Removal rates to flatten as idle inventory clears: new GOM report

Decommissioning in the shallow water Gulf of Mexico should remain high in the next two to three years compared to historic levels, but the recent record levels of activity will fall as idle inventories deplete, a new study finds.

In the near-term – three to five years – removal rates are expected to slow, and over five to 10 years the active inventory trajectory will flatten.

The next three to five years will see between 175 and 275 removals per year, according to the Gulf of Mexico Offshore Decommissioning Report 2014.

But after 2016 most of the current idle inventory in the Gulf of Mexico (GOM) will be cleared and decommissioning activities will drop from record highs. All but the most difficult and expensive hurricane-destroyed structures that remain in the GOM circa 2014 are expected to be decommissioned by 2016.

Produced for DecomWorld by Mark J. Kaiser, research and development director at Louisiana State University’s Center for Energy Studies, the report estimates the GOM decommissioning market to be worth $26bn in and around January 2014.

Shallow water decommissioning is worth about $18bn, Kaiser found, but it is a depleting market. Annual activity levels have peaked and are expected to generate between $1bn and $2bn annually over the next three to five years.

In its fifth edition, the Gulf of Mexico Offshore Decommissioning Report contains detailed market analyses and forecasts for both shallow and deep water, plus updates on transactions and regulatory developments. Click here for more information.