NOIA seeks transparency on decommissioningNews // October 11, 2016
The National Ocean Industries Association (NOIA) says it has sent a Freedom of Information Act (FOIA) request to the Bureau of Safety and Environmental Enforcement (BSEE) seeking information related to the agency’s recently revised estimates for future well plugging and abandonment and platform decommissioning costs in the Gulf of Mexico.
The FOIA request reinforces industry efforts to obtain information being used by BSEE to determine estimates of decommissioning costs. To date, that information has not been released to the public or to companies attempting to meet new financial assurance/bonding requirements being issued by the Bureau of Ocean Energy Management (BOEM).
The FOIA request seeks to assure transparency regarding the methodologies used to calculate BSEE’s revised estimates, the accuracy of which cannot be verified by industry without the supporting documentation.
“BSEE estimates, particularly for facilities in the shallow water, appear to vary wildly from current decommissioning costs,” said NOIA. “BSEE released the revised estimates with little explanation regarding the assumptions and data it relied upon, despite the fact the agency’s own projections for decommissioning liability in the shallow water Gulf are over 100 per cent higher than previous estimates from as recently as four months ago. In stark contrast, actual costs to perform decommissioning projects have decreased dramatically due to depressed commodity prices, better equipment and execution by operators, and a reduction of overall service costs in the Gulf,” NOIA claimed.
BOEM may be incorporating BSEE’s revised decommissioning estimates into its new financial assurance/bonding requirements for offshore operators. Thus, BSEE’s decommissioning assessments must provide realistic liability estimates for use by BOEM to establish bonding limits for each lease. “It is vital that underpinning formulas and information being used by BSEE are thoroughly vetted and verified,” said NOIA.
NOIA member companies affected by the revised estimates have made exhaustive inquiries to BSEE regarding the assumptions and methodologies supporting the revised estimates, but their inquiries have yet to garner any meaningful response from BSEE.