5.7 Oil and Gas
The oil and gas industry is subject to retirement obligations across the entire industry value chain,
from the upstream extraction of hydrocarbons to the downstream processing and ultimately the retail
distribution of refined products. Retirement obligations in the industry include those associated with the
following systems and facilities:
- Upstream:
- Oil wells.
- Saltwater disposal wells.
- Well pads — including tank batteries, ponds, and other improvements.
- Midstream:
- Gathering systems.
- Transmission lines.
- Pressurization systems.
- Downstream:
- Refineries.
- Liquefied natural gas terminals.
- Shipping terminals.
- Retail:
- Underground storage tanks.
- Aboveground storage tanks.
- Offshore:
- Pipelines.
- Platforms.
- Wells.
With the assets above, regulations or lease agreements may require the abandonment in place or
removal of the structure at the end of the useful life of the asset. Some midstream (pipeline) assets
are considered to operate in perpetuity on the basis of the expectation of repair and maintenance
rather than removal and retirement. On the retail side, underground storage tanks must be removed,
and some level of soil remediation is often required as a result of unintentional leaks. Because
of complexities of working offshore along with increased regulatory scrutiny, the cost of offshore
decommissioning is often significantly higher than that of similar onshore activities.