Intelligence brief: Financial-assurance talks underway in GoM; New approach to abandonment could halve costs

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BOEM and operators have kicked off talks over new financial assurances (Image credit: iStock / DragonImages)

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BOEM, operators open talks over financial assurances

The US Bureau of Ocean and Energy Management (BOEM) has opened negotiations with operators about supplemental bonding requirements for offshore decommissioning liabilities, at least two independents revealed in their latest quarterly reports.

W&T Offshore said it received several orders from BOEM in February and March demanding $260.8 million in supplemental bonding on certain offshore oil and gas leases, rights of way, and rights of use and easement. The operator has filed appeals with the Interior Board of Land Appeals regarding three of the BOEM orders totaling $227.8 million in supplemental bonding. It said it is in continuing discussions with BOEM and sister agency the Bureau of Safety and Environmental Enforcement, “and while we can’t guarantee a favorable outcome regarding an agreement, we are cautiously optimistic that an amicable solution can be reached".

Stone Energy said it received notice letters from BOEM on March 21 stating that it no longer qualified for a supplemental bonding waiver. In late March, Stone proposed a tailored plan to BOEM for financial assurances. Discussions on the approval and implementation of this plan are ongoing, it said.

Concern over potential insolvencies was behind the decision to tighten financial security regulations for offshore oil and gas operators, BOEM Risk Management Operations Group’s Wanda Lilly told DecomWorld in December, after the new rules were made public. Key changes included the removal of waivers from providing supplementary financial assurance (to which about 50 operators were entitled), a lower self-insurance threshold, and scrutiny of every participant in an offshore lease.

DNV GL says new approach to risk-based abandonment can halve costs

DNV GL has issued a new recommended practice on risk-based abandonment of offshore wells. It says the practice, when used in combination with optimized project execution and new technology, could reduce plugging and abandonment (P&A) costs by 30-50%. On the Norwegian Continental Shelf, DNV GL has forecast potential cost savings of more than $32 billion, roughly 30% of the projected costs over the next 40 years.

There has been a shift toward differentiating P&A requirements on a well-by-well basis instead of having prescriptive requirements, DNV GL noted. In laying out its recommendations, the international classification body said the four main categories of inputs for risk assessment should be: well-specific data, such as well design, well history and current status; geological data, including reservoir and overburden condition; an environmental resource overview; and metocean data, including salinity and temperature profiles.

System diagram illustrating the main components of P&A wells (Image credit: DNV GL)

For hydrocarbon-bearing formations with moderate or significant flow potential, the number of independent barriers to be included in the well-abandonment design should be evaluated by risk analysis, DNV GL said. It provided different combinations of primary barriers, surface barriers – and in some cases secondary barriers – to be applied to different flow-potential scenarios.

Among other things, it also recommended identification of potential causes of well-barrier failure. Potential causes of failure include insufficient barrier length in the mainbore or annulus, the barrier function being degraded in the mainbore or annulus, corrosion of casing or yielding of casing due to pressure in well, overpressure of formation, and fluid exposure.

Expro completes first GoM abandonment project

Expro has completed its first integrated abandonment project since expanding its business capabilities to include late-life reservoir management, permanent reservoir abandonment and post-abandonment monitoring.

The international oilfield-services company completed the project for Apache in the Gulf of Mexico. The work comprised the pre-abandonment and plugging of wells in the ultra-deepwater Atwater Valley and Mississippi Canyon areas.

Beginning in March 2016, Expro utilised its well-intervention services to provide the first phase of abandonment of the wells. This involved plugging, cutting and perforating using slickline and electric-line cased hole applications to gain access to the wells and allow circulation.

Expro has worked with Apache for over 10 years, primarily in the North Sea, supplying subsea, well testing, intervention and sampling services, and well integrity software.