November 29, 2011

FOR SALE: Well-maintained 20-room platform. Panoramic sea views and a Heli deck.

Norway’s most popular online classifieds recently alerted us to the following opportunity:

"Well-maintained 20-room platform for sale. Panoramic sea views and a Heli deck."

If it is not purchased, the North Sea drilling platform will have to be decommissioned and disassembled by the current owners. This is because the 1992 OSPAR Convention–which guides international law on the protection of the marine environment in the North-East Atlantic, and classifies unproductive, abandoned rigs as ocean pollution. The disassembling process is full of uncertainty, but the global consulting firm Accenture recently estimated the cost of decommissioning various platforms at somewhere between $38 to 48 billion over the next thirty years.

Retrofitting drilling platforms has been discussed in the context of seasteading before (see here and here), and while the idea is not entirely without its merits, it may not be an ideal prospect for early seasteading businesses.

First, the pros:
    •    Oil rigs are large, existing structures whose initial fixed costs have already been covered
    •    High maintenance and decommissioning costs encourage owners to sell at a low cost
    •    Many North Sea platforms are outside any country’s jurisdiction, but are still near consumers with relatively high incomes.

Next, the cons:
    •    The savings from initial fixed costs are quickly swamped by high maintenance costs
    •    Although the Finnish ad states that the platform for sale "is built with a timeless and durable steel chassis," most oil rigs are only built to last for the productive lifetime of the well beneath them. This makes them less than ideal for achieving The Seasteading Institute’s goal of permanent autonomous communities on the ocean.
    •    There is an additional permitting process required to authorize rigs for purposes other than those for which they were originally constructed

The platform in the ad is just one of over 200 ocean installations that are expected to be decommissioned over the next decade. As more platforms become unproductive, rig owners will have to compete over buyers, driving the price of rigs down, possibly until sellers must pay money just find to buyers who are willing to keep the platforms productive in a non-drilling capacity.

The question is, How can new owners put the structures to productive use? Current uses include base-stations for oceanography and meteorology research, and a bare-bones lodging for scuba divers, but some have suggested that platforms could also be used as alternative energy generators, waste disposal centers, or even luxury hotels. A poster in our forums suggested a rig could be used as a temporary seamount on which building equipment could be housed and operated while a larger floating structure is built around it.

While we don’t anticipate any seasteaders jumping on this particular opportunity, we would certainly be pleasantly surprised if an entrepreneur with a good idea took advantage of it!