Offshore, Off-Limits

This briefing by the Center for International Environmental Law (CIEL) examines the environmental, climate, health, and financial risks associated with the decommissioning of offshore oil and gas infrastructure. It highlights how improper closure and the proliferation of abandoned wells lead to methane leaks and toxic contamination, while corporate strategies and regulatory loopholes often shift the massive financial burden of cleanup from operators to the public.

• Improperly decommissioned or abandoned offshore wells are a significant source of greenhouse gas emissions, specifically methane, which is responsible for 25 percent of current global warming. In the North Sea, a study indicated that one-third of abandoned offshore wells could release between 3,000 and 17,000 tons of methane annually, an amount comparable to the CO2 emissions of 16,000 to 91,500 gas-powered cars.
• Abandoned offshore infrastructure poses severe biodiversity and environmental risks. Leaking wells can release benzene, a carcinogen that affects marine life physiology and reproduction, and nitrogen, which can cause harmful algal blooms. Additionally, discarded drill cuttings can release heavy metals like mercury and radioactive materials, while the use of explosives during decommissioning can destroy coral reefs and harm marine mammals, fish, and sea turtles.
• The 'rigs-to-reeS-reefs' (RtR) practice, which converts platforms into artificial reefs, is controversial. While the fossil fuel industry supports it to reduce costs, critics argue it may facilitate the spread of invasive species, alter food-web dynamics, and release contaminants as structures corrode. In the US, the Bureau of Safety and Environmental Enforcement (BSEE) allows platforms to be 'topped' 85 feet below the surface, toppled in place, or towed to a reefing location.
• Decommissioning costs are substantially higher for offshore sites than onshore ones, increasing with water depth. BSEE estimates that plugging a shallow water offshore well costs around $150,000, while a deepwater subsea well can cost at least $21 million. Removing a floating rig in deep water can cost $30 million or more. Globally, offshore decommissioning costs were estimated by IHS Markit to be nearly $100 billion between 2021 and 2030.
• Oil and gas companies employ various strategies to avoid decommissioning liabilities, often transferring aging assets to smaller, under-resourced 'wildcat' operators who may later declare bankruptcy. Examples include Woodside transferring assets in the Timor Sea to Northern Oil and Gas Australia, and Venoco declaring bankruptcy after purchasing a California rig from Mobil. In Nigeria, multinationals like Shell and ExxonMobil are reported to offload assets to local companies that lack the means to cover cleanup costs.
• Regulatory and contractual loopholes further shift costs to the public. In the UK, tax relief is expected to cover half of the estimated £40 billion cost to dismantle North Sea rigs. In Guyana, a production-sharing agreement allows a consortium including ExxonMobil, Hess, and China National Offshore Oil Corporation to deduct future decommissioning costs as current operating expenses, which IEEFA estimates will cost Guyana GY$666.1 billion ($3.2 billion) in lost oil profits.
• In the US Gulf of Mexico, there is a significant gap in financial assurance and oversight. Over 32,000 of 55,000 abandoned wells have been ignored for decades. Carbon Tracker reported that in 2022, only 10 percent of estimated decommissioning costs for the Outer Continental Shelf (OCS) were secured by bonds, partly due to BOEM allowing third-party guarantees for companies without investment-grade credit ratings.

APA

Khatri, U., Steer, A., & Reisch, N. (2025). Offshore, Off-Limits. Center for International Environmental Law. https://www.ciel.org/wp-content/uploads/2025/03/Offshore-Off-Limits-Decommissioning.pdf

Chicago

Khatri, Upasana, Aidan Steer, and Nikki Reisch. Offshore, Off-Limits. Center for International Environmental Law, 2025. https://www.ciel.org/wp-content/uploads/2025/03/Offshore-Off-Limits-Decommissioning.pdf.

Wikipedia

{{cite report |last1=Khatri |first1=Upasana |last2=Steer |first2=Aidan |last3=Reisch |first3=Nikki |title=Offshore, Off-Limits |publisher=Center for International Environmental Law |date=2025 |url=https://www.ciel.org/wp-content/uploads/2025/03/Offshore-Off-Limits-Decommissioning.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{khatri2025offshore, author = {Khatri, Upasana and Steer, Aidan and Reisch, Nikki}, title = {{Offshore, Off-Limits}}, institution = {Center for International Environmental Law}, year = {2025}, url = {https://www.ciel.org/wp-content/uploads/2025/03/Offshore-Off-Limits-Decommissioning.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }