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Merit McCrea – WHEELHOUSE SCOOP

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Wednesday, October 02, 2019
Told you so!


The Big Picture
Oil platforms, shipwrecks and artificial reefs

It all started when offshore oil platform operator Venoco threw in the towel on its 3 California oil platforms in the Santa Barbara Channel. That company had big plans, but then the Refugio oil spill happened. A pipeline operated by Plains All-American burst, spilling oil in a gulley, which then drained into coastal waters.


This shut down production of their state waters platform Holly, as well as 3 of the most productive platforms on the coast, operated by Exxon-Mobil in federal waters just up the Channel, plus 3 more production platforms located off Point Conception, operated by Freeport-McMoRan.


State waters run to 3 miles offshore, and when Venoco declared bankruptcy, it gave a 22 million dollar bond and the decommissioning responsibility for Platform Holly, back to the State of California. The bond was not nearly enough to do the work required.


Venoco also quitclaimed two more platforms in Federal waters — those waters from 3 to 12 miles offshore — platforms Gail and Grace. They are in the Santa Barbara Channel off Ventura County.


While Exxon intends to do what it can to bring its big 3 back on line, Platform Holly — in state waters, and the 5 others are currently on the block for decommissioning. In the interim, Rincon (ARCO) Oil Island was handed back to the state (State Lands Commission) by Rincon Island Limited Partner­ship in similar fashion as Holly.


In the coming weeks I hope to fill in the details on each of these sites, including specifics and what we know of the locale and sea life living at each.


There are a total of 27 offshore platforms, all in our WON South zone. Of these, 4, including Holly, are in state waters — the three others are off Huntington Beach. In addition, there are 4 oil islands including Rincon — the other three are off Long Beach/Seal Beach.


Decommissioning dynamics


The big question that faces us is what to do with the structures. These have become some of the most, if not the most productive reef sites in the region. Though they are not equal in that regard.


However, as a condition of the lease, they are required to be fully removed and the site returned to its original form. The current back-of-the-napkin estimate for removal of all 27 oil platforms exceeds 7 billion dollars.


This means leaving all, or a portion of the platform in place to continue to provide habitat for fish and the thousands of tons of sea life attached to them can represent a phenomenal financial savings, while allowing them to continue to provide some of the ecosystem services they have evolved to.


At the same time, paradoxically, the major environmental groups really want them fully removed as promised, and they want it to cost the oil industry as much as possible, in order to dissuade any future drilling. Bear in mind, only a small fraction of the known producible oil off our coast has been extracted.


In 2010 under Governor Schwarzenegger the California Marine Resources Legacy Act — AB 2503, also known as “Rigs-to-Reefs” was passed. It allows the state to permit partial removal of the structure instead of full removal.


However, the oil industry has heartache with being saddled with continuing liability for the structures as the bill is currently written, and the bill provides a diminishing fraction of the savings in the decommissioning process allocated to them over time, which has largely run by now.


If decommissioning happens after 2023, it provides 85-percent of such savings to be allocated to conservation projects that would be administered by the state. A larger fraction with more savings inuring to the industry the sooner decommissioning was happen was scheduled, but the that decreasing fraction of the savings schedule has largely already passed. Industry would like to restart that timeline.


A major piece of the cost puzzle is also simply getting the gear to this hemisphere. This incentivizes the several responsible parties to piggyback de­commissioning projects to­gether, in a pan-company campaign, rather than wait to produce those final few barrels available.


And finally, there is the responsibility piece. While one of the majors may have erected the platform and punched the initial wells, more often than not, once the play started to lose production, the major would sell off the asset to a secondary operating company.


While Mobil installed Holly and punched the initial 23 wells, it has since merged with Exxon and the asset was sold to Venoco. Venoco went bankrupt leaving the State holding the bag beyond the bond. Law along the Gulf States has held the initial installer remains responsible for the removal, where the subsequent owner cannot.


Exxon and the State continue to apportion the costs, the state finding 58 million and Exxon currently estimating its portion at 305 million dollars. At the same time, Chevron, who initially installed Venoco’s two federal waters platforms has essentially said, “We got this.”


Platform Basics


Oil platforms are sub-divided into components, and although we tend to call them “oil rigs,” the actual drilling rig is a removable tower mounted on the drilling deck, and often the entire drilling deck is mobile.


This enables the rig to be positioned over any of number of wells. For example, platform Holly has thirty such wells, and a single well can have multiple terminations in the oil-bearing formations.


Between the topsides and seafloor, each well has a conductor casing, within which the well casing and drill line run. With Gulf Coast rigs to reefs, these are often removed, but our preliminary results point to these structures being a large portion of the reef life and fish holding habitat.


Science aside, the apparent difference between the side of the platform having the conductor bay and not is night and day.


The base of the platform, not including the conductors is called the jacket. It’s like the legs and seat of a chair. Mounted on this is the topsides and it houses living quarters and galley, supports a helipad usually, along with housing much plumbing which can include produced water separation systems, power generation and tankage.


The topsides support the flare boom and cranes among other equipment. In fact, of the twin platforms off Long Beach, Elly and Ellen, one supports the drilling functions, while the other supports all the related pre-processing plumbing and gear. A pipeline runs between Edith and these two.


In my scientific survey activities, I’ve surveyed Edith from sea surface to bottom, and that pipeline between it and Elly. We’ve surveyed down to the 100-foot level on SCUBA as well as from 40 feet to the bottom via manned submersible (submarine). To be continued…


* * *


Merit McCrea is saltwater editor for Western Outdoor News. A veteran Southern California party boat captain, he is a marine research scientist with the Dr. Milton Love Lab at the University of California at Santa Barbara’s Marine Science Institute. He can be reached at: merit@wonews.com.


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