The Gulf of Mexico Decommissioning Market

Abstract

The Gulf of Mexico offshore decommissioning market is the most diverse and competitive service contract environment in the world. The purpose of this paper is to describe the business, engineering, and market environment of decommissioning services in the Gulf of Mexico, and to provide a first-order approximation of the number of structures expected to be removed over a 25 year time horizon. Decommissioning activities associated with offshore production are an important and specialized segment of marine construction that has received limited attention in the academic literature, yet is compelling because few industrial sectors have such well-understood and widely adopted abandonment requirements. This paper should appeal to practitioners and researchers interested in learning the processes involved in deconstruction and the basic structure of the industry. The regulatory requirements and primary stages of decommissioning are reviewed, and the management, bid/tender process, and negotiation strategies are described. A life expectancy model of the number of structures expected to be removed from the Gulf of Mexico is presented, along with a discussion of the model uncertainty and the limitations of the analysis.