In June 2023, the Bureau of Ocean Energy Management proposed a rule that would require stricter financial assurance standards for oil companies operating in the Outer Continental Shelf.
This costly rule became final on April 15, 2024, but in the 10 months since its initial proposal, BOEM did nothing to alleviate concerns for smaller companies that comprise of 76 percent of oil and gas operators in the Gulf.
The situation threatens an estimated 36,000 jobs, more than $570 million in federal government royalties, and $9.9 billion from our GDP. Records obtained via the Freedom of Information Act show private meetings between Interior officials and representatives of the major oil companies as they cooperated on this rule.
Mega oil companies will have little problem with the rule's new credit rating requirement.
Small oil companies will now have to spend, conservatively, $379 million per year on surety bonds, but some estimates are closer to $800 million.
Against a conservative estimate of roughly $25 billion in decommissioning costs borne solely by private companies over the years, and the contribution of billions each year from all oil and gas royalties, the public is left to wonder whether this rule is a solution in search of a problem.
The new costs to small oil businesses are for naught - unless the motivation is to make energy more expensive and drive out more companies.
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