Increased permit approval time could delay future decommissioning

Permit approval time for decommissioning activities in the US Gulf of Mexico (GoM) has increased since 2000 due to growing offshore activities, added regulatory requirements, and understaffed departments at the Bureau of Ocean Energy Management (BOEM).

This lag in permit approval has decreased the actual field time available to execute a decommissioning project within the timeframe allowed by the regulations and has put a strain on executing the field operations efficiently.

Although operators can request extensions, lately these have not been granted.

Increasing delays
According to BOEM data, an average of 149 platforms have been decommissioned per year in the last decade. The last two years were above the average; 152 were decommissioned in 2008 and 216 in 2009. In addition to the annual platform harvest, decommissioning activities are expected to increase in the coming years due to upcoming “idle iron rules” and increased hurricane risk mitigation by the platform operators.

Based on current trends, limited resources, and upcoming regulatory changes, decommissioning planning may have to begin before cessation of production to meet lease obligations.

The timeframe to complete all decommissioning obligations is fixed. Oil and gas operations in the outer continental shelf are regulated under Title 30, Chapter II, Part 250 of the Code of Federal Regulations [30CFR250.180 (b)], which states that the lease expires if operations stop during last 180 days (6 months) of the lease. Sections 30CFR250.170 and 30CFR250.1725 state that the wells must be plugged and the platforms must be removed within one year of lease termination.

This chart shows the number of Well APMs submitted and average duration to approve the permit. The blue lines show the results for all permit classifications. The red line depicts the well pipeline abandonment and TA APMs. Well APMs doubled from 2005 to 2009. Well abandonment APM has seen more than a threefold increase in that same time frame. This is a direct result of the actions taken to mitigate risk after hurricanes Katrina and Rita. Well abandonment APMs have increased from one-third to two-thirds of the total APMs. The chart also shows that the average APM approval time is consistently ~1 day longer for abandonment APMs.

In a typical decommissioning project, the wells are first plugged and abandoned, the topsides equipment is cleaned, the pipelines are abandoned, decks and jackets are removed, and the seabed is cleared of debris and verified by trawling. All of these activities, with the exception of the facilities flushing, require task-specific permits.

The Well Application for Permit to Modify (well APM), which includes all well abandonment permits, is submitted electronically through the “eWell” website. The corresponding BOEM district reviews and approves the well APM.

Pipeline abandonment permit applications have doubled from 194 in 2000 to 426 in 2009. As a percentage of the total number of permit applications, pipeline abandonment applications increased from 15% of the permits in 2000 to 27% of the permits in 2009. Before 2005, abandonment permit applications averaged 50 days for approval. Since 2005, the average is 85 days.

Pipeline abandonment, platform removal, and site clearance verification permit applications are submitted to the BOEM regional office in New Orleans, where the pipeline group reviews and issues the pipeline abandonment permit and the structures group reviews and issues the platform removal and site clearance verification permits.

Analysis parameters
For this permit duration review, the well APM database, Pipeline Permits database, and Platform List of Structures Removed and Method of Removal list were downloaded from the BOEM website, with the data first sorted by the date the permit was received. The duration was calculated using the received date and approved date. The number of permits and the average durations were then calculated by year. The wells and pipelines databases include all of the permit categories used by the BOEM. The platform removal results include only the removal permit applications.

This chart presents only the lease term pipeline and right of way pipeline abandonment permit applications. It also shows that the average approval time began to decrease in 2008. This is due in part to the increased number of pending abandonment permit applications.

Uncertainty impacts planning
Increased approval time is not proportional to increases in the number of permits being submitted. Like most of corporate America, the BOEM regulatory groups are being asked to do more with less.

A typical platform with two to three wells and one to two pipelines requires a minimum of three to five months for permit approval. Uncertainty in permit approval duration does not allow operators to plan the work efficiently. The operator cannot plan to execute a multiple well, pipeline, and platform program in a sequential order.

Permit approval time has increased consistently since 2000. The spike in permit approval duration in 2006 is a result of the permit applications associated with the platforms that were toppled or heavily damaged by hurricanes Katrina and Rita. The average permit approval duration increased from 13 days in 2000 to 80 days in 2009. Platform removal permit applications increased 77% (131 in 2000 to 232 in 2009), but the rate at which permits are approved increased more than six-fold from 13 to 80 days.

The draft Notice to Lessees (NTL) No. T45-g states, “The BOEM conducted an Alternative Internal Control Review (AICR) of idle structures and wells on active leases in the Gulf of Mexico Outer Continental Shelf (OCS) in 2008. This review looked at the presence of this idle infrastructure and a process of identifying, tracking, and decommissioning these idle wells and structures. Findings from this AICR indicate that approximately 25% (12% if no production for five years or more) of the existing platforms are idle, and 52% (35% if no production for five years or more) of wells not permanently plugged are idle.”

Enactment of this NTL will add to the current decommissioning workload for both the BOEM and the industry. Without any significant changes in the BOEM staff, the time for any permit approval will increase and ultimately delay the decommissioning of structures the NTL is trying to have removed.