captain
Contributor
From the Times-Picayune, New Orleans, LA
...long read but interesting:
Plan to redo old rigs snags support
By Matthew Brown
West Bank bureau
Hundreds of obsolete offshore rigs could be reincarnated as artificial reefs, fish farms or platforms for wind energy turbines under a measure pending before Congress that would let corporations largely off the hook for the expensive task of dismantling aging oil and gas platforms.
The waters of the Gulf of Mexico off the Louisiana and Texas coasts are dotted with thousands of oil and gas production platforms nearing the end of their useful lives. About 4,600 are expected to be decommissioned in the next two decades, according to the U.S. Minerals Management Service.
Since the mid-1980s, a small percentage of old platforms have been turned into artificial reefs through rigs-to-reef programs run by state officials in Louisiana and Texas. Now a provision in the Deep Ocean Energy Resources Act, approved by the House in June, could drastically expand the retooling of obsolete platforms for other uses by placing them in a new federal program to be run by the U.S. Interior Department.
Although a competing version of the energy bill passed by the Senate last week is silent on the issue, the groundwork for converting rigs to other uses already is being formulated by Interior officials, under more limited authority granted in a separate bill signed into law last year.
Previously, federal agencies prohibited the use of platforms for anything other than oil and gas exploration and required platforms to be removed within a year after their federal lease expired. The removal process can cost energy companies as much as $5 million for a large platform, according to industry representatives. Those high stakes have prompted criticism of the House bill as a thinly veiled giveaway to an energy industry flush with profits.
Supporters said the pending proposal recognizes what many commercial and recreational fishers have known for decades: In the open ocean, rigs left standing offer ideal underwater habitats. Dozens of species of fish and other marine life congregate around the platforms' towering steel supports. In many areas the platforms offer fish the only cover available for hundreds of square miles.
And the portion of those structures above the surface, some federal officials said, would make for an ideal base for fish farms or massive turbines that could capture energy from the wind.
Limited benefit seen
"There's a whole new world of possibilities out there," Minerals Management Service spokeswoman Caryl Fagot said.
But with Louisiana already taking as many of the rigs as it can handle into its own artificial reef program, opponents say the benefits of an expanded, federalized rigs-to-reef initiative would be limited.
"The oil companies would be really happy if they could just transfer their oil rigs, basically sell them to people like offshore aquaculture. They don't want to maintain liability for removing them down the road. They just want to get them off their hands," said Zach Corrigan, staff attorney for Food and Water Watch in Washington, D.C.
Overshadowed by royalties
Tucked deep into a House bill that would open vast offshore areas to new oil and gas leases, the rigs-to-reef provision has received little public debate.
In Louisiana it has been overshadowed by the argument over whether the state should get a bigger share of offshore energy royalties, money that could be used to restore the state's battered coastal wetlands. Elsewhere in the country, the discussion over the energy bill has been dominated by arguments over allowing oil and gas drilling in places where it is now prohibited, such as off the Eastern seaboard and along the California coast.
Yet the fate of oil and gas platforms is of particular interest to the Gulf Coast, which as recently as the past decade accounted for two-thirds of all such structures worldwide.
"We've got these valuable resources, and we want to make sure their full potential is realized," said Rep. Bobby Jindal, R-Kenner, sponsor of the House-passed bill. "We envision wind energy uses. We're looking for multiple uses, some of which we're still developing right now."
Jindal said offshore aquaculture operations, or fish farms, also are among the possibilities. That prospect has raised concern in the struggling Gulf fishing industry, which sees aquaculture products driving down prices and putting traditional fishers out of business.
There also are doubts about whether wind power and fish farms are even realistic in the near future.
Jindal's plan criticized
A New Iberia company's proposal for a wind farm in the Gulf has been dogged by questions over whether it could compete head-to-head with conventional energy sources. And several fish farm pilot projects, including at least two in Louisiana and one in Texas, ended in failure in recent years after hurricanes or other storms trashed the operations.
Richard Charter, co-chairman of the National Outer Continental Shelf Coalition, an environmental advocacy group, described the lofty ambitions for offshore platforms offered by Jindal and others as "a pipe dream" that will not soon come to pass.
The proposal faces its first fight this fall, when House and Senate negotiators attempt to hammer out differences in their respective bills. Senate Majority Leader Bill Frist, R-Tenn., and Minority Leader Harry Reid, D-Nev., have pledged to thwart any attempts to broaden the Senate bill. But Jindal said he hopes to get his rigs conversion proposal into the final bill as a "noncontroversial item."
In the two decades since Louisiana and Texas implemented their own rigs-to-reef programs, 235 of about 1,500 decommissioned platforms were converted into artificial reefs.
La., Texas concerns
Under both states' programs, half of any savings realized by the companies that operated the platforms were donated to state parks or wildlife agencies. In Louisiana, that has brought in about $28 million, said Rick Kasprzak, coordinator of the reef program in the Louisiana Department of Wildlife and Fisheries. In Texas, it's brought in $11.5 million, said Doug Peter, a biologist with Texas Parks and Wildlife.
