FERC pipeline decommissioning cost in the U.S. Gulf of Mexico, 1995–2015

Abstract

At the end of its useful life or because of a catastrophic event such as a hurricane, offshore pipelines are decommissioned, which normally involves cleaning the line by pigging or flushing, cutting the pipeline endpoints, and then plugging and burying each endpoint below the seabed or covering with a concrete mattress. The vast majority of decommissioned pipeline in the U.S. Gulf of Mexico is abandoned-in-place if the pipeline does not constitute a hazard to navigation, commercial fishing, or unduly interferes with other uses of the seabed. Using a unique data source from the Federal Energy Regulation Commission, decommissioning cost estimates for 28 gas export pipelines in the shallow water U.S. Gulf of Mexico between 1995 and 2015 are evaluated. The average inflation-adjusted pipeline decommissioning cost was $301,000 per mile ($187,000/km) and $47 per cubic foot ($1660 per cubic meter). Hurricane damaged and leaking pipelines are about three to four times more expensive on a unit cost basis than undamaged and non-leaking lines. No time trends or scale economies were observed. Primary cost drivers are identified and discussed.