Credit: WhitcombeRD

Companies that participate in Gulf of Mexico’s rigs-to-reef programs give 50% of the cost savings to the states’ artificial reef programs through deeds of donations and the ownership of the material is transferred from the operator to the state.
Deeds of donation have amounted to tens of thousands of dollars for shallow-water platforms, but this will hike to tens of millions of dollars for deeper facilities, Byrd said.
“We are looking at deeds of donations in the order of $20-25 million,” Byrd said.
“If you look at these very large complete removal projects, there is an immense amount of cost risk. Bringing a project into a reefing program reduces the operator risk immensely. So, it is very attractive from that standpoint - as well as a significant cost saving,” Byrd said.
However, there are yet to be firm commitments from deep-water operators, Byrd said.
“Everything right now is pending, nothing has actually happened. There are some big projects that are under consideration,” Byrd said.
“I don’t think there is any question that there is going to be a lot of reefing work for the big platforms in the Gulf of Mexico, because no one is opposed to it, really,” Byrd said.

Regulation
“I think that we are going to see further regulatory encouragement for offshore oil and gas operators to engage in the rigs-to-reefs program,” Glenn Legge, Partner at Legge Farrow, a Houston-based civil litigation firm, said.
In 2013 the Bureau of Safety and Environmental Enforcement (BSEE) released the Rigs-to-Reef Interim Policy Document (2013-07) which lifted the 2009 moratorium on reef proposals outside of normal planning areas.
In the 2013 document, BSEE indicated that it would be acting or exercising discretion to extend decommissioning deadlines for operators that were considering using their decommissioning facilities for rigs-to-reefs programs, Legge said.
“That’s a good indication of a reasonable regulatory approach to encourage companies to consider the rigs-to-reefs program,” Legge continued.
“There are very stringent requirements for a facility to be approved for a rigs-to-reefs program, because you don’t want to have any latent contaminant from the structure,” Legge said.
“So, as companies and their service companies improve their ability to clean and prepare facilities for the rigs-to-reefs program, I think that we will hopefully see a growing trend to get involved in the rigs-to-reefs program, because as service companies become more efficient at doing that, than we may see a larger delta in savings by using a rigs-to-reefs program,” Legge said.
This would require more competition in the market for these services in order to make them more efficient and more cost-effective, which itself requires greater demand signals, Legge said.
“I think that what a lot of operators are frustrated about is that because of the requirements to get engaged in Rigs-to-Reefs program, there hasn’t been a large demand for such services at this point in time,” Legge added.

Win-win program
The Rigs-to-Reefs program has seen some 478 platforms donated to the Louisiana and Texas Artificial Reef Programs, according to DecomWorld’s Offshore Decommissioning Report 2014 Gulf of Mexico.
In 2013, the Louisiana Artificial Reef Program (LARP) accepted 17 structures and the Texas Artificial Reef Program (TARP) accepted four structures as artificial reefs, the report said.

LARP donated structures by year and deployment method (2009-2013), Offshore Decommissioning Report 2014 Gulf of Mexico, DecomWorld

In recent years, Chevron USA., Maritech Resources, Apache Corp., EOG Resources, and Merit Energy Company have been leading donators to reef programs.
“The operators are certainly able to save a significant amount of money by doing these projects,” Mike McDonough, Artificial Reef Coordinator, Louisiana Department of Wildlife & Fisheries, said.
The artificial reefs have proven effective in supporting fisheries habitat in the Gulf of Mexico.
The National Fishing Enhancement Act allows the transfer of a structure into a state approved reefing program; along with a transfer of all associated liability, according to the American Petroleum Institute.
The donation from the operator to the state reef program is designed to cover maintenance of the facility.
“The Rigs to Reef Program is a win-win program for the industry, the fishing community, coastal states and the environment,” Holly Hopkins, Senior Policy Advisor, Upstream and Industry Operations at the American Petroleum Institute (API), said.
According to API, Rigs to Reefs programs have benefits for multiple stakeholders. They have been effective in reducing workplace exposures of decommissioning activities - to the operator and all personnel involved in these activities - including safety risks, liability, and financial exposure.
The artificial reef programs of the GOM coastal states is an active and critical component of the decommissioning plans of many operators, API said.

Adding biodiversity
“Rigs-to-reefs can be done in an environmentally beneficial manner, but it needs to have very well defined parameters and guidelines,” said Joseph Ferris, Associate Director at BMT Cordah, an environmental consultancy.
The artificial reefs can add to the biodiversity of the area, depending on its original properties, Han Lindeboom, Professor at the Netherlands-based Institute for Marine Resources & Ecosystem Studies, said.
“You have a much higher biodiversity, when you have an oil and gas platform, due to the added hard substratum and local ban on fisheries,” Lindeboom said.
In the Gulf of Mexico, where these programs are conducted on a large scale, artificial reefs create a substratum on the seafloor, a structure that can cause a higher production in fisheries, he added.
“If you remove the platform, you will lose that added biodiversity…From an ecological point of view, there are good reasons to keep rigs in place or to turn them into reefs.”
The benefits can vary according to the sediment type of the area, with significant benefits in sandy areas such as the Dutch sector of the North Sea.