BOEM Finalizes Long-Awaited Overhaul of Offshore Oil and Gas Financial Assurance Regulations

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The Bureau of Ocean Energy Management (BOEM) announced its finalization of a rule substantially revising the financial assurance requirements applicable to offshore oil and gas operations. The final rule revises criteria for determining whether oil, gas, and sulfur lessees, right-of-use and easement (RUE) grant holders, and pipeline right-of-way (ROW) grant holders are required to provide supplemental financial assurance above the current minimum base bond levels. The final rule also codifies the federal government’s process for estimating decommissioning costs; clarifies bonding requirements for RUE and ROW grant holders; and removes restrictions on the use of third-party guarantees to fulfill financial assurance obligations. BOEM estimates that a total of $6.9 billion in new supplemental financial assurance will be required as a result of the final rule, down from $9.2 billion estimated in the proposed rule.