Peter said there was concern in his agency that future rigs-to-reef donations could be diverted to federal coffers if the Interior Department takes over the program. In Louisiana, Assistant Secretary for Fisheries John Roussel said the potential exists for a federal program to disregard the state's careful planning of just where platforms can be turned into reefs.
"Right now we have the leverage to make sure it follows our rules," Roussel said. "There's the potential for them to pre-empt us. "
He also said the issue of who maintains platforms will be key to any federal program. "We don't want it to be just a piece of junk out there with no one responsible for it," he said. Roussel added that the true effects of a federal program will not be known until new regulations are crafted by the Minerals Management Service.
The savings realized by oil companies through the state programs amounted to more than $160,000 per rig on average in the two states' rigs-to-reefs programs. Multiply that by the hundreds of rigs that could be allowed into a new federal program, and oil companies stand to stave off tens of millions of dollars in costs under Jindal's bill.
Transferring liability
Jindal rejected the notion that the legislation amounts to a boon for oil companies. He said any savings by the oil companies are more than offset by other provisions in his bill that would recoup up to $1 billion a year in back royalties, money that energy companies never paid because the Minerals Management Service failed to include certain terms in their offshore leases. That's a separate issue from the increase in future oil and gas royalties sought by the Louisiana congressional delegation to restore the coast.
Offshore rigs advocate Steve Kolian says the oil companies gain something far more important than decommissioning costs through Jindal's bill: the chance to transfer their financial liability on the platforms to someone else. Under current law, liability for a platform sticks with whatever company built it even if ownership of the structure is transferred to another company or organization. That means an abandoned platform involved in a shipwreck or other maritime accident could come back to haunt the original platform owner long after control was handed over to another party.
Jindal's bill removes that requirement, and allows for liability to be transferred. Kolian is a former Louisiana Department of Natural Resources employee who said he spent the past 17 years pushing the state and federal governments to keep decommissioned platforms standing.
Through a company called Ecorigs, Kolian hopes to turn his advocacy into profit: He is planning a venture that would take control of a platform and use it as a base to culture corals and ornamental fish. The fish would be sold to pet stores and the corals to pharmaceutical companies that could use them in drugs now under development, Kolian said.
Beyond the lack of regulations that would allow such an enterprise, Kolian said his biggest obstacle has been the corporations that own the platforms he wants to use.
"When people want to use these platforms for artificial reefs and mariculture, everybody thinks the oil and gas companies are for it because they will get out of removal costs," Kolian said. "That doesn't mean a thing to them. It's the $30 million to $40 million in liability."
Matthew Brown can be reached at mbrown@timespicayune.com or (504) 826-3784.
...long read but interesting:
Plan to redo old rigs snags support
By Matthew Brown
West Bank bureau
Hundreds of obsolete offshore rigs could be reincarnated as artificial reefs, fish farms or platforms for wind energy turbines under a measure pending before Congress that would let corporations largely off the hook for the expensive task of dismantling aging oil and gas platforms.
The waters of the Gulf of Mexico off the Louisiana and Texas coasts are dotted with thousands of oil and gas production platforms nearing the end of their useful lives. About 4,600 are expected to be decommissioned in the next two decades, according to the U.S. Minerals Management Service.
Since the mid-1980s, a small percentage of old platforms have been turned into artificial reefs through rigs-to-reef programs run by state officials in Louisiana and Texas. Now a provision in the Deep Ocean Energy Resources Act, approved by the House in June, could drastically expand the retooling of obsolete platforms for other uses by placing them in a new federal program to be run by the U.S. Interior Department.
Although a competing version of the energy bill passed by the Senate last week is silent on the issue, the groundwork for converting rigs to other uses already is being formulated by Interior officials, under more limited authority granted in a separate bill signed into law last year.
Previously, federal agencies prohibited the use of platforms for anything other than oil and gas exploration and required platforms to be removed within a year after their federal lease expired. The removal process can cost energy companies as much as $5 million for a large platform, according to industry representatives. Those high stakes have prompted criticism of the House bill as a thinly veiled giveaway to an energy industry flush with profits.
Supporters said the pending proposal recognizes what many commercial and recreational fishers have known for decades: In the open ocean, rigs left standing offer ideal underwater habitats. Dozens of species of fish and other marine life congregate around the platforms' towering steel supports. In many areas the platforms offer fish the only cover available for hundreds of square miles.
And the portion of those structures above the surface, some federal officials said, would make for an ideal base for fish farms or massive turbines that could capture energy from the wind.
Limited benefit seen
"There's a whole new world of possibilities out there," Minerals Management Service spokeswoman Caryl Fagot said.
But with Louisiana already taking as many of the rigs as it can handle into its own artificial reef program, opponents say the benefits of an expanded, federalized rigs-to-reef initiative would be limited.
"The oil companies would be really happy if they could just transfer their oil rigs, basically sell them to people like offshore aquaculture. They don't want to maintain liability for removing them down the road. They just want to get them off their hands," said Zach Corrigan, staff attorney for Food and Water Watch in Washington, D.C.
Overshadowed by royalties
Tucked deep into a House bill that would open vast offshore areas to new oil and gas leases, the rigs-to-reef provision has received little public debate.
