March 2000 Vol. 221 No. 3  Drilling

Robert E. Snyder,  Editor

UKOOA’s drill cuttings initiative progresses

A Phase I Summary Report has been issued by the United Kingdom Offshore Operators Association’s (UKOOA) Joint Industry Project (JIP) charged with implementing the group’s drill cuttings initiative. As readers may remember, this JIP was formed in 1998 to determine how to deal most effectively with drill cuttings associated with platforms that might be decommissioned. This issue has had three elements requiring solutions, including:

• A means to avoid or minimize disturbance of drill cuttings
• The effect of releasing the contents
• The effects of different methods for disposing of cuttings pile materials.

When the JIP was formed, there was little information on these elements, therefore a £1-million ($1.6-million), multi-phase research program was established to find proper ways of dealing with them.

Since then, 15 separate studies have been run in the first research phase. They were targeted toward three key areas: problem definition, potential solutions and development of a framework for evaluating management options. In late January, the Phase I Summary Report was released to UKOOA member-operators and their partners, also known as "stakeholders." In regard to problem definition, JIP participants said they improved their knowledge on cuttings pile volumes and composition, but they also determined that there is "a lack of any correlation between these and well histories." They found that little toxicity information is available, other than for hydrocarbon content where a "no-effect" concentration of 10mg/kg has been suggested.

Observations were made that recolonization by "opportunistic" species begins one to two years after discharges cease, and the rate increases relative to distance from a pile’s center. A wide range of contaminants has the potential to be biodegraded naturally, but the time required is likely to be long, and it may vary between and within individual piles.

As regards potential solutions, the JIP found that disposal offshore, via degradation by both anaerobic and aerobic means, is likely, but limited by the availability of "electron acceptors," e.g., oxygen. Some strategies have been developed for degradation acceleration. The report said that containment is reasonably practical, but "contained aquatic disposal would cause significant environmental impact during construction, and a cover would slow degradation." Alternatively, onshore processing capacity in the UK and Norway is sufficient, and "typical energy consumption is reported." Landfill capacity is available, except for oily waste, but such capacity is limited to England, thus requiring long-distance transportation.

Further, treatment and disposal costs would be incurred, and re-use opportunities are limited and would require processing. In summation, the JIP determined that re-injection is currently the only established technique available for processing cuttings offshore. However, if no suitable formation is present, then only onshore processing can satisfy existing regulations. A three-tier "evaluation framework" was suggested, including assessment of preliminary sites; analysis of data, risk and potential ecosystem disturbance; and estimation of management options for remediation of any specific pile.

Although all research was completed on time, some conclusions were developed with data limitations that qualified the results. Due to remaining uncertainties, the JIP recommends more work in addition to, and associated with, field trials in Phase II. All findings and recommendations were discussed on February 2, at the second "stakeholder dialogue workshop" in London. About 70 delegates attended a "frank and open discussion" of the report. They gave their views on study findings to date and how to progress with Phase II in light of that information. A report on delegates’ reactions will be issued in the middle of this month by The Environmental Council (which ran the workshop).

Rig moves and acquisitions continue. Speaking of the UK and Norway, Rowan Cos. said that it will move two more jackups, Arch Rowan and Gorilla IV, to the Gulf of Mexico from the North Sea. Rowan Chairman and CEO C. R. Palmer said that while his firm is optimistic about the North Sea in the long term, "we must accept the reality of the marketplace and move on." Meanwhile, Snyder, Texas-based Patterson Energy, Inc., has agreed to acquire High Valley Drilling, Inc. Primary assets of High Valley are eight onshore drilling rigs, ranging from 1,000 to 2,500 hp, with drilling capacities of 10,000 to 25,000 ft. Three of the rigs are expected to be operable by the end of second-quarter 2000, and the remaining five should be active by the end of fourth-quarter 2000. Patterson already owns 119 rigs, of which 114 units are operable.

Clinton gets in one last "jab" at industry. Thank goodness, this will be the last year of President Clinton’s second and final term. Based on a line item in his latest proposed federal budget, the upstream industry can ill-afford much more of his administration. On February 7, 2000, the President proposed imposing $50 million in new and expanded user fees over five years on oil companies drilling in offshore waters. The money would come from increasing rental rates on offshore leases, implementing a bidding "fee" for leases and charging for federal officials to re-inspect alleged company violations of lease terms.

The Clinton administration said it would propose legislation to authorize these fees, which must be approved by Congress. If approved, the fees would take effect on October 1, 2000, and be implemented by the MMS. The revenue would be projected in MMS’ budget for each of the next five fiscal years. Senators and congressmen from oil-and-gas-producing states are sure to voice loud opposition to such fees, particularly because operators already face higher royalty fees for oil produced on federal lands. After a several-year delay, Congress last fall passed a compromise measure that allowed the Interior Department to impose the higher royalties, as of the middle of this month.

Copyright © 2000 World Oil
Copyright © 2000 Gulf Publishing Company