Oil companies turn rigs to reefs in the Gulf of Mexico
By Brittany Williams
In order to harness the oil resources that lay off the coasts of the United States, energy companies have long built drilling rigs offshore. One might think these massive structures would be harmful to the environment and the marine life that call the ocean home. But it appears the offshore oil industry is providing a valuable ecosystem, acting as an artificial reef, where aquatic life can thrive.
Offshore oil rigs make ideal structures for artificial reefs because they are made out of long-lasting, durable materials and already serve as an ecosystem for many species of marine life. Some have even been in the water for more than 30 years, providing a home to thriving reef ecosystems. Removing these structures could actually harm aquatic life.
That's why the federal Bureau of Safety and Environmental Enforcement (BSEE) adopted a policy in the 1980s that supported the reuse of decommissioned oil rigs for artificial reef development off U.S. coasts. The program, called Rigs to Reefs, allows oil companies to donate their non-productive rigs as long as they are environmentally safe and get approval from the Army Corps of Engineers, the BSEE and the appropriate state agency.
The Oil and Gas Financial Journal estimated that more than 75 oil- or gas-related companies have participated in the Rigs to Reefs program since its inception. Out in the ocean there are several artificial reefs, acting as ecosystems for a variety of marine life, made possible by oil companies such as ExxonMobil, Shell, ConocoPhillips and BP.
Since 1983, Chevron has donated 74 structures to Rigs to Reefs programs along the Gulf of Mexico, in states such as Mississippi, Louisiana and Texas. "The platforms provide excellent habitat that is beneficial both to marine organisms that inhabit these reef systems and to commercial and recreational fishermen," said Lew Dennis, U.S. offshore area manager for Chevron Environmental Management Co., in the company's 2012 annual report.
Cost Savings for Oil Companies
You might wonder why an oil company would want to donate an expensive piece of equipment, but the process of turning a rig to a reef can provide huge cost savings for energy companies. Before an oil company can get a permit for offshore drilling, it must sign a contract committing to properly decommission the rig once drilling has completed.
That includes sealing the well to protect the environment, relocating drilling equipment and removing the rig from the ocean. By donating the unproductive rig, the company doesn't have to pay the high cost of moving it to the shore, which can cost upward of $700,000.
If the oil rig is donated, it is either moved to a more appropriate reefing site or split into two pieces to ensure the safety of those navigating through the ocean. To partially remove an oil rig, divers swim down 85 feet beneath the water line and cut the upper portion of the structure off. The top portion of the rig is then lowered to the floor of the ocean by a crane barge, where it will lay on its side.
According to the Texas Parks and Wildlife Department, aquatic life starts taking over these artificial structures almost immediately and in as little as a year a repurposed oil rig is well established as a reef ecosystem. Fish densities surrounding these artificial reefs can be anywhere from 10 to 100 times greater than adjacent sand or mud bottom habitats, according to a study by the BSEE.
The increased marine life has made artificial reefs an attractive destination for divers looking to take in the natural beauty of the ocean. And because fish supplies have increased in areas with artificial reefs, fisherman can more easily catch enough fish to supply fresh markets and grocery stores, an economic benefit to many coastal cities.
"The oil and gas platforms are such a unique structure. The abundance of aquatics that are underneath these platforms is mind boggling," said Captain Brent Casey of the Port Aransas Boatmen Association in a documentary about the Rigs to Reefs program. The film was produced by the Gulf of Mexico Foundation, an organization that promotes conservation and preservation in the Gulf of Mexico.
In Texas, the Rigs to Reef program run by the Texas Parks and Wildlife Department has found great success. The Gulf Coast has cool temperatures and murky water that won't support the growth of natural reefs. But the location is also teeming with fish, plants and invertebrates that need to cling to hard surfaces to complete their lifecycles. Placing artificial reef structures off the coast has improved marine habitat by providing growth and additional sustenance for aquatic species such as grouper, snapper and shark.
“The base belief of any artificial reef program is that we can improve upon nature. We can, should and will have to in order to meet growing demands for fishery resources," said Quenton Dokken, president and CEO of the Gulf of Mexico Foundation. "In the Gulf of Mexico, offshore oil/gas production platforms have become a cornerstone of a billion dollar recreational fishery and the commercial fishing industry which supplies fresh seafood to thousands of restaurants and countless tens of thousands of consumers."
