A Study for the U.S. Department of the Interior, Minerals Management Service GULF OF MEXICO DEEP WATER DECOMMISSIONING STUDY REVIEW OF THE STATE OF THE ART FOR REMOVAL OF GOM US OCS OIL & GAS FACILITIES IN GREATER THAN 400’ WATER DEPTH M09PC00004 Final Report Conducted by PROSERV OFFSHORE HOUSTON, TX PROJECT NO. 29038-11 OCTOBER 2009 This report has been reviewed by the Minerals Management Service and approved for publication. Approval does not signify that the contents necessarily reflect the views and policies of the Service, nor does mention of trade names or commercial products constitute endorsement or recommendation for use. State of the Art for Removing GOM Facilities in Greater than 400 Feet Water Depth MMS M09PC00004, Proserv Offshore Project 29038-11 Final Report – October 2009 LEGAL NOTICE U S Dept of Interior Minerals Management Services (MMS) October 2009 This report has been reviewed by the Minerals Management Service and approved for publication. Approval does not signify that the contents necessarily reflect the views and policies of the Service, nor does mention of trade names or commercial products constitute endorsement or recommendation for use. This report ("Report") to the MMS presenting a study on US Gulf of Mexico deepwater decommissioning titled “State of the Art for Removing GOM Facilities in water depths greater than 400’” was prepared by PROSERV OFFSHORE solely for the benefit and private use of the US MMS. Neither PROSERV OFFSHORE nor any person acting on PROSERV OFFSHORE's behalf either (a) makes any warranty, express or implied, with respect to the use of any estimate, information or method disclosed in this Report or (b) assumes any liability with respect to the use of or reliance on calculations, information or methods disclosed in this Report by anyone other than the US MMS. Any recipient of Report, by acceptance of, reliance on, or use of this study, releases and discharges PROSERV OFFSHORE from liability for any direct, indirect, consequential or special loss or damage whether such loss or damage arises in contract, tort (including the negligence of PROSERV OFFSHORE in the preparation of this study), strict liability or otherwise. Information furnished by PROSERV OFFSHORE hereunder shall not be used or referred to in connection with the offering of securities or other public offering. Legal Notice 00c-1 Rev.0 –Oct 2009 State of the Art for Removing GOM Facilities in Greater than 400 Feet Water Depth MMS M09PC00004, Proserv Offshore Project 29038-11 Final Report – October 2009 GOM DEEP WATER DECOMMISSIONING STUDY Final Report REVIEW OF THE STATE OF THE ART FOR REMOVAL OF GOM US OCS OIL & GAS FACILITIES IN GREATER THAN 400’ WATER DEPTH Date Rev. No. Revisions Oct 2009 0 Draft Report Oct 2009 1 Final Report, Revised All Sections PREPARED BY: Proserv Offshore Revision Prepared By: Checked By: Approved By: Issue Date 1 SMW/BCE SMN RCB Dec 2009 Document Control 00d - 1 Rev.1 –Dec 2009 State of the Art for Removing GOM Facilities in Greater than 400 Feet Water Depth MMS M09PC00004, Proserv Offshore Project 29038-11 Final Report – October 2009 GOM DEEP WATER DECOMMISSIONING STUDY Final Report REVIEW OF THE STATE OF THE ART FOR REMOVAL OF GOM US OCS OIL & GAS FACILITIES IN GREATER THAN 400’ WATER DEPTH MMS M09PC00004 Table of Contents EXECUTIVE SUMMARY BACKGROUND REVIEW OF