Shutting Down Offshore Wells Is Expensive, But It's Necessary

Offshore drilling operations cannot continue forever. Wells can only produce for so long before their costs outweigh their productivity. At times, wells must be temporarily shut-in for reasons related to severe weather or problems related to supply and demand (such as occurred during the COVID-19 crisis). Eventually, every well will need to be permanently shut down.

Shutting down oil wells is no easy feat, however. The process is expensive and dangerous, which explains the more than 32,000 abandoned offshore oil wells littering our oceans.

Completely decommissioning and removing an offshore platform in relatively shallow waters, such as in the Gulf of Mexico, is estimated to cost $15 million to $20 million. The costs will be far greater in deep waters. One study from 2020 found that decommissioning offshore facilities in the Pacific Outer Continental Shelf Region off the California coast could cost $19 million to $189 million per platform.

Why is it so expensive? Shutting down an offshore oil rig is a complex process, involving:

  • Plugging all wells
  • Severing all well casings 15 feet below the mudline
  • Cleaning and removing all risers
  • Removing the platform from its foundation
  • Disposing of the platform at a scrap or fabrication yard

Offshore oil wells must be permanently shut down if they cannot produce enough to offset operation costs (if they essentially “dry up”) and if they are posing too much of a danger to the environment.

Challenges Posed by Temporarily Shutting In Offshore Oil Wells

Temporarily shutting in an offshore well presents problems of its own. Restarting production is expensive, and there is no guarantee that the well will return to its previous flow rate. There is no way to “slow down” or adjust the flow of oil at a well, offshore or on land. It is either at full capacity or closed completely. When it is reopened, the pumping equipment must be repaired and refitted. There is no “on” or “off” switch.

When pumping ceases at an offshore well, pressure will build up at a rapid rate. This can cause the formation of methane hydrates, which can clog underwater pipes and make relaunching production extremely costly and difficult.

Despite the cost and risk, a temporary shut-in may be necessary if a platform lies in the path of a hurricane or tropical storm. Crews must be evacuated and offshore drilling operations must be shut down and secured. If not, every person on the platform will be in danger. Failing to shut down and prepare for a hurricane can also lead to catastrophic oil spills and the loss of an entire platform. You can learn more about this process in our blog: Offshore Platform Hurricane Preparedness.

Decreased demand, like oil companies experienced as a result of widespread COVID-19 shutdowns in 2020, can also lead to temporary shut-ins. With a lower demand for oil and gas and not enough storage, companies faced difficult choices in shutting down drilling operations on land and offshore. Some experts even considered that COVID-related well shutdowns might accelerate oil depletion by adversely affecting production even after operations resumed. Certain Russian oil producers claimed they would rather burn off excess oil than shut down wells.

What Happens When Offshore Wells Are Not Properly Shut Down?

We’ve established that shutting in offshore wells is expensive, but it is also necessary. When companies fail to shut in wells and evacuate crews or abandon offshore facilities without properly decommissioning rigs, lives will be lost and the environment will suffer.

The Bureau of Safety and Environmental Enforcement (BSEE) released a Joint Safety Alert on May 16, 2022 that called out operators and contractors of the Globetrotter II for failing to evacuate and suspend well operations in the face of Hurricane Ida. According to the report, the rig, “with 115 personnel onboard, lost 11 marine riser joints and a lower marine riser package (LMRP) and polluted the Gulf of Mexico with 88 barrels of miscellaneous fluids in its failed attempt to evacuate the area and evade Hurricane Ida.”

Another notable incident involved a Taylor Energy platform off the coast of Louisiana near the mouth of the Mississippi River. In 2004, the platform was hit by Hurricane Ivan and at least 28 wells were exposed. Oil has been leaking from the site ever since, totaling an estimated 140 million gallons. Taylor Energy was unsuccessful in plugging the well; today there is a system created by leading engineers and the U.S. Coast Guard in place on the sea floor that is collecting about 1,000 gallons of oil every day from the wells. Some believe they may leak for another 100 years or more.

Offshore Well Shut In Accidents & Injuries

The process of shutting in an offshore well is inherently dangerous, but this is true of nearly every task crews must complete on rigs located miles from shore. Heavy equipment, volatile substances, and complex processes all increase the risks that offshore workers face every single day. This does not excuse accidents and injuries that occur during shutdowns and when production resumes, however.

Offshore companies carry the burden of properly training workers and providing them with the right equipment and gear to get their jobs done. They must also provide fair warning for shutting down operations prior to a hurricane or other event – which did not occur with the Globetrotter II or, similarly, with the Deepwater Asgard, which was battered by Hurricane Zeta in October 2020 after failing to evacuate and shut down in time.

Without the proper procedures, training, and personal protective equipment (PPE), crews will be subject to catastrophic injuries or even death while trying to suspend operations. At Arnold & Itkin, our offshore injury attorneys represent crew members and families whose lives have been torn apart by the carelessness and negligence of big corporations. When oil and gas companies are more interested in protecting their profits than their crews, we expose their wrongdoing and help those who have been harmed recover and move on with their lives.

To find out more about our firm and the ways we can help, call (888) 346-5024 or contact us online.

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