Download Background on the Idle Iron Policy • In a knee-jerk

Background on the Idle Iron Policy
• In a knee‐jerk response to the Deepwater Horizon disaster, the U.S. Department
of Interior issued what has come to be known as the “Idle Iron” policy, a directive
stating that all non‐producing rigs must be plugged and any remaining structure
removed. “Non‐producing” wells are defined as those that have not produced oil
or natural gas for the previous five years.
• Federal regulations already required such structures to be removed, but the
regulation has never been enforced. The directive was directly a result of the
Macondo well.
• One of the primary concerns of the Idle Iron policy was the need to address the
navigational hazard represented by these non‐producing structures.
• There are approximately 3, 500 offshore structures in the Gulf of Mexico and the
directive will impact roughly 650 of them.
• The directive was issued on Oct. 15, 2010. Energy companies must act on non‐
producing rigs no later than five years from that date.
• The rigs and structures of the Gulf of Mexico are generally regarded as the largest
man‐made artificial reef in the world, providing habitat to dozens of species of fish
and marine life, many of which are structure‐dependent. After years in the marine
environment, the structures are supporting a significant biomass in the Gulf of
Mexico. Removing them is certain to have a negative impact on the marine
environment and its ability to support fisheries greatly valued by recreational
anglers.
• Accompanying the Department of Interior’s directive was reference to the Rigs to
Reefs program. In creating the program, the Minerals Management Service worked
with NGOs, coastal states, and the offshore industry to address concerns over
removing non‐producing structures and the subsequent impact on the profound
connection between fish, fishing, and oil and gas structures in the marine
environment.
• Under Title II of the National Fishing Enhancement Act of 1984 (P.L. 98‐623), the
National Marine Fisheries Service developed and published a National Artificial
Reef Plan (NOAA Technical Memorandum NMFS OF‐6, November, 1985, as
amended). This law and associated planning requirements set the stage for Federal
endorsement of offshore artificial reef projects. In support of the National Artificial
Reef Plan, and in response to affected stakeholders, the MMS adopted a national
Rigs‐to‐Reefs policy that supports and encourages the reuse of oil and gas
structures for offshore artificial reef developments.
• The Rigs to Reefs program allows coastal states with approved, state‐specific,
artificial reef plans to identify offshore areas and sites suitable for artificial reef
developments. Therefore, oil and gas operators may cooperate with Gulf Coast
States to recycle obsolete structures as permitted artificial reefs as an alternative
to onshore disposal.
• As it currently stands, for a non‐producing structure to be turned into an artificial
reef, the artificial reef coordinators from the states must assess the interest of
their state in acquiring oil or gas structures offered for reef development, work
with the structure operator or their agent in securing the required U.S. Army Corps
of Engineers permit, negotiate an agreement for a structure donation, and accept
title and responsibility for the structure as a permanent state reef. In order to be a
state reef, it must be cut and towed to designated state artificial reefing areas.
• The energy companies must weigh the costs and benefits of reefing a non‐
producing structure or towing it back to shore to sell as scrap. Current demand
from developing countries like China has created a lucrative market for scrap steel.
• Since the inception of Louisiana’s artificial reef program in 1986, 64 oil and gas
related companies have participated in the program and donated primarily the
jackets of oil and gas structures. In addition to the material, companies also donate
one half their savings over a traditional onshore removal into Louisiana's Artificial
Reef Trust Fund.
• The Texas Artificial Reef Plan was adopted by the Parks and Wildlife Commission
in 1990. To date, more than 100 offshore petroleum structures have been donated
by cooperating oil and gas companies. Currently, the Artificial Reef Program
receives 50 percent of an oil company's savings from converting the jacket to a reef
instead of taking the structure to shore where it is salvaged.