Texas, Louisiana and Mississippi on Monday sued the U.S. government to block the Biden administration’s proposed rule that would require the offshore oil and gas industry to provide nearly $7-billion in financial assurances to cover costs of dismantling old infrastructure.
The BOEM did not immediately respond for comment on the suit. When the rule was announced in April, the Department of the Interior said it was “to protect taxpayers from covering costs that should be borne by the oil and gas industry when offshore platforms require decommissioning.” “This is a really egregious direct assault on intermediate level producers of oil and gas, and that affects a lot of business in our state,” Murrill told Reuters in an interview.
“This is a significant cost to our industry that would really put a lot of people out of business,” said Mike Minarovic, CEO of Arena Offshore, which operates more than 100 platforms in the Gulf of Mexico that produce some 50,000 barrels per day of oil equivalent The new rule could cost Arena Offshore some $800-850 million in surety bonds, plus the costs of the bonds themselves, Minarovic said, citing government estimates of decommissioning cost.
The BOEM held around $3.5-billion in supplemental bonds to cover between $40-billion and $70-billion in total estimated decommissioning costs.