The Trump administration is changing another Biden-era offshore oil and gas industry rule regarding assurances for decommissioning of old infrastructure.
The US Department of the Interior stated that it would be revising the Risk Management and Financial Assurance for OCS Lease and Grant Obligations Rule from 2024, albeit with almost no details on how it intends to do so.
The previous administration’s rule was estimated to increase financial assurance requirements for offshore oil and gas operators by $6.9 billion in additional bonding, costing businesses an additional $665 million in premiums each year. This was intended to mitigate taxpayer risk if a driller failed to cover the dismantling costs of equipment.
Smaller companies did claim that the Biden rule limited their ability to operate and invest in projects in the Gulf of Mexico. The previous administration’s rule even faced legal challenges from three oil-producing states, however, a federal judge refused to block the rule earlier this year.
Interior Secretary Doug Burgum claimed that the revision of the rule would allow energy producers to channel their capital towards future leasing, exploration, and production.
“Cutting red tape will level the playing field and allow American companies to make investments that strengthen domestic energy security and benefit the Gulf of America states and their communities,” Burnum stated.
The Department of the Interior expects to finalise the rule in 2025 following public comments on its proposal once it becomes available.
The change to this rule comes some two months after the Republican party used the Congressional Review Act to repeal a requirement that new oil and gas leaseholders on the US outer continental shelf submit an archaeological report before they start offshore drilling production.
But the announcement about the decom rule change occurred only days after the implementation of new parameters for downhole commingling in the Paleogene reservoirs, expanding the allowable pressure differential from 200 psi to 1,500 psi.
