornamental Fish and Invertebrates platforms into artifi cial reefs and maintain navigational aids. Ornamental fi sh are not regulated by the Gulf Council and can be harvested without Specifi c Regulatory Changes permits. Coral and sponge can be raised and collected from artifi cial structures. Recommended for Net-Pen National Oceanic and Atmospheric Ad- Mariculture Operations in Federal ministration (NOAA) Fisheries issues “Live Waters Rock” permits for culturing from natural No specifi c federal legislation currently substrate in coastal and offshore waters. exists permitting offshore net-pen mari- In fact, several live-rock ventures are cur- culture. The Magnuson Act, which autho- rently operating in the federal waters off- rizes the Gulf Council to manage federal shore of Florida (Fisheries Management fi sheries in the Gulf of Mexico, was not Plan [FMP] Coral). originally drafted with mariculture in mind. The federal agencies directly involved in New Gulf Council Fisheries Management Plan for Mariculture New regulations for mariculture in the Gulf are currently being drafted by the Gulf Council in their FMP for Mariculture. This represents and important step forward in providing for mariculture in the Gulf of Mexico. The FMP is currently in revision and is anticipated to be submitted for approval in 2006.

Sunset view of an offshore cage in the Gulf of Mexico near an oil rig.

4-8 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure New NOAA Fisheries Mariculture Legislation NOAA is presently drafting a National Off- shore Aquaculture Act to address many of the confounding regulatory and legal issues facing marine aquaculture in federal waters. If approved, the draft NOAA legislation would be a signifi cant advancement in mariculture management. The current draft legislation addresses many profound regulatory obstacles and will help to streamline permitting. Moreover, the new regulations will exempt mariculture activities from the Magnuson Act. It is anticipated that in the 109th Con- gress, the Executive Branch will present this Act, providing the Department of Commerce with clear authority to regulate offshore aquaculture. The Alabama-Mississippi Sea Grant Legal Mariculture program suggested that one avenue that Changes Required Comments Operation could provide for sustainable offshore aquaculture is the consolidation of aqua- Ornamental fi sh None No permit needed. Ornamental fi sh are culture leases into a single area to be not regulated in Gulf Council’s Reef Fish known as a Marine Aquaculture Zone FMP. (MAZ). Zoning has been a useful land- Coral and sponge None NOAA Fisheries/Gulf Council already has based tool in the U.S., setting aside par- satisfactory permitting system. ticular areas for industry development. Oyster depuration None The depuration process is approved by the The creation of a MAZ requires that FDA, however, it is assumed that depura- one federal agency be responsible for: tion at retired oil and gas platforms will the management of the zone; issuance need approval from FDA*. of leases of the water column and sea- bed in the zone; and issuance of a permit *The National Shellfi sh Sanitation Program (NSSP) addresses this and other public health which would incorporate the concerns of issues within the Interstate Shellfi sh Sanitation Conference (ISSC). The ISSC now requires other relevant federal and state agencies states to develop and implement a Vibrio vulnifi cus Risk Management Plan. The collective (Fletcher and Neyrey 2001). goal of these risk management plans is to reduce rates of V. vulnifi cus illness by 40% for 2005-2006, and 60% for 2007-2008.

NOAA’s general council ruled that mariculture constituted fi shing activities and is therefore subject to Gulf Council’s regulations that were designed for fi shing vessels. If the venture involves raising regulated fi sh, the nature of mariculture will most likely breach a number of fi shing regulations: • possession of fi sh in excess of bag limits or trip limits; • possession of fi sh below the legal size limits; and • sale of regulated fi sh during closed season. An exempted fi shing permit (EFP) is required for mariculture ventures to exempt them from the Gulf Council’s regulations.

Section 4: Environmental, Socio-Economic, and 4-9 Regulatory Issues 4-10 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure SECTION 5: CONCLUSION

Current federal and state regulations require that offshore oil and gas platforms be removed within one year after cessation of production. About 150 to 200 platforms are scheduled to be removed annually for the next 20 years (MMS). The vast majority of these platforms on the Louisiana continental shelf will be gone in 10–15 years at this rate of removal. The oil and gas industry is spending $300–$400 million a year removing these platforms (NRC 1996) and will eventually spend over $10 billion for onshore dismantling and disposal.

