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58 comments on I think Katrina and Rita got some folks attention

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louGrinzo on October 6, 2005 - 11:36am

"They are lost forever"? "Losing a oplatform means permanent loss of production."? Really? Even once oil is $200 or $300 or more per barrel? We'll literally NEVER go back to those locations for the oil we know is there?

I can't prove we'll go back, but saying we'll never do it seems like a pretty tough assertion to defend.

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Glenn on October 6, 2005 - 10:33pm

Lost forever might be an overstatement, but consider this: A. Drilling equipment is very scarce
B. Most of these wells were only producing relatively small amounts

It will take a long time to make re-drilling these wells profitable. So until A gets resolved through more rig production or B that small amount becomes important, they are a straight up loss to us for the foreseeable future.

Geologically, I'm not sure what happens when you disrupt a well like that. Does it eventually lose pressure?

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Stuart Staniford on October 7, 2005 - 1:40am

J (long time TOD oil insider) wishes to respond:

Fact: the environmental and disposal costs will heavily impact bottom line numbers. If the fields had been new, then a possibility might exist that the platforms could turn around their economics. But in an aged and depleting field, you cut your losses when you have total structural wipeout because your economics are completely different.

After a platform is toppled, you have to stop any pollution, provide remediation (with the EPA and Louisiana DEQ, this in itself could be more than the cost of a platform), cut off all wells at the mudline and re-enter them to plug them back, then remove the scrapped platform itself. If you have 20-30 wells, this is 20-30 million dollars at a minimum, just to plug the wells! Most of these platforms were only economical because they had been built in a cheaper era and paid out by the primary production before being purchased by a new owner at an adjusted (much reduced) price.

Even at $200 bbl oil, the economics do not work out because of the limited amount of oil left and the new, higher cost of extraction and facilities. Combine the additional plugging and environmental costs, and you have a nice loss to carry forward though...

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