DECOM WORLD: Deepwater decommissioning up to four times more costly, study finds

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By Rod Sweet on Apr 30, 2014

A new report on the Gulf of Mexico decommissioning market finds that costs rise sharply in water depths greater than 200ft (61m).

Structure decommissioning ranges from $3-5 million in water depths less than 200ft, to $15-20 million in water depths greater than 200ft, according to DecomWorld’s latest Gulf of Mexico Offshore Decommissioning Report 2014.

In conventional decommissioning, dry tree shallow water plugging and abandonment operations typically cost between $300,000-$500,000 per wellbore, finds the report author, Mark J. Kaiser, research and development director at Louisiana State University’s Center for Energy Studies.

But he warns that estimating true decommissioning costs depends on many site-specific factors.

Meanwhile, the cost of decommissioning storm-destroyed structures often ranges between three to five times the cost of conventional operations, but may be greater by a factor of ten or more in extreme cases, the study found.

In the immediate aftermath of a storm, the resources necessary to initiate inspections, conduct repairs, and procure material and equipment are usually stretched thin.

The report concluded that small companies tend to be cost-minimizers in decommissioning while large companies focus on risk management, with specialized teams and business units dedicated to the task, potentially pushing costs higher.

Produced for DecomWorld the report estimates the GOM decommissioning market to be worth $26bn in and around January 2014.

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.

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