Reefer Madness

Turning oil rigs into reefs saves money and marine life, yet many greens oppose it.

Posted on June 14, 2014 by economist.com

WHEN an offshore well stops producing oil, what should be done with the rig? One option is to haul it ashore, break it up and recycle it. This is expensive. For a big, deep-water oil or gas platform, it can cost $200m. Just hiring a derrick barge massive enough to do the job can cost $700,000 a day. But there is an alternative: simply leave most of the structure where it is. That is what you would expect a greedy oil firm to do: despoil the ocean just to save a lousy few million dollars. The surprise is, the cheap option may actually be greener.

For a start, it takes a lot of energy to move a rig. The ships that would be needed to shift California’s largest one would emit 29,400 tonnes of carbon dioxide, by one estimate. And moving a rig disturbs the organisms that have attached themselves to its underside, or jacket. Far better, some say, to turn old rigs into coral reefs.

“Reefing” typically involves bringing a platform’s above-water parts ashore and cropping the lower parts to leave at least 26m of clearance: deep enough for ships to pass over, yet shallow enough for photosynthesis to nourish organisms on its upper reaches (see picture). Oil-rig reefs may shelter and feed up to eight tonnes of fish. In 2009 Shell moved a jacket in the Gulf of Mexico ten kilometres (six miles) away. The fish followed.rigstoreefs

More than 490 platforms in American waters have become reefs in the past three decades. The federal Bureau of Safety and Environmental Enforcement urges states to issue reefing permits. State coffers gain: oil firms typically hand over half the money they save by reefing.

Those savings vary greatly. Small platforms in shallow waters can often be removed for $10m, but sometimes for as little as $1m, according to DecomWorld, a consultancy. But for states with lots of offshore oil rigs, the windfalls soon add up. Mississippi pocketed an average of $625,000 for each of the 12 permits it has issued, according to Melissa Scallan of the state’s Department of Marine Resources. Louisiana’s take has averaged $270,000 per reefing—and the state has seen 336 of them, says Mike McDonough of the Louisiana Department of Wildlife and Fisheries.

Currently, less than a tenth of America’s old oil and gas platforms are reefed. Sometimes the reasons for this are practical. For example, platforms may be removed if waiting for a permit means weathering another hurricane season (in 2005 150 defunct platforms in the Gulf of Mexico were toppled by winds and waves). Operators typically favour reefing but it is not always economical or allowed, says David Welch of Stone Energy Corporation. The firm has only reefed 12 of the 60 Gulf of Mexico platforms it has decommissioned.

That share is likely to grow. Within five years oil firms will be reefing one offshore rig in four, predicts Quenton Dokken of the Gulf of Mexico Foundation, a conservation group. Gulf states, particularly Louisiana and Texas, are making “a big push” to streamline the permitting process, he says.

Far bigger savings are possible in the deep waters off California. Four years ago the Golden State passed a law allowing reefing. Operators are loth to estimate costs publicly, but the Tulane University Energy Institute reckons that reefing the state’s 27 platforms could save $2 billion. A platform or two could be retired as early as next year, though rising oil prices may mean they keep pumping longer.

The California Ocean Science Trust, a research group that has advised lawmakers, thinks that platforms increase marine life and should not all be removed. Skyli McAfee, the group’s director, describes this conclusion as “a big fat duh”. Studies by Milton Love, a marine biologist at the University of California, Santa Barbara, support it. Oil platforms serve as “excellent nursery grounds” that boost fish populations, he says. The bocaccio, a rockfish whose numbers are worrying fishing authorities, is one big beneficiary.

Yet the odds of preserving most oil-rig reefs look bleak. Public opposition is robust. Not one platform off California has been reefed. Activists quote the findings of scientists such as James Cowan, an oceanographer at Louisiana State University, who studied isotopes, tissue caloric densities and the stomach contents of creatures from both natural and artificial reefs and concluded that the latter generate no extra biomass. The Environmental Defence Centre in Santa Barbara, a group that files anti-development lawsuits, advocates the complete removal of oil platforms. Linda Krop, its chief counsel, says that abandoned structures might damage anchors, rob natural reefs of fish and even leach poisons. She does, however, acknowledge the environmental damage associated with complete removal.

When reefs cause grief

Greenpeace, a pressure group, makes a different argument. John Hocevar, its head of ocean campaigns, concedes that in some locations reefed platforms, if non-toxic, may increase marine life. But they should be banned anyway, he says, because they save the oil firms money and therefore encourage them to drill more.

The debate is likely to intensify. In the Gulf of Mexico some 400 platforms are now being decommissioned each year. Divers and many fishermen want more to be reefed; shrimpers complain that reefs prevent them from dragging nets across parts of the ocean floor. In California operators must decide quickly if they wish to turn redundant rigs into reefs. Until 2017 firms can keep 45% of the savings. After that the figure falls to 35% until 2023; then it drops to just 20%.

For now, the evidence suggests that reefing is a rare policy. It is both eco-friendly and pays for itself.