Opportune, a leading global business advisory firm, announced today the release of a cost-benefit analysis assessing how proposed additional bonding requirements may affect both the U.S. taxpayer and independent oil and gas lessees in the Gulf of Mexico’s outer continental shelf (OCS).
One June 29, 2023, the Bureau of Ocean Energy Management (BOEM) proposed a new rule (the Proposed Rule) to change the evaluation criteria for OCS financial assurance requirements and the provisions under which additional bonds and third-party guarantees may be issued or cancelled. Opportune shows within its revised study (the Opportune 2023 Study) how the perceived benefits of the Proposed Rule are wholly disproportionate to any potential risk. This study reiterates how the current rule and offshore industry practices have adequately protected U.S. taxpayers for decades. Regardless of the genuine intent of all interested parties, further constraints on oil and gas capital driven by the Proposed Rule are the greatest threat to the U.S. taxpayer.
“Federal regulations have always required previous owners to remain responsible for the decommissioning costs of wells, pipelines, and other facilities. The current system works, and the underlying risks are miniscule,” said Josh Sherman, Partner of Opportune’s Complex Financial Reporting practice. “Rather than imposing additional bonding requirements, BOEM has an opportunity to improve existing processes through better valuation techniques, using lessees’ audited financial data, and modernizing financial assurance vehicles that can further protect the U.S. taxpayer.”
The Opportune 2023 Study has been conducted to independently calculate the OCS plugging and abandonment (P&A) liability, assess the risk such liability poses to the U.S. taxpayer, and perform a cost-benefit analysis of how the Proposed Rule would economically affect the offshore oil and gas industry (the Industry), Gulf Coast and United States. This study was performed…