In Louisiana it has been overshadowed by the argument over whether the state should get a bigger share of offshore energy royalties, money that could be used to restore the state's battered coastal wetlands. Elsewhere in the country, the discussion over the energy bill has been dominated by arguments over allowing oil and gas drilling in places where it is now prohibited, such as off the Eastern seaboard and along the California coast.
Yet the fate of oil and gas platforms is of particular interest to the Gulf Coast, which as recently as the past decade accounted for two-thirds of all such structures worldwide.
"We've got these valuable resources, and we want to make sure their full potential is realized," said Rep. Bobby Jindal, R-Kenner, sponsor of the House-passed bill. "We envision wind energy uses. We're looking for multiple uses, some of which we're still developing right now."
Jindal said offshore aquaculture operations, or fish farms, also are among the possibilities. That prospect has raised concern in the struggling Gulf fishing industry, which sees aquaculture products driving down prices and putting traditional fishers out of business.
There also are doubts about whether wind power and fish farms are even realistic in the near future.
Jindal's plan criticized
A New Iberia company's proposal for a wind farm in the Gulf has been dogged by questions over whether it could compete head-to-head with conventional energy sources. And several fish farm pilot projects, including at least two in Louisiana and one in Texas, ended in failure in recent years after hurricanes or other storms trashed the operations.
Richard Charter, co-chairman of the National Outer Continental Shelf Coalition, an environmental advocacy group, described the lofty ambitions for offshore platforms offered by Jindal and others as "a pipe dream" that will not soon come to pass.
The proposal faces its first fight this fall, when House and Senate negotiators attempt to hammer out differences in their respective bills. Senate Majority Leader Bill Frist, R-Tenn., and Minority Leader Harry Reid, D-Nev., have pledged to thwart any attempts to broaden the Senate bill. But Jindal said he hopes to get his rigs conversion proposal into the final bill as a "noncontroversial item."
In the two decades since Louisiana and Texas implemented their own rigs-to-reef programs, 235 of about 1,500 decommissioned platforms were converted into artificial reefs.
La., Texas concerns
Under both states' programs, half of any savings realized by the companies that operated the platforms were donated to state parks or wildlife agencies. In Louisiana, that has brought in about $28 million, said Rick Kasprzak, coordinator of the reef program in the Louisiana Department of Wildlife and Fisheries. In Texas, it's brought in $11.5 million, said Doug Peter, a biologist with Texas Parks and Wildlife.
Peter said there was concern in his agency that future rigs-to-reef donations could be diverted to federal coffers if the Interior Department takes over the program. In Louisiana, Assistant Secretary for Fisheries John Roussel said the potential exists for a federal program to disregard the state's careful planning of just where platforms can be turned into reefs.
"Right now we have the leverage to make sure it follows our rules," Roussel said. "There's the potential for them to pre-empt us. "
He also said the issue of who maintains platforms will be key to any federal program. "We don't want it to be just a piece of junk out there with no one responsible for it," he said. Roussel added that the true effects of a federal program will not be known until new regulations are crafted by the Minerals Management Service.
The savings realized by oil companies through the state programs amounted to more than $160,000 per rig on average in the two states' rigs-to-reefs programs. Multiply that by the hundreds of rigs that could be allowed into a new federal program, and oil companies stand to stave off tens of millions of dollars in costs under Jindal's bill.
Transferring liability
Jindal rejected the notion that the legislation amounts to a boon for oil companies. He said any savings by the oil companies are more than offset by other provisions in his bill that would recoup up to $1 billion a year in back royalties, money that energy companies never paid because the Minerals Management Service failed to include certain terms in their offshore leases. That's a separate issue from the increase in future oil and gas royalties sought by the Louisiana congressional delegation to restore the coast.
Offshore rigs advocate Steve Kolian says the oil companies gain something far more important than decommissioning costs through Jindal's bill: the chance to transfer their financial liability on the platforms to someone else. Under current law, liability for a platform sticks with whatever company built it even if ownership of the structure is transferred to another company or organization. That means an abandoned platform involved in a shipwreck or other maritime accident could come back to haunt the original platform owner long after control was handed over to another party.
Jindal's bill removes that requirement, and allows for liability to be transferred. Kolian is a former Louisiana Department of Natural Resources employee who said he spent the past 17 years pushing the state and federal governments to keep decommissioned platforms standing.
Through a company called Ecorigs, Kolian hopes to turn his advocacy into profit: He is planning a venture that would take control of a platform and use it as a base to culture corals and ornamental fish. The fish would be sold to pet stores and the corals to pharmaceutical companies that could use them in drugs now under development, Kolian said.
Beyond the lack of regulations that would allow such an enterprise, Kolian said his biggest obstacle has been the corporations that own the platforms he wants to use.
"When people want to use these platforms for artificial reefs and mariculture, everybody thinks the oil and gas companies are for it because they will get out of removal costs," Kolian said. "That doesn't mean a thing to them. It's the $30 million to $40 million in liability."
Matthew Brown can be reached at mbrown@timespicayune.com or (504) 826-3784.
