Nov 17, 2014 IPAA Submits Comments on BOEM’s Advanced Notice of Proposed Rulemaking: ‘Over Bonding Must End.’
Washington, D.C. – Today, the Independent Petroleum Association of America (IPAA) submitted comments to the Bureau of Ocean Energy Management (BOEM) in response to its effort to update the self-insurance program on risk management for the Outer Continental Shelf (OCS).
In its comments, IPAA maintains that BOEM and its sister agency, the Bureau of Safety and Environmental Enforcement (BSEE), have acted in the last four years to tie up more and more company capital in bonds the government does not need or use. While IPAA members agree that there is a role for government-required bonds to assure production facilities are removed, they also agree that the era of overbonding must end. To bring that era to a close, IPAA recommends eight steps to assure that bonds cover actual and imminent removal costs, not multiplicative and speculative removal costs.
Barry Russell, President and CEO of IPAA, released the following statement after filing the comments:
“Independent oil and natural gas producers play a unique and critical function in the Outer Continental Shelf, developing 95 percent of America’s oil and gas wells and reinvesting billions of dollars back into the American economy. The current system for assuring that companies have adequate capital to remove offshore production facilities is broken and redundant. The effect of this action has fallen disproportionately on independent producers. We encourage BOEM to work with independent producers to rationalize its approach to security, avoid disincentives to offshore investment, and protect the role of independent producers in the OCS.”
Click here to read IPAA’s full comments submitted to BOEM on the Advanced Notice of Proposed Rulemaking proposal.