The decommissioning market in the Gulf of Mexico is facing serious regulatory and fiscal challenges, and the longer-term outlook is uncertain, an expert has warned.

A raft of new rules without the manpower to enforce them, the transfer of decommissioning liabilities down to inadequately financed companies, and the lack of tax incentives to save cash to pay for those liabilities all hamper the smooth functioning of the market, said Professor Eric Smith, associate director of Tulane University Energy Institute in New Orleans.

subsea decommissioning industry

Speaking at DecomWorld’s Gulf of Mexico Decommissioning & Abandonment Summit in Houston last month, Prof Smith said the government had put “the horse before the cart” after Macondo by introducing new rules while the Bureau of Safety & Environmental Enforcement (BSEE) suffered severe staff shortages.

Mactech’s Take:
“Uncertainty is the only certainty there is, and knowing how to live with insecurity is the only security.” ~ John Allen Paulos (

Regulation and policy play a large part in many industries, but it has never been more important than it is now in the subsea decommissioning industry. Contractors will now be focused not only on job duties ahead of them, but also the potential for liabilities to be passed onto them from larger players in the market. Policy and regulation are necessary to promote safety within the industry, but regulations should not come at the cost of disturbing the market. According to this article, Professor Smith mentions that these regulations may push some of the larger contractors out of the Gulf of Mexico and explore new decommissioning opportunity off the coast of California.

It will be interesting to see how the smaller contractors follow suit and how regulation in the industry plays out over the next ten years.

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