Modeling regulatory policies associated with offshore structure removal requirements in the Gulf of Mexico

Federal regulations require that a lease in the Outer Continental Shelf of the Gulf of Mexico be cleared of all structures within one year after production on the lease ceases, but in recent years, the Minerals Management Service has begun to encourage operators to remove idle (non-producing) structures on producing leases that are no longer “economically viable”. At the end of 2003, there were 2175 producing structures, 898 idle (non-producing) structures, and 440 auxiliary (never-producing) structures on 1356 active leases; and 329 idle structures and 65 auxiliary structures on 273 inactive leases. The purpose of this paper is to model the impact of alternative regulatory policies on the removal trends of structures and the inventory of idle iron, and to provide first-order estimates of the cost of each regulatory option. A description of the modeling framework and implementation results is presented.