In-Depth: What would it take to decommission offshore oil platforms near California?

Posted at 7:09 PM, Nov 09, 2021
and last updated 2021-11-09 22:17:34-05

SAN DIEGO (KGTV) -- The October oil spill off the coast of Huntington Beach re-energized efforts to end offshore drilling near California.

However, experts say federal law gives oil companies strong protection to maintain existing drilling leases. And the cost of decommissioning all the oil platforms near California could exceed $2 billion.

There are 27 oil and gas platforms near California. Twenty-three of the 27 are in federal waters, just beyond the authority of state lawmakers.

“The state doesn’t really have control over what goes on outside of that three-mile limit out in federal waters,” said UC Santa Barbara marine science professor David Valentine.

Collectively, their output has been shrinking dramatically over the last several years. California’s offshore infrastructure produced 4.5 million barrels in 2019, down from 18.5 million barrels in 2014.

For context, that’s 0.6 percent of what companies extracted from the Gulf of Mexico.

“It’s an insignificant amount in the national picture,” Valentine said.

The cost to remove a platform is immense. A report contracted by the U.S. Bureau of Safety and Environmental Enforcement estimated removing the three platforms connected to the pipeline that ruptured in October would cost $141.8 million.

Removing all 23 platforms in federal waters would cost $1.6 billion, the report said.

Decommissioning Platform Holly, one of the four platforms in state waters, is projected to cost $350 million. Work on that project is underway.

The companies that own the platforms are supposed to cover decommissioning costs, but in reality, Valentine says that hasn’t always happened.

“The [major oil companies] who, in many cases, were the ones that originally built these platforms, they have passed them on to much smaller operators,” he said. “The concern there is that you don’t have the deep pockets to clean it all up when things go bad.”

He says there are plenty of examples of small companies declaring bankruptcy and leaving taxpayers with the bill.

In Washington, the Build Back Better Act, still being debated by Democrats in Congress, includes a ban on new oil leasing off the Pacific and Atlantic coasts, as well as a portion of the eastern Gulf of Mexico.

So why doesn’t the government force these companies out?

A 1953 federal law gives essentially says that once an oil company secures a lease to drill, they can keep it as long as they continue drilling operations.

“As long as they continue to operate on their existing lease, there’s not much that can be done to take that away from them,” Valentine said. “Even if ‘operating’ is not really truly operating.”

In some cases, companies keep platforms technically active on paper, even if they are not producing anything just to avoid the massive costs of decommissioning.

Five of California’s offshore platforms are in an early stage of decommissioning. Another six are inactive and in a state of limbo as former operators dispute responsibility for the costs.

The problem, Valentine says, is that the older these platforms and pipelines get, the more likely they are to leak. Some of California’s platforms are more than 50 years old.