New market for dismantling old rigs results in ‘The Claw’

By Matthew Tresaugue

New federal requirements to dismantle idle oil and gas equipment in the Gulf of Mexico are creating a market for companies that supply heavy lift boats and other salvage or demolition equipment.

At this week’s Offshore Technology Conference, Proserv, based in the United Kingdom, unveiled a subsea cutting tool intended to sever wells within 12 hours.

Houston-based Versabar, meanwhile, promoted a 10-story-high floating platform named the Claw, which can lift an entire topside off the seafloor without the use of divers.

Some analysts predicted when the regulations were made final in October 2010 that the market for dismantling what the industry refers to as “idle iron” could generate $3 billion in new revenue over the next few years.

The Claw completed 20 lift projects in its first year, but Versabar officials said they are frustrated by the pace of permitting for oil and gas companies trying to dismantle platforms.

“We are sitting and waiting because the regulators won’t give them permits,” said John Greeves, Versabar’s technical director. “There is a lot of pent-up demand.”

Regulators speaking on background at OTC Wednesday said that the permitting pace should pick up with the hiring of more engineers and inspectors in the coming weeks. They noted several projects for which companies have permits but haven’t started work.

Oil and gas companies removed a record 106 non-producing platforms from the Gulf in 2011, the first year under the new rules. The number, however, fell short of projections as regulators approved nearly 350 permits to dismantle platforms in the Gulf over the past year.

The new rules require oil and gas companies operating in the Gulf to plug wells and remove platforms that have not been used for at least five years and no longer are considered profitable. The operators must complete the work within three years.

Regulators began to look closely at idle wells and platforms in 2002, and the focus intensified after a string of hurricanes swept the Gulf starting in 2004. The powerful storms toppled several platforms, and the industry realized that it costs significantly more to plug a well without a platform than one still easily accessible.

The federal Bureau of Safety and Environmental Enforcement, which oversees offshore oil and gas work, has identified about 650 platforms and 3,500 wells subject to the rules.

As a result of the new rules, 2011 was a record year for plug and abandon projects in the Gulf, said Mark Kaiser, research and development director at the Center for Energy Studies at Louisiana State University.

At an OTC panel discussion Wednesday, independent oil and gas producers criticized the cleanup requirement as shortsighted.

Smaller independents, which often squeeze more oil out of wells no longer attractive to major companies, sometimes can reuse existing platforms. Whether one is available can be a critical factor in deciding whether a small company commits to a project.

If existing facilities are removed, they will not be there for possible further production, panelists said.

Emily Pickrell contributed to this story.