Member Article

Under longstanding regulations governing its risk management program, Bureau of Ocean Energy Management (“BOEM”) may require an offshore oil and gas lessee or operator operating on the Outer Continental Shelf (“OCS”) to provide additional security, over and above standard security requirements, if BOEM determines that the security is necessary to ensure compliance with OCS lease obligations. On September 22, 2015, BOEM issued proposed “guidance” that would significantly revise its current procedures, primarily in connection with plugging, abandoning and decommissioning OCS wells, platforms and other facilities. While BOEM described its goal as modernizing its financial assurance regulations to match current industry practices, it also expressly stated the intent to ensure that U.S. taxpayers never pay to decommission an OCS facility and that the environment is protected. The proposed guidance significantly expands and tightens the effect of the criteria by which BOEM may determine and require supplemental security for these decommissioning obligations. Without clarifying whether the proposed guidance is formally subject to public notice and comment, BOEM did state that the proposed guidance would be posted on its website “for a 45 day review” and that it plans to hold a workshop on October 9 in Houston to field questions and discuss the proposed guidance with interested participants.

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