ACCESS NUMBER: 30951-85246 

STUDY TITLE: Forecasting the Explosive Removal of Offshore Structures 

REPORT TITLE: Modeling Structure Removal Processes in the Gulf of Mexico 

CONTRACT NUMBER: 1435-01-99-CA-30951-85246 

SPONSORING OCS REGION: Gulf of Mexico 

APPLICABLE PLANNING AREA: Western, Central, Eastern 

FISCAL YEAR(S) OF PROJECT FUNDING: 2003, 2004 

COMPLETION DATE OF REPORT: June 2005 

COST(S): FY 2003: $15,437.44; FY 2004: $160,517.56; CUMULATIVE PROJECT 

COST: $175,955.00 

PROJECT MANAGER: M.J. Kaiser 

AFFILIATION: Louisiana State University, Center for Energy Studies 

ADDRESS: Energy, Coast & Environment Bldg., Nicholson Extension, Baton Rouge, 

Louisiana 70803 

PRINCIPAL INVESTIGATOR: M.J. Kaiser 

KEY WORDS: Gulf of Mexico; offshore structures; decommissioning; explosive 

removal; modeling 

BACKGROUND: The Outer Continental Shelf (OCS) of the U.S. Gulf of Mexico (GOM) 

is one of the most highly developed and mature basins in the world. Over the last 50 

years, the oil and gas industry has installed over 6,000 structures and 33,000 miles of 

interconnecting pipelines in the gulf waters. Today, there are about 4,000 active 

structures installed in federal water ranging from less than 10 feet to over 7,000 feet. 

Structures need to be constructed, delivered, installed, and equipped prior to 

production, operated and serviced during production, and then eventually 

decommissioned and removed after production. Each of these activities has both a 

direct and indirect impact on the communities in which the service facilities and 

manufacturing operations are located, and hence induce a “spill-over” effect on the 

economic growth of regions which serve the development. An entire industry has been 

built in the GOM around installing production equipment and structures, servicing those 

structures (maintenance, repairs, supply), and then removing the structures when 

production ceases. 
ACCESS NUMBER: 30951-85246 

Operators wishing to remove an OCS platform or facility are required to submit a 

structure removal permit application to MMS for technical review and the preparation of 

an environmental assessment (EA) under National Environmental Policy Act (NEPA) 

guidelines. Prior to mobilization, additional permits are required for well abandonment 

(temporary or permanent) and/or pipeline decommissioning to ensure that all of the 

infrastructure components to and from the structure are secured. Removal operations 

proposing explosive severance are currently subject to the terms and conditions of a 

programmatic Biological Opinion (BO)/ Incidental Take Statement (ITS) issued by the 

National Oceanographic and Atmospheric Administration’s Fisheries Service (NOAA 

Fisheries) under an Endangered Species Act (ESA) Consultation with MMS. If an 

operator proposes any activities that fall outside of the BO/ITS severance criteria, a sitespecific ESA Consultation and new BO/ITS will be required. 

OBJECTIVES: The purpose of this report is to examine the operational aspects of 

removal processes in the GOM; to quantify the application, use, and regulatory structure 

of explosive methods of severance; and to develop a production-based model to 

forecast the removal of offshore structures. 

DESCRIPTION: Offshore structures combine capital, labor, materials and fuel to 

produce hydrocarbons, and operate under the physical laws and engineering 

specification of the system, economic principles which determine the design and 

commerciality of production, and man-made rules governing operation and 

decommissioning activities. Significant interrelationships exist between the physical 

laws by which a system operates and the commercial rules and regulations established 

for the system. 

 

Structures are installed to produce and process hydrocarbons, and when the time 

arrives that the cost to operate a structure – or more commonly, a group of structures – 

exceeds the income from the hydrocarbons under production, the structure(s) exists as 

a liability instead of an asset and becomes a candidate for divestiture or 

decommissioning. Over 2,200 structures have been removed from the GOM over the 

last half-century, and over the past decade, 125 structures on average have been 

removed annually. Within one year of lease termination, the Minerals Management 

Service (MMS) requires that the lessees remove all structures to a depth of 15 feet 

below the mudline and that the site be returned to prelease conditions. Although 

multiple techniques may be used to sever the structural components, they are generally 

categorized as either explosive or nonexplosive methods. 

SIGNIFICANT CONCLUSIONS: Predictive models of the use of explosives are 

severely constrained by the number of factors involved in decision-making, and while a 

formal method has been developed to forecast structure removals, many uncertainties 

influence the model results. 

STUDY RESULTS: A statistical description of the explosive removal of offshore 

structures is developed, and the influence of factors such as water depth, planning area, 

configuration type, and structure age upon the application of explosive removal methods 
ACCESS NUMBER: 30951-85246 

is investigated. Estimates for the number of structures that are expected to be removed 

from the GOM over a 25-year time horizon are forecast using a heuristic life expectancy 

and probabilistic removal model. 

The factors involved in the decision to use a specific severance technique are 

described, and the probability that a structure will be removed with explosive technology 

is quantified. A predictive model of the decision to use explosive methods is also 

developed. An empirical analysis of oil and gas structures removed in the GOM 

between 1986-2001 provide the historic data required to compute the probability of an 

explosive removal and to estimate binary choice models for severance selection. 

Binomial logit and probit models of severance selection are constructed to establish the 

relationship between structure attributes and the probability that a particular severance 

technique will be employed. 

Four models of abandonment timing decisions are developed, ranging from a resourcebased forecast to a sophisticated, risked, net present value approach. Meta-modeling 

simulation is employed to construct functionals that describe how the age of the 

structure upon abandonment is related to the system parameters. The sensitivity of the 

results to differences in the model assumptions, and the practical matter of whether 

refined methods are, in fact, more accurate than simple forecasting techniques, is 

discussed. A generic field development scenario is used to illustrate the 

decommissioning timing models. 

The economic limit of offshore structures is estimated using historic data from GOM 

structures removed over the past two decades. This is the first time that threshold limits 

of production near abandonment have been investigated and quantified. 

A production-based model to forecast removal rates and costs of offshore structures is 

presented. A stochastic decline model is used to forecast production, and in conjunction 

with estimates of the economic limit, is used to determine the time that a structure is 

abandoned. The expected time a structure is removed is based on federal regulatory 

requirements which determine the latest possible removal scenario. A description of the 

modeling framework and results are presented, along with a discussion of the limitations 

of analysis. 

STUDY PRODUCTS: Kaiser, M.J., D.V. Mesyanzhinov, and A.G. Pulsipher. 2005. 

Modeling Structure Removal Processes in the Gulf of Mexico. U.S. Department of the 

Interior, Minerals Management Service, Gulf of Mexico OCS Region, New Orleans, La. 

OCS Study MMS 2005-029. 133 pp.