A Houston-based energy company is asking a federal bankruptcy court for permission to walk away from its aging infrastructure in the Gulf of Mexico. Fieldwood Energy is attempting to shift responsibility for removing 1,715 wells, 276 platforms and 281 pipelines to oil and gas companies that previously held leases for the same area, according to court documents.
Under existing federal regulations, companies remain liable for decommissioning infrastructure on areas of federally owned seafloor where they previously produced oil and gas. But the former holders of the Fieldwood leases — including Chevron, BP and Shell — are attempting to get out of that obligation because of the cost, estimated at $9 billion.
It’s a familiar story. A recent U.S. Government Accountability Office report found that oil and gas companies have been allowed to abandon 97 percent of offshore pipelines in the Gulf of Mexico in place without penalty. The abandoned infrastructure poses environmental concerns, but it has also created another problem: The pipelines are blocking access to the sand that Louisiana and other gulf states desperately need to rebuild their coastlines in the face of rising seas.
The Gulf of Mexico swallows a football field of Louisiana coastline every 100 minutes on average. Barrier islands that have historically acted as speed bumps for hurricanes headed toward coastal communities are among the areas losing ground. Without them, the state is more vulnerable to climate change and severe weather.
Geologists estimate that up to 11,000 million cubic meters of sediment are needed to restore the state’s coastline, but about 58 percent of the offshore sediment in the gulf that could be used to rebuild Louisiana’s coast is blocked by pipelines, said Syed Khalil, a geologist with the state’s Coastal Protection and Restoration Authority. While there is enough sand for the coastal restoration projects that Louisiana has planned in the short term, the state’s fight to fend off rising seas will require more.
“We need every grain of sand for the restoration of coastal Louisiana,” Khalil said.
Other Gulf Coast states are facing the same problem. But the issue has come to a head in Louisiana, where coastal land is disappearing faster than anywhere else in the nation. Flood control levees built along the Mississippi River are partly to blame for the Bayou State’s land loss. Levees block off the supply of sediment once carried by the river into coastal wetlands.
Canals dug through the wetlands to build and service pipelines — which create pathways for saltwater to flow into the marsh — are also partly to blame for Louisiana’s coastal erosion. Now, those pipelines are hindering the solution.
Federal regulations require the removal of offshore pipelines once they are decommissioned, but the rules are rarely enforced. The Bureau of Safety and Environmental Enforcement, the Interior Department agency that regulates offshore energy, has been mostly unsuccessful at getting companies to pay for the removal of pipelines decommissioned in place when they are later determined to be in the way.
The Bureau of Safety and Environmental Enforcement (BSEE) was established after the Deepwater Horizon drilling rig explosion in 2010 to address the conflicting interests of the Minerals Management Service, which was tasked with collecting lease payments from oil and gas companies and enforcing environmental and safety regulations for those same companies.
But oil and gas companies have continued to benefit from lax enforcement for decommissioning pipelines, said Megan Milliken Biven, a public policy expert who worked for the Interior Department’s Bureau of Ocean Energy Management (BOEM). The BSEE allows major oil companies to sell their leases to smaller operators, such as Fieldwood, that lack the resources to clean up when wells are drained.
“There’s no revenue from cleaning up after yourself,” she said. “Every incentive is to avoid it.”
Often, previous pipeline operators have gone bankrupt or fight the decision by appealing to the Interior Board of Land Appeals. The previous operators of more than 100 miles of pipelines buried in sediment no longer exist, according to the GAO report. This number is expected to increase as more companies go bankrupt because of a drop in oil prices and the growth of onshore fracking that has priced out offshore gas.
Louisiana has identified the best places to get sand and sediment to rebuild its coast. But all of these underwater sediment deposits in federal waters, called “borrow areas,” contain pipelines that dredges have to navigate around, said Jessica Mallindine, a marine biologist for BOEM’s Marine Minerals Program in the Gulf of Mexico.
Dredges used to suction up sand from the bottom of the gulf are not allowed to excavate within 1,000 feet of pipelines. This is to keep the pipelines intact and to ensure the safety of workers. It is estimated that a pipeline one kilometer long (0.6 miles) — in addition to the required offset — will make about 2.3 million cubic yards of sand inaccessible. The pipelines also force dredges to operate in smaller footprints, increasing the price tag of coastal restoration projects.
It’s the difference between mowing a large, open backyard and mowing a small yard with garden hoses in the way. “Every time a dredge turns, it costs money, or more money than to go in a straight line,” Mallindine said. “By reducing the efficiency of the design, you’re increasing project costs.”
In 2009, the Minerals Management Service sent a letter to oil and gas companies leasing federal land in the Gulf of Mexico discouraging them from leaving inactive pipelines in areas where sediment could be used for coastal restoration. In 2016, BOEM sent a letter to the BSEE with the same message: Pipelines in these areas must be removed when they are no longer in use.
Before 2016, the safety and environmental enforcement bureau allowed 3,405 miles of decommissioned pipelines to be left in these areas, BSEE spokesman Mike O’Berry said. Now when BSEE gets a request from a company to decommission a pipeline in place, the agency defers to BOEM for recommendations to remove such pipelines — or portions of pipelines — in significant sediment resource areas. In cases in which BOEM recommends removal of the pipeline, BSEE denies the operator’s request to decommission in place.
Since 2016, the two agencies authorized 195 miles of pipeline to be left in areas of the gulf with sediment deposits, O’Berry said. The agency has the authority to require removal of previously decommissioned-in-place pipelines when it is determined that the pipeline is an obstruction.
But BSEE has had difficulty in getting those companies to retroactively remove pipelines because the companies are not required to set aside money for pipeline removal, and they may be bankrupt or liquidated. The agency is currently reviewing its regulations related to pipelines and is expected to release its recommendations for rule changes this year for public comment, O’Berry said.
Milliken Biven expressed doubt that a change in BSEE policy would stop oil and gas companies from abandoning pipelines in the gulf. “The regulations are such that they should be removing pipelines,” she said. “What makes you think they’ll follow new regulations, if they don’t follow old regulations?”
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