{"id":5897,"date":"2014-08-19T17:41:23","date_gmt":"2014-08-19T17:41:23","guid":{"rendered":"http:\/\/www.reefrelieffounders.com\/drilling\/?p=5897"},"modified":"2021-05-19T01:04:11","modified_gmt":"2021-05-19T01:04:11","slug":"ee-interior-to-update-decades-old-bonding-regs","status":"publish","type":"post","link":"https:\/\/www.reefrelieffounders.com\/drilling\/2014\/08\/19\/ee-interior-to-update-decades-old-bonding-regs\/","title":{"rendered":"E&E: Interior to update decades-old bonding regs"},"content":{"rendered":"
\u00a0<\/span><\/div>\n
Phil Taylor, E&E reporter<\/i><\/div>\n
Published: Monday, August 18, 2014<\/i><\/p>\n

The Interior Department late last week announced plans to update 20-
\nyear-old regulations that ensure taxpayers are not left on the hook for
\nthe cost of tearing down abandoned offshore oil and gas facilities.<\/p>\n

Interior’s Bureau of Ocean Energy Management said its existing bonding
\nregulations for oil and gas development have not kept pace with new
\nfacilities designed to drill in deeper waters and the growing cost to
\ndecommission them.<\/p>\n

The agency is giving the public until Oct. 20 to comment on best
\npractices for mitigating financial risks and whether current bonding
\nrequirements are adequate.<\/p>\n

“We would like to work with industry and others to determine how to
\nimprove our regulatory regime to better align with the realities of
\naging offshore infrastructure, hazard risks and increasing costs of
\ndecommissioning,” BOEM acting Director Walter Cruickshank said in a
\nstatement.<\/p>\n

BOEM said the costs of decommissioning offshore rigs have “dramatically
\nincreased” since the last bonding regulations were developed nearly a
\nquarter-century ago.<\/p>\n

At that time, the biggest financial risk the government faced in
\nselling oil and gas leases was nonpayment of rents and royalties,
\nnoncompliance with laws and regulations, and potential problems due to
\nbankruptcy, BOEM said.<\/p>\n

Currently, operators must pay a base bond of $50,000 per lease prior to
\ndevelopment. Bonds rise to $200,000 per lease for exploration and
\n$500,000 for production. Operators also can post bonds for an area of
\nleases, which start at $1 million for exploration and $3 million for
\nproduction.<\/p>\n

While BOEM may require additional financial assurances for
\ndecommissioning, the agency exercises this authority about 10 percent
\nof the time.<\/p>\n

Reducing financial risks is complicated by the 40- to 50-year life span
\nof many offshore drilling projects, BOEM said. New and unexpected
\ntechnological or financial challenges may necessitate new financial
\nassurances as projects evolve, it said.<\/p>\n

“BOEM is specifically interested in comments regarding the financial
\nrisks and liabilities associated with aging offshore infrastructure,
\ndeepwater decommissioning, subsea decommissioning, pipeline
\nabandonment, Arctic operations, and new technologies designed to
\naddress deepwater development or exploration and\/or development of
\nenergy or mineral resources in locations with unusually adverse
\nconditions,” the agency said in a Federal Register notice today.<\/p>\n

The new rulemaking will not address the costs and damages associated
\nwith oil spill financial responsibility, which are covered elsewhere in
\nBOEM’s regulations.<\/p>\n

As of the beginning of this year, Interior’s Bureau of Safety and
\nEnvironmental Enforcement counted 1,583 abandoned wells and 374 idle
\nplatforms waiting for decommissioning, a major drop from the 3,233
\nabandoned wells and 617 unused structures BOEM found in need of removal
\nin late 2010 (EnergyWire, March 12).<\/p>\n

Federal regulations require offshore energy companies to remove all
\nmaterial used for oil and gas extraction in the Gulf as soon as their
\nactivities are completed at lease sites.<\/p>\n

Interior last summer announced a new policy that will make it easier
\nfor oil and gas companies to allow obsolete rigs in the Gulf of Mexico
\nto be used as habitat for fish. It drew support from operators that
\nstand to save on the cost of decommissioning the hulking steel
\nstructures as well as recreational fishing groups that argue the rigs
\nprovide important hiding and hunting grounds for fish in the Gulf,
\nwhose muddy bottom is generally inhospitable to reefs (Greenwire, June
\n27, 2013).<\/p>\n

But some environmentalists and scientists argue companies have abused
\nInterior’s “rigs to reefs” program to avoid the cost of
\ndecommissioning, threatening to turn the Gulf into an oil and gas<\/p><\/div>\n

“junkyard” (Greenwire, July 31).<\/div>\n","protected":false},"excerpt":{"rendered":"

\u00a0 Phil Taylor, E&E reporter Published: Monday, August 18, 2014 The Interior Department late last week announced plans to update 20- year-old regulations that ensure taxpayers are not left on the hook for the cost of tearing down abandoned offshore oil and gas facilities. Interior’s Bureau of Ocean Energy Management said its existing bonding regulations … Continue reading E&E: Interior to update decades-old bonding regs<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[12,11],"tags":[],"class_list":["post-5897","post","type-post","status-publish","format-standard","hentry","category-gulf-of-mexico-clean-up","category-gulf-restoration"],"_links":{"self":[{"href":"https:\/\/www.reefrelieffounders.com\/drilling\/wp-json\/wp\/v2\/posts\/5897","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.reefrelieffounders.com\/drilling\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.reefrelieffounders.com\/drilling\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.reefrelieffounders.com\/drilling\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.reefrelieffounders.com\/drilling\/wp-json\/wp\/v2\/comments?post=5897"}],"version-history":[{"count":2,"href":"https:\/\/www.reefrelieffounders.com\/drilling\/wp-json\/wp\/v2\/posts\/5897\/revisions"}],"predecessor-version":[{"id":6095,"href":"https:\/\/www.reefrelieffounders.com\/drilling\/wp-json\/wp\/v2\/posts\/5897\/revisions\/6095"}],"wp:attachment":[{"href":"https:\/\/www.reefrelieffounders.com\/drilling\/wp-json\/wp\/v2\/media?parent=5897"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.reefrelieffounders.com\/drilling\/wp-json\/wp\/v2\/categories?post=5897"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.reefrelieffounders.com\/drilling\/wp-json\/wp\/v2\/tags?post=5897"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}