WASHINGTON, D.C. – The Bureau of Ocean Energy Management (BOEM) has announced that it will withdraw sole liability orders issued to outer continental shelf (OCS) oil and gas lease and grant holders in December, to allow time for the new administration to review the complex financial assurance program.
Additionally, the agency says that any implementation issues associated with those orders will be discussed as part of the ongoing, six-month interactive process it has initiated to gather input on other components of the Notice to Lessees (NTL) 2016