In contrast, offshore platforms currently Providing opportunities for the provide a foundation for one of the most sequestration of greenhouse gases; prolifi c ecosystems, by area, on the plan- and et. Stanley and Wilson (2000) reported Facilitating and hosting the that 10,000–30,000 adult fi sh reside in development of wind, wave, current, an area about half the size of a football ocean thermal, and other renewable fi eld. Coral, sponges, endangered spe- energy sources. cies, and “protected” fi sh and inverte- In Japan, Norway, Spain, Germany, and brates colonize the platform’s submerged Ireland, offshore platforms have already structure. Platforms create reef habitat been installed for purposes other than that would otherwise not exist over tens petroleum production. These countries of thousands of square miles of soft bot- are utilizing offshore platforms to culture tom on the northern continental shelf of fi sh, generate carbon-free energy, and the Gulf of Mexico. mitigate pollution. All the mariculture Maintaining this existing offshore infra- applications discussed in this report are structure for future economic applica- already being practiced in Japan. tions could help preserve habitat that is critical to many organisms, as well as provide substantial opportunities in a variety of areas, including: Providing infrastructure for a wide variety of mariculture applications; Economizing and increasing domestic seafood production; Reducing exploitation of natural coral reefs internationally; Helping to facilitate the incremental recovery of additional crude oil and natural gas reserves in the future; Providing future facilities for LNG storage and offl oading; Supporting drilling in the future of deep natural gas formations below existing oil and gas fi elds;

Thousands of ﬁ sh, millions of invertebrates, and billions of microorganisms colorize each platform.

Section 5: Conclusion 5-1 Moreover, the potential economic ben- Little is known about the economic viability efi ts from maintaining this infrastructure of mariculture on oil and gas platforms; could be substantial: however, the economic impact of artifi cial Assuming that the 3.6 billion reefs programs in the Gulf States has barrels of stranded oil resources been found to produce a considerable in- are developed over a 40-year time fl uence on the local economies: frame, by 2025 this would result in The United States is spending billions of • An incremental production of dollars removing oil and gas platforms 200,000 to 250,000 barrels while other countries are installing off- per day; shore platforms for purposes other than petroleum production. Collectively, we • More than 8,000 jobs retained need to energize discussions at the lo- by the Louisiana oil and gas cal levels in the areas of stewardship and industry; governance to help promote the rational • Increased economic activity utilization of these offshore platforms for amounting to $500 million per future, viable applications. Moreover, a year to Louisiana; and comprehensive framework for reviewing, • Increased state and federal and in some cases revamping, national revenues of greater than $250 ocean policies is required. million per year, with more than Accomplishing this will allow for the con- 90 percent, under current fi scal tinued economic viability and growth of arrangements, going to the several industries — oil and gas produc- federal government. tion and fi shing and seafood production — critically important to the State of Loui- siana and to our nation.

Economic Analysis of Artiﬁ cial Reefs

Annual Economic Area Jobs Source Impact Southeast Florida $2.4 billion 26,800 Johns et al., 2001 Northwest Florida $415 million 8,100 Bell et al., 1998 Mississippi $78 million No data Southwick et al., 1998

5-2 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure BIBLIOGRAPHY

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Bibliography A-5 Pomponi, S.A. 1999. The bioprocess-technological potential of the sea. J. Biotechnol. 70: 5-13. Porter, S. 2004. Population and economic analysis of the coral Growth on offshore oil and gas platforms. Eco-Logic Environmental Report, Eco-Rigs, Inc., Baton Rouge, LA. Puerto Rico Sea Grant. 2004. Offshore cage culture: Environmental impact and perceptions by the local fi shing community. Sea Grant Semi-Annual Progress Report, NOAA- NMFS-SK Award Number NA17FD2370, NOAA National Sea Grant (grant number NA16RG1611), University of Puerto Rico at Mayaguez, Mayaguez, Puerto Rico. Pulsipher, A.G., O.O. Iledare, D.V. Mesyanzhinov, A. Dupont, and Q.L. Zhu. 2001. Forecasting the number of offshore platforms on the Gulf of Mexico OCS to the year 2023. U.S. Dept. Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, LA, OCS Study MMS 2001-013, 52 pp. Rademacher, K.R., and J.H. Render. 2003. Fish assemblages around oil and gas platforms in northeastern Gulf of Mexico: Developing a survey design. In, D.R. Stanley and A. Scarborough-Bull (eds.), Fisheries, Reefs, and Offshore Development, Am. Fish. Soc., Symp. No. 36, Bethesda, MD, pp. 101-122. Reggio, V.C. 1989. Petroleum structures as artificial reefs: A compendium. Fourth Int. Conf. on Artificial Habitats for Fisheries, Rigs-to-Reefs Special Session, Nov. 4, 1987, Miami, FL, OCS Study/MMS 89-0021. Render, J.H. and C.A. Wilson, C.A. 1996. Effects of gas bladder deflation on mortality of hook-and-line caught and released red snapper: Implications for management. ICLARM Conf. Proceedings, No. 48, 1996, pp. 244-253. Ryan, J., G. Mills, and D. Maguire. (in press). Farming the deep blue. Proc. Irish Sea Fisheries Board. Sammarco, P.W. 1982. Echinoid grazing as a structuring force in coral communities: Whole reef manipulations. J. Exp. Mar. Biol. Ecol. 61: 31-55. Sammarco, P.W. 1996. Comments on coral reef regeneration, bioerosion, biogeography, and chemical ecology: Future directions. J. Exp. Mar. Biol. Ecol. 200: 135-168. Sammarco, P.W. 2003. Coral reef communities on oil and gas platforms in the Gulf of Mexico: Where nature and industry meet. Subm. to House Sub-Committee on Energy and Natural Resources, Washington, DC. Sammarco, P.W. 2004. Determining the geographic distribution, maximum depth, and genetic affinities of corals on offshore platforms, northern Gulf of Mexico. US Dept. Interior, Minerals Management Service, New Orleans, LA, GM-92-42-117. Sammarco, P.W., D.A. Brazeau, and T.N. Lee. 1999. Enhancement of reef regeneration processes: Supplementing coral recruitment processes through larval seeding. Proc. Int. Conf. Sci. Aspects of Coral Reef Assessment, Monitoring, and Restoration, National Coral Reef Institute, Nova University, Ft. Lauderdale, FL. Abstract. Sammarco, P.W. and J.C. Coll. 1997. Secondary metabolites – or primary? Re-examination of a concept through a marine example. In, H.A. Lessios and I.G. Macintyre (eds.), Proc. 8th Int. Coral Reef Congress, Panama, Vol. 2, pp. 1245-1249. Sanvicente-Anorve, L., C. Flores-Coto, and X. Chiappa-Carrara. 2000 . Temporal and spatial sales of ichthyoplankton distribution in the southern Gulf of Mexico. Estuar. Coast. Shelf Sci. 51: 463-475. Semmens, B.X., E.R. Buhle, A.K. Salomon, and C.V. Pattengill-Semmens. 2004. A hotspot of non-native marine fi shes: Evidence for the aquarium trade as an invasion pathway. Mar. Ecol. Prog. Ser. 266: 239-244. Sheehan, J., T. Dunahay, J. Benemann, and P. Roessler. 1998. A look back at the U.S. Department of Energy’s aquatic species program - Biodiesel from algae. US Dept. Energy, Office of Fuels Development, Nat. Renewable Energy Lab., Golden, CO.