Today, there are more than 3,000 oil rigs off the region's coast and about 100 of them are decommissioned each year. The majority of these structures are moved onshore and dismantled, disrupting the marine life that lived on or around the structure. However, since the program began in 1990 more than 140 of these offshore oil rigs have been donated to Texas' Rigs to Reefs program and now serve as ecosystems for aquatic life in the gulf.
The state agency also receives 50 percent of an oil company's savings from converting an obsolete oil rig into an artificial reef instead of moving the structure ashore for salvaging. These funds are used to finance research, maintenance and construction of new reefs.
Brittany Williams is a copywriter for SaveOnEnergy.comwhere she covers controversial topics, explores renewable energy options and shares her knowledge to help others minimize their electricity bills, and in turn their carbon footprints.
Technology revolution for water retailers
In April 2017, the UK’s water retail market in the world opened for business – the single biggest change to the water sector since privatisation. This development allowed businesses, charities and public sector organisations to shop around for the best deal.
However, like any industry, this change hasn’t been without its sticking points; here, Paul Williams, CTO at Everflow Tech (pictured far right), discusses how retailers can harness technology to their advantage
Quotations could take up to a week to produce, billing software had to be manually updated and brokers were unable to manage the complete customer journey in one place – all of which took time, cost money and allowed for human error.
The more complexity that was involved in billing or quoting, the more contact end customers needed to have with their retailers, pushing up the cost to serve for every SPID. This meant retailers – ourselves included – found themselves in a situation where profits were simply eaten up by service costs.
We also note that it can traditionally be hard for retailers to stay on top of balancing what they are charging their customers with what they are being charged by the market. To further exacerbate this, the longer a change goes unnoticed, the more trouble it can be to balance the issue.
It was these issues that Josh and his (at the time) small team wanted to ameliorate, creating their own technology in the absence of anything else.
This technology evolved into our award-winning retail sales, billing and customer management platform for the water retail market, and Everflow Tech was launched as a standalone venture in 2018, selling the software externally for other water retailers and their customers to benefit from.
What retailers want
As a relatively new entrant to the world of utilities competition, the water market could be seen to be lagging behind, particularly when it comes to innovation.
In fact, as recently as 2019, Ofwat said it expected the industry to be making technological advances and to be working with a culture of innovation, collaborating with companies both within and outside of the sector.
And with cost-savings for consumers traditionally lower than for other utilities, retailers need to be offering something more – whether that’s better support, energy-efficiency advice or more accurate data.
What’s more, consumers have had a taste of the power of technology, and they’ve come to expect nothing less from retailers across the board.
Another key issue – thrown into sharp relief during the past 12 months (and counting) of a pandemic – is rising levels of arrears, which are likely to increase bad debt beyond margins that retailers originally allowed for when the market was created.
In such a low-margin industry, there is a limit to the amount of debt retailers can take on, especially as recovering costs can be a very slow process. Ofwat has signalled that this issue could be addressed as early as this year, with a mechanism for recovering bad debt to be established during 2021/22.
The market needs simple solutions to better serve the end user, and we were perfectly placed to develop those solutions. At Everflow, our software is designed for the water retail market, by the water retail market.
As well as simple billing, clear-to-understand workflows, and a revenue assurance system to allow retailers to quickly compare market charges, Everflow has also introduced a complete debt solution, allowing missed payment dates to drive late payment charges and escalations automatically.
Retailers are able to design and put out their own bill and quotes, tailoring customer journey and overall experience – whatever the circumstances.
What does the future hold?
Automation is key to any industry; we’re heading into an age of driverless cars and smart homes, and this drive for tech will filter through to our industry, and we need to catch up.
The Internet of Things – a network of physical objects connected to each other – means human error (and effort) can effectively be removed from many everyday tasks, which goes for meter readings too. However, in the 21st century, the water market is still not leveraging previously emerged technology in the form of smart meters to provide accurate billing.
Consumers are also becoming more empowered, both to ask for information and change their preferences if they don’t like what they learn. Retailers need to be armed with this information, not next week, not tomorrow, but now – and, at Everflow Tech, we’re putting that information at their fingertips.
But the retailers themselves need to speak up too, and we will always work with them to get the best ideas on what needs to be developed and when.
Our strong bond with Everflow Water, along with other key customers, means we have a direct interest in making sure our systems serve the water market in the best way they can.
For us, the goal is to make sure retailers on our platform can grow as much as possible, leaving behind laborious daily processes to focus on their own strategic growth and, most importantly, helping their customers.