BOEM launches consultation to modernize offshore risk and financial assurance rules
US regulator BOEM plans to update its 20-year-old rules on risk management and financial assurance governing the offshore oil and gas industry to keep pace with the move into deep water, increased decommissioning costs, and changing industry practice.
The US Bureau of Ocean Energy Management (BOEM) on Monday issued an advanced notice of proposed rulemaking on risk management, financial assurance, and loss prevention to seek public input as it considers modernizing its risk management program and bonding regulations for offshore oil and gas operations on the Outer Continental Shelf (OCS).
This first step initiates a dialogue about BOEM’s existing regulations, which are approximately 20 years old and have not kept pace with offshore infrastructure developments including deepwater operations, current industry practices, and the growing costs of decommissioning.
“We would like to work with industry and others to determine how to improve our regulatory regime to better align with the realities of ageing offshore infrastructure, hazard risks, and increasing costs of decommissioning,” said BOEM acting director, Walter D. Cruickshank.
“Today’s action is an important first step in initiating a dialogue on how to best enhance our risk management program to better match current practices, with the ultimate goal of ensuring that industry meets its decommissioning responsibilities and the burden of decommissioning a facility on the Outer Continental Shelf does not fall to taxpayers.”
Existing regulations require lessees on the OCS to provide bonds or other alternative forms of financial assurance to cover current and future operations, such as decommissioning oil and gas infrastructure.
Since the current bonding requirements were set nearly a quarter of a century ago, offshore operations have changed significantly, such as increased advancements in the scale and complexity of deepwater and subsea operations, and the costs of decommissioning have dramatically increased.
In light of this, BOEM has decided to update its requirements and develop a comprehensive program to assist in identifying, prioritizing, and managing the risks.
BOEM says it is seeking stakeholder comments specifically on the bonding and financial assurance program for BOEM’s offshore oil and gas program, but also for offshore renewable energy and hard minerals.
The notice also solicits comments on best practices to mitigate risks, as well as whether the current forms of financial assurance are adequate and appropriate.