New offshore decommissioning requirements coming

HOUSTON — New regulations governing the decommissioning of old offshore oil infrastructure are on the horizon, a top Obama administration official said Tuesday.

The Bureau of Ocean Energy Management will issue an “advanced notice of proposed rulemaking” tackling the issue this summer, said Tommy Beaudreau, the former director of the agency.

Although Beaudreau did not give specifics during a presentation at the Offshore Technology Conference, the coming regulations are expected to deal with concerns that existing bonding requirements for oil and gas companies are insufficient in an era of ultra-deep exploration far from the coast.

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The supplemental bonding requirements are meant to ensure companies meet their obligations for decommissioning offshore oil and gas facilities, including pipelines and platforms.

Beaudreau said the Interior Department would active seeking input from stakeholders — including industry representatives — on the best way to deal with decommissioning and bonding concerns.

“This will be an open, transparent process (on) how we meet these challenges around aging infrastructure and decommissioning,” said Beaudreau, who is now chief of staff to Interior Secretary Sally Jewell.

The issue is a live one as some of the oldest deep-water wells in the Gulf of Mexico reach the end of their lives and companies look to dismantle the operations — often using the same rigs and equipment that command high day rates working on new wells with the promise of a big payoff.

“I know in an environment where costs are always a key concern for you — including rising operating costs — conversations around decommissioning costs can be uncomfortable and maybe even a little painful,” Beaudreau told OTC. “But it’s something we all need to own up to and face up to.”

The advanced notice of proposed rule making is the very beginning step in a long process of writing new regulations; it actively invites public comment on the shape of coming rules. Beaudreau said BOEM would essentially be inviting stakeolders “to provide us feedback on the types of issues we need to be thinking about in the context of decommissioning.”

New bonding requirements could set different levels for operators, depending on the type and number of projects in their portfolios, as well as their size.

Some operators also want more time to decommission offshore equipment.

Randall Luthi, the head of the National Ocean Industries Association and a former federal drilling regulator, said any changes should embrace rigs-to-reefs programs designed to allow old structures to live new lives as a habitat for marine life.