PREVIOUS STUDIES OBJECTIVE, ASSUMPTIONS AND OVERALL APPROACH CONSTRUCTION COST INFLATION TRENDS CONCLUSIONS RECOMMENDATIONS SECTION 1 – PROJECT INITIAL ASSESSMENTS 1.1 BACKGROUND 1.2 GOM ASSET DESCRIBTION 1.3 GOM MAJOR ASSET INVENTORY 1.4 GOM MAJOR ASSET INVENTORY PRELIMINARY GROUPING SECTION 2 –METHODOLOGIES, TECH. & INFRASTRUCTURE ASSESSMENT 2.1 DECOMMISSIONING WORK ACTIVITIES 2.1.1 Decommissioning Planning 2.1.2 Decommissioning Engineering 2.1.3 Permitting 2.1.4 Bidding 2.1.5 Pre-job Meetings 2.1.6 Offshore Work 2.1.7 Project Closure 2.2 DECOMMISSIONING TECHNOLOGY 2.2.1 Explosive Methods 2.2.2 Non-Explosive Methods 2.2.3 Severing Conclusions 2.2.4 Deepwater Diving Suits Table of Contents 00b - 1 Rev.0 –Oct 2009 State of the Art for Removing GOM Facilities in Greater than 400 Feet Water Depth MMS M09PC00004, Proserv Offshore Project 29038-11 Final Report – October 2009 2.2.5 Remotely Operated Vehicles 2.2.6 Directly Operated Vehicles 2.2.7 Subsea Operations Conclusions 2.2.8 Standard Heavy Lift Technologies 2.2.9 Alternative Heavy Lift Technologies 2.2.10 Heavy Lift Conclusions 2.2.11 Well Intervention Vessels/Systems 2.3 DEEPWATER DECOMMISSIONING TECHNOLOGY CHALLENGES 2.3.1 Platform Removal Preparation 2.3.2 Conductor Removal 2.3.3 Pipeline/Flowline Abandonment 2.3.4 Topsides Removal – All Scenarios 2.3.5 Decommissioning Project Challenges SECTION 3 –DISPOSAL OPTIONS 3.1. GENERAL REQUIREMENTS FOR MATERIAL DISPOSAL 3.1.1. Scrap Yards 3.1.2. Reefing 3.1.3. Reuse of Production Facilities 3.2. SPECIFIC DISPOSAL REQUIREMENTS FOR STRUCTURES 3.2.1. Jacket Platforms 3.2.2. Tension Leg Platforms 3.2.3. Semisubmersible Production Units 3.2.4. SPARS 3.2.5. Floating Production Storage & Offloading Systems (FPSO) 3.2.6. Subsea Wells & Tie Backs 3.2.7. Subsea Pipelines & Control Umbilical’s 3.3. REMOVAL & REUSE OPTIONS 3.3.1. Platforms 3.3.2. Tension Leg Platforms 3.3.3. Semisubmersibles 3.3.4. SPARS 3.3.5. Floating Production Storage & Offloading Systems (FPSO) 3.3.6. Subsea Well Heads 3.3.7. Subsea Pipelines & Umbilical’s 3.4. REEFING PROGRAMS 3.4.1. Texas 3.4.2. Louisiana 3.4.3. Mississippi 3.4.4. Alabama 3.4.5. Florida 3.5. EFFECTIVE REEFING COMMUNITIES 3.6 ALTERNATIVE TO PLATFORM REMOVAL Table of Contents 00b - 2 Rev.0 –Oct 2009 State of the Art for Removing GOM Facilities in Greater than 400 Feet Water Depth MMS M09PC00004, Proserv Offshore Project 29038-11 Final Report – October 2009 SECTION 4 –DECOMMISSIONING OPTIONS & COSTS 4.1 FIXED PLATFORMS DECOMMISSIONIG COSTS Platform only without conductors Conductors severing and removal Pipeline abandonment Well Plug & Abandonment (P&A) Cost Summation Conceptual Fixed Platform Removal Costs 4.2 SPAR DECOMMISSIONING COSTS Platform preparation Deck removal Pipeline Abandonment Well P&A Mooring system removal Hull removal Cost Summation 4.3 TLP & MINI TLP DECOMMISSIONIG COSTS Platform preparation Pipeline Abandonment Well P&A Mooring system removal Deck / hull removal Cost Summation 4.4 SEMI DECOMMISSIONING COSTS Platform preparation Pipeline Abandonment Well P&A Mooring system removal Hull removal Cost Summation 4.5 FPSO STRUCTURE DECOMMISSIONING Pipeline Abandonment Well P&A Mooring system removal 4.6 SUBSEA STRUCTURE DECOMMISSIONING 4.7 PROBABILISTIC DECOMMISSIONING COST SECTION 5 – APPENDIX 5.1 DECOMMISSIONING ESTIMATES BY REPRESENTATIVE PLATFORM 5.2 LIST OF FIGURES 