Trade Groups Seek Information on New US Decommissioning Rules

 

The four industry trade groups, the National Ocean Industries Association (NOIA), the Independent Petroleum Association of America (IPAA), the Louisiana Mid-Continent Oil and Gas Association (LMOGA), and the Gulf Economic Survival Team (GEST)—which collectively represent the entirety of the offshore oil and gas industry in the Gulf of Mexico – have joined together to press for immediate consideration of these FOIA requests and continue to urge BOEM, the Bureau of Safety and Environmental Enforcement (BSEE), and DOI to be responsive to industry concerns regarding its Notice to Lessees (NTL) No. 2016-N01, which changed the existing framework for securing decommissioning liability for the offshore oil and gas industry.  

 

This comes on the heels of NOIA’s recent FOIA request to BSEE seeking information related to the agency’s revised estimates for future well plugging and abandonment and platform decommissioning costs in the Gulf of Mexico, which varied wildly from actual and current decommissioning costs and BSEE’s own previous cost projections.

 

Today’s FOIA requests augment continued industry efforts to gain greater clarity into how BOEM and DOI determined that new financial assurance requirements were necessary and the considerations underpinning and informing their decision-making process.

 

Combined, these efforts represent the oil and gas industry’s commitment to understand how DOI and BOEM determined that changing the rules via the NTL guidance was appropriate rather than undertaking a formal rulemaking process, a much more transparent and equitable process. 

 

According to the groups, transparency typically afforded to companies under normal circumstances with NTLs has been at a premium with BOEM in this instance, as information central to the rationale of NTL No. 2016-N01 has not been released to the public or to companies attempting to meet the new financial assurance and bonding requirements.

 

The new rules are a solution in search of a problem, as the existing framework has protected taxpayers for decades, the groups said. Moreover, offshore operators made significant investments based on the existing regulatory framework and BOEM has now changed the rules in a manner that threatens to trigger the very risk it is trying to protect against, as these new bonding requirements will tie up capital that would otherwise be available for exploration, development, jobs, revenues to states and the federal government for actual plugging and abandonment work.