US picks contractor for decom work on eight orphaned oil & gas pipelines in Gulf of Mexico

The Bureau of Safety and Environmental Enforcement (BSEE) has hired the Louisiana-based Chet Morrison Contractors, known as Morrison Energy, on a five-year on-site pipeline decommissioning assignment partially funded by a $4.7 billion investment for orphaned oil and gas well cleanups, called the Bipartisan Infrastructure Law, signed into law by President Joe Biden in 2021.

Following the laying of the groundwork last year, the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) revamped 20-year-old regulations in April 2024 with a final rule to ensure American taxpayers would be protected from covering costs that should be borne by the oil and gas industry when offshore platforms, wells, and other infrastructure require decommissioning after they reach the end of their service life. The move was made to strengthen financial assurance requirements for the offshore oil and gas industry operating on the U.S. Outer Continental Shelf (OCS). 

Two months later, the Department of the Interior officials surveyed the progress of an offshore project for decommissioning orphaned wells in the Matagorda Island area, in the Gulf of Mexico region, partially funded by President Biden’s Bipartisan Infrastructure Law. One of BSEE’s key responsibilities is ensuring that infrastructure used in exploration, development, and production activities is properly decommissioned to protect offshore resources and the environment.

To this end, BSEE awarded contracts for the decommissioning of nine orphaned wells last year, along with associated pipelines and platforms, in the Matagorda Island lease area, which lies in federal waters approximately 12 miles off the Texas coast. In June 2024, the site visit showed that the project was tackling what the BSEE saw as the most urgent decommissioning needs at the time to minimize the risk of environmental pollution and safety incidents, including by securing wellheads, removing hazardous materials, and preparing the site for well plugging, which permanently seals the wells.

The BSEE confirmed the award of another orphaned pipeline decommissioning contract on October 3, 2024, by explaining that the contract and the first task order for the decommissioning of eight orphaned pipelines in the Matagorda Island lease area, approximately 12 miles off the Texas coast were part of the Biden-Harris Administration’s efforts to address legacy pollution. The project is expected to curb pollution risks and improve offshore safety by cleaning up and removing infrastructure that could interfere with navigation, commercial fisheries, and other current or future ocean uses. 

According to BSEE, the five-year indefinite-delivery/indefinite-quantity contract was originally awarded to Chet Morrison Contractors on September 3 to conduct necessary on-site pipeline decommissioning activities. A few days later, BSEE awarded the first task order under the contract, for the Matagorda Island Area.

Kathryn Kovacs, Interior Deputy Assistant Secretary for Land and Minerals Management, who leads BSEE, commented: “With this award, BSEE advances to the active pipeline decommissioning phase of the Matagorda Island area project. The funding provided by the Bipartisan Infrastructure Law is crucial to BSEE as we tackle orphaned infrastructure on the Outer Continental Shelf, which presents a serious hazard to safety and the environment.” 

While decommissioning on the OCS is the obligation of the oil and gas industry, it is BSEE’s task to ensure that wells and infrastructure used in exploration, development, and production activities undertaken under the Outer Continental Shelf Lands Act are decommissioned properly and on time to remove unnecessary hazards to safety, navigation, and the environment.

Recent estimates from the Government Accountability Office (GAO) indicated that between $40-70 billion was needed to cover the costs of plugging wells, removing platforms, and cleaning up infrastructure. The government only had about $3.5 billion in collective financial assurances from the fossil fuel industry at the time to cover the costs of decommissioning all existing offshore oil and gas drilling projects, thus, taxpayers were on the line to cover that discrepancy.

However, the new rule based on BOEM’s estimates will see the oil and gas industry provide $6.9 billion in new financial assurances to protect American taxpayers from assuming decommissioning costs. According to Earthjustice, an environmental NGO, the fossil fuel industry did not meet its deadlines for decommissioning over 40% of wells out of 10,600 and 50% of platforms out of 2,300 between 2010 and 2022 in the Gulf of Mexico, which is the source of about 97% of all U.S. offshore oil and gas production.

In addition, the government counted more than 1,000 idle wells in the Gulf, as of June 2023, with over 800 inactive for more than ten years while nearly 600 had not even been temporarily plugged, leaving them more prone to leaks. Findings from a study published in Nature Energy showed that there were 14,000 unplugged oil and gas wells in the Gulf of Mexico, with the process of plugging and decommissioning these wells calculated to cost around $30 billion.

The lion’s share of these wells were idle for at least five years, with about 7,300 wells in federal waters, estimated to require about $28.7 billion to plug, while the remaining wells were found to be located in the state waters of Texas, Louisiana, Alabama, and Mississippi. Moreover, Nature Energy’s study found more unplugged and non-producing oil and gas wells than active ones in the Gulf of Mexico.

The figures from the Government Accountability Office showed that BSEE gave the green light to the oil and gas industry to leave over 97% of pipeline mileage, nearly 18,000 miles, on the seafloor of the Gulf of Mexico since the 1960s.

In addition, BSEE also approved close to 96% of all applications to decommission-in-place from 2015 through May 2020, allowing for hundreds of pipeline segments to remain on the ocean floor, despite warnings from environmentalists and climate campaigners about the potentially serious adverse environmental consequences of leaving oil and gas pipelines in the ocean.

The climate campaigners have been waging legal battles to stop drilling activities in the Gulf of Mexico, albeit with not much success as their efforts are not welcomed by many due to the growing demand for energy along with the security of supply concerns, which lead to an increase in hydrocarbon exploration not just in the U.S. but also on the global scene.