5.3 ACKNOWLEDGEMENTS 5.4 MMS CCONTRACT WORK SCOPE 5.5 GLOSSARY OF TERMS Table of Contents 00b - 3 Rev.0 –Oct 2009 State of the Art for Removing GOM Facilities in Greater than 400 Feet Water Depth MMS M09PC00004, Proserv Offshore Project 29038-11 Final Report – October 2009 5.6 EXPLOSIVE PERMIT STIPULATIONS 5.7 FIXED PLATFORM GENERAL METHODOLOGY & ASSUMPTIONS 5.8 INTERNATIONAL CONSTRUCTION INFLATION TRENDS 5.9 SUBSEA REPORT – CROSSMAR 5.10 PRESENTATION ON ARTICIAL REEFING PROGRAMS Table of Contents 00b - 4 Rev.0 –Oct 2009 State of the Art for Removing GOM Facilities in Greater than 400 Feet Water Depth MMS M09PC00004, Proserv Offshore Project 29038-11 Final Report – October 2009 EXECUTIVE SUMMARY This study has been prepared for the Department of the Interior, Minerals Management Service (MMS) in response to their Request for Proposals (RFP) for specific areas of interest to the MMS Technology Assessment and Research (TA&R) Program, Oil Spill Response Research & Decommissioning as published in Broad Agency Announcement Solicitation Number M08PS00094. The study provides a review of the state of the art and current practice in the removal and disposal of Gulf of Mexico (GOM) U.S. Outer Continental Shelf (OCS) oil and gas facilities in water depths greater than 400 feet (deep water). It also identifies and discusses the challenges and choices faced by the industry and regulatory authorities in dealing with the decommissioning of these facilities. The study also estimates the cost of decommissioning typical fixed and floating deep water facilities. The study is separated into the following Section areas of interest. (1) Section 1 identifies the GOM major facility inventory by type and water depth, grouping and representative platform. (2) Section 2 provides an assessment of methodology, technology and infrastructure and presents a synopsis of the major decommissioning tools, resources, limitations and future challenges. (3) Section 3 provides an assessment of disposal options and their impact on state run reefing programs and assessment of the water depths that the programs are most effective. (4) Section 4 presents A) deterministic cost data to determine estimated decommissioning liabilities for typical fixed, tethered and moored structures and associated pipelines and wells in the GOM, B) a conceptual removal method estimate and C) a discussion on deterministic and probabilistic estimating and a sample probabilistic cost estimate for platform removal. (5) Section 5 Appendix presents the decommission cost estimates for the representative platforms used in this study, lists of Figures/Tables, acknowledgements, MMS Contract Work Scope, Glossary of Terms, explosive permit stipulations and fixed platform General Methodology & Assumption. BACKGROUND Currently, most offshore GOM platform decommissioning has been in water depths less than 400 ft. This study focuses on water depths >400 ft. There are currently 111 surface platforms in the GOM in water depths greater than 400 feet to ±8,000 feet, as shown in the Major Asset Table 0.1 below. For the purpose of this study surface platform includes a) fixed structures with legs anchored by piles to the seabed and includes compliant towers, b) Spars attached to the seabed by mooring lines and c) tensioned leg platforms attached to the seabed by tensioned steel tubes.