What do you do with an abandoned offshore oil rig? You convert it into a storage site.
A Covington exploration firm plans to transform a decommissioned well in the Gulf of Mexico into an oil and gas storage unit by 2025. LLOG Exploration Company said it will turn the old well into a floating production unit, or FPU, that will be dubbed the Salamanca production facility. It will be located in Keathley Canyon — an undersea canyon rich with oil about 250 miles southwest of New Orleans in the Gulf — and it will store oil and gas found in the Leon and Castile discoveries in the canyon. LLOG is partnering with Repsol E&P USA Inc. and Beacon Offshore Energy LLC for the project, which is being financed by ArcLight Capital Partners LLC, a Boston private equity firm that focuses on energy work. Salamanca is expected to process about 60,000 barrels of oil per day and 40 million cubic feet of natural gas per day once it is operational in mid-2025.nola.com
Oil companies have shied away from more drilling despite increased costs for oil and gas.
LLOG’s move comes at a time when exploration companies have generally been hesitant to explore for new oil and gas, despite higher oil prices. The federal government has put pressure on the oil and gas industry to reduce drilling as part of President Joe Biden’s climate change agenda, though Biden has walked back some of those policies amid an energy crunch induced in part by Russia’s war in Ukraine. Eric Zimmermann, chief operating officer at LLOG, said the project has been in the works for a while, well before oil prices became more volatile in 2022. “Projects of this scale, they take a long time to get to this point,” he said. “They take a long time to come online. We make sure project of this scale are robust.” LLOG officials also said refurbishing an old well, as opposed to building a new one, will save costs and emissions that typically arise during construction. “This development will add a significant new source of needed domestic oil and natural gas production when it comes online,” Philip LeJeune, president and CEO of LLOG, said in a statement.
Interesting concept and I would guess the chance of a spill remains the same.