Asset Decommissioning Risk Metrics for Floating Structures in the Gulf of Mexico

Area of Science:

• Environmental Science
• Economics
• Engineering

Background:

• Public companies report proved reserves and asset retirement obligations annually.
• Current reporting provides aggregate corporate decommissioning risk but lacks granular detail.

Purpose of the Study:

• Introduce a novel decommissioning risk metric: Asset Decommissioning Risk (ADR).
• ADR is defined as the ratio of expected asset reserves value to expected decommissioning costs.
• Enable granular quantification of decommissioning risk for structures and regional comparisons.

Main Methods:

• Formalized two decommissioning risk metrics.
• Applied the ADR metric to deepwater Gulf of Mexico (GOM) floater inventory.
• Estimated reserve values and decommissioning costs for GOM floating structures.

Main Results:

• The value of GOM proved reserves ($37-$80 billion) significantly exceeds decommissioning costs (estimated $4.3 billion).
• Specific platforms (Eni's Allegheny, MC Offshore's Jolliet) show ADR metrics below one, indicating nearing end-of-life.
• ADR metric provides market signals for future decommissioning activity.

Conclusions:

• The ADR metric offers a more granular and informative approach to assessing decommissioning risk.
• Proposed metrics can complement existing financial metrics in regulatory reviews, such as supplemental bonding for the U.S. Outer Continental Shelf.