Potential Cost Savings from Converting California Outer Continental Shelf Oil and Gas Platform Jackets to Artificial Reefs

Abstract

This paper reviews cost estimates for decommissioning and fully removing the 23 oil and gas platforms located on the federal Outer Continental Shelf offshore California and estimates the costs that could be avoided (saved) if the platform jackets are partially removed and reefed in-situ rather than fully removed. The cost savings are calculated by estimating the weight of the jacket structure that would remain in-situ and multiplying that weight by a demolition cost ranging from $3,000 to $7,000/ton (short tons) for structure removal. This cost range was derived from a review of published information on estimated and actual jacket removal costs. The calculations show that if all 23 platform jackets are reefed in-situ the estimated total cost savings achieved would range from $856 million to $2.0 billion. On a per platform basis, the cost savings range from a low of $0.3 million for Platform Gina (84 tons remaining in-situ) to a high of $494 million for Platform Harmony (70,540 tons remaining in-situ). Under the California Marine Resources Legacy Act (AB 2503) the owners of oil and gas platforms who obtain approval to reef a platform jacket are required to share 65% to 80% of the cost savings with the State of California. Based on the cost savings estimates presented in this paper, the State of California would receive an allotment ranging from a low of $685 million to as much as $1.6 billion if all 23 OCS platforms were approved to be reefed in-situ.