Why Rig Owners Hesitate To Decommission Oil Rigs

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There are several oil rigs that were commissioned in the 1970s and are nearing the end of their usefulness. Oil rig owners are required to decommission the aging oil rigs. Otherwise, they are held responsible for any accidents or injuries that are caused by structures breaking off and falling into the water. However, there are many factors that influence rig owners to delay the decommissioning process of these aging oil rigs. This article highlights the key reasons why rig owners hesitate in decommissioning these oil rigs.

Decommissioning Rigs Is Expensive

These structures have supported offshore oil rig jobs in the past, but are now lying unused. Oil rigs become a liability once they have outlived their working life;  it is expensive to decommission these oil rigs. The process of decommissioning rigs is easier said than done. It is an expensive process, which is the main reason for rig owners to delay the process. A majority of rig owners have expressed their concern regarding the expenses associated with decommissioning an oil rig, especially at a time when production has ceased.

Alexandra Ossola said in a recent article:

“Decommissioning is expensive, costing anywhere between $1 million and $10 million per rig, depending on the water depth and weight of the rig… Among other steps, rig owners must sever the metallic tethers from the sea floor, cement up the well, and pick up any debris in the surrounding area — all steps required since the 1970s when Congress passed its so-called Idle Iron policy… The cost of turning a rig into a reef is only slightly less than pulling the rig out of the water and scrapping it, but oil companies would rather leave the rigs where they stand and save money.”

Depth Of These Structures Poses A Challenge

The depth at which these oil rig structures explore and produce oil from around the globe poses a huge challenge when it comes to decommissioning them.

Julien Mathonnier said in an article:

“A large number of fixed offshore structures were not designed to be removed… Weather conditions are too erratic during winter months for lifting large structures and removals tend to occur mainly throughout the summer months.”

Lifting these structures out of the water poses a logistical problem for rig owners as they are gravity-based rigs; designed to resist difficult weather conditions. To completely decommission an oil rig; owners need to pull the rig out of the water and then scrap the structure.

Decommissioning oil rigs is not easy. This article explains why rig owners hesitate to decommission oil rigs when the rig structure is nearing the end of its working life.