The cost of explosive severance operations in the Gulf of Mexico

The cost of explosive severance operations associated with decommissioning offshore structures is estimated based on 139 service jobs performed by DEMEX Division, TEI Construction Services, Inc., over a 4-year period in the Gulf of Mexico, 1999–2002. There are no published reports or systematic analysis of the cost of explosive cutting and so this analysis should serve as a useful industry baseline. The elements of a standard contract are presented and the total cost of the operation is derived in terms of the parameters of the contract. The percentage contribution of the fixed cost of service to the total cost is then estimated based on an assessment of average contract parameters. The total cost to perform an explosive severance operation is aggregated according to job type and normalized according to the number, size, and length of cut performed. Descriptive statistics are provided and relations are derived that estimate the time and cost of cutting based on various descriptor variables. The expected size and potential value of the explosive severance market in the Gulf of Mexico is also estimated. A major conclusion of the analysis is that explosive severance is a time-invariant structure-dependent operation and this combination of time invariance and structure dependence is one of the primary reasons for the popularity of explosive severance. Contractors essentially know the cost of an explosive severance operation before performing the job and this certainty of operation is an extremely valuable characteristic from an operational and financial perspective.