BOEM updating financial-assurance rules on offshore oil and gas leases

The Bureau of Ocean Energy Management (BOEM) recently issued a Notice to Lessees and Operators (NTL) detailing how the bureau plans to update its financial assurance and risk-management requirements for companies holding oil and gas leases in federal waters to ensure lessees can cover the decommissioning costs of their facilities and that taxpayers will never foot the bill.

“BOEM’s goal is to modernize its approach to risk management in a way that better aligns with the realities of the industry and protects the U.S. government and taxpayers from risk in a manner that isn’t overly burdensome to the oil and gas industry,” BOEM Director Abigail Ross Hopper said. “By implementing these changes, we will create comprehensive procedures to decrease risks to taxpayers while providing industry flexibility to negotiate adaptive solutions and use tailored financial plans to meet their financial assurance requirements.

The updated requirements include improved procedures to determine whether lessees can fulfill the obligations of their leases, all of which include requirements to remove all facilities and return sites to their original state.

 

“BOEM’s financial-assurance regulations need to take into account current industry practices,” Hopper said. “We must ensure the U.S. taxpayer never pays to decommission an OCS facility and that the environment is protected. Managing risk in the early stages of a lease will provide lessees negotiated solutions that improve business certainty and leverage existing company strengths.”