For Immediate Release: Thursday, July 14, 2016
Contact: Nicolette Nye, (202) 465-8463, email@example.com
NOIA Reviewing New Financial Assurance and Risk Management Requirements
Washington, D.C. – NOIA President Randall Luthi issued the following statement on the financial assurance and risk management requirements announced today by the Bureau of Ocean Energy Management:
“We are carefully reviewing the financial assurance and risk management requirements in BOEM’s Notice to Lessees, which has been long in the making and the subject of extensive dialogue between the regulators and the oil and natural gas industry.
“Existing laws and regulations allow federal regulators the flexibility to cooperate with operators to ensure that decommissioning costs are adequately covered, and we remain concerned that this is largely a solution in search of a problem, as U.S. taxpayers have never been left on the hook for offshore decommissioning costs. We urge the regulators to recognize that private agreements between companies can fully address potential liability. When a company purchases a lease from another company, funds or private bonds are a likely part of the purchase and transfer agreement, making additional supplemental bonding potentially unnecessary. Any additional bonding required by the regulator could create a lose-lose scenario by reducing the amount of capital a company could use to develop a successful well, and thereby decreasing the potential of future revenue to the federal government by what could be millions of dollars. This NTL could cause some of the very financial instability it purports to protect against.
“A one-size–fits-all approach to financial assurance and risk management is an unrealistic solution because each company is different and each project is unique depending upon stage of development, project partners and previous lease-holders. NOIA supports the use of flexible tailored plans in establishing a solution that is both workable and enforceable. We will continue to work with the regulators to ensure that financial assurance and risk management requirements are sensible, reflect market conditions, and address the perceived risk of not being able to meet decommissioning requirements.”
NOIA is the only national trade association representing all segments of the offshore industry with an interest in the exploration and production of both traditional and renewable energy resources on the nation’s outer continental shelf. NOIA’s mission is to secure reliable access and a fair regulatory and economic environment for the companies that develop the nation’s valuable offshore energy resources in an environmentally responsible manner. The NOIA membership comprises about 300 companies engaged in business activities ranging from producing to drilling, engineering to marine and air transport, offshore construction to equipment manufacture and supply, telecommunications to finance and insurance, and renewable energy.