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A-8 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure APPENDIX Cost to Build Artiﬁ cial Reefs: Estimation of Volume of Oil and Gas Structures in Gulf of Mexico

The Gulf of Mexico platforms are magnitudes larger and more durable than Japanese designs. The size and the construction materials and installation expense affect the cost of deploying artifi cial reefs. They are sold in units of volume usually in units of cubic meters. In literature review, a range was found between $67/m3 - $320/m3 with $140/m3 (Table 1) the average cost.Platform jackets closely resemble some of the most expensive artifi cial reefs, however, the other designed artifi cial reefs tend to have a more complex structure and more surface area-decks have a tremendous amount of surface area. The construction materials of other designed artifi cial reefs consist of reinforced cement, plastic and cement, and steel (steel being the most expensive). The structural integrity of a platform is signifi cantly stronger than other designed artifi cial reefs and should survive longer on the ocean fl oor — 30 years for Japanese artifi cial reefs (Grove 1994) and 300 years for platform jackets (Reggio 1989).

Description of Calculations to the Model

In order to calculate the volume and value of offshore oil and gas platforms in the Gulf, a model was developed to generate estimates based on MMS data. The number of platforms used in the model does not include 4-pile platforms. It does not include platforms in water depths of less than 50ft nor does it include caissons or well heads from any depths. The search was ﬁ ltered to exclude any platforms with a removal date. The results include only major platforms. This search resulted in 3,942 major platforms in all water depths and was ﬁ ltered 2,265 in water depths greater than 50ft. The source of information is gathered from the MMS Platform Master Database and Report MMS Aug 2004. (1) Oil and gas structures are made of two basic components: a jacket and a deck. The jacket supports the deck above water and it raises to about 10 ft. above sea level where it joins with the deck. So when a platform is in 50 ft of water it is really 60 ft in height and so 60 ft is used in the volume equation instead of 50 ft for a platform in 50 ft of water. (2) 55 platforms are in water depths between 500 ft–1,400 ft and instead of calculating each increment of 10, all the platforms used a factor of 500 ft for the height in the volume equation.

Table 1. Estimation of cost to build and install artiﬁ cial reefs.

Appendix A-9 Table 2. Results from modeling volume of offshore platforms and cost to build and install equivalent volume.

A-10 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Calibration Data

Calibration data is provided by the Wood Group Production Services. The data matched up pretty well within 20% above and below the numbers predicted in the model.See data below:

Appendix A-11 A-12 Mariculture and Other Uses for Offshore Oil and Gas Platforms: Rationale for Retaining Infrastructure Produced by Eco-Rigs A Louisiana Non-Proﬁ t Organization

For More Information, Please Contact:

Steve Kolian [email protected] 225-910-0304

Paul Sammarco [email protected] 985-851-2876

Please visit www.towersoﬂ ife.com/ecorigs for more information on the marine organisms inhabiting offshore oil and gas platforms in the Gulf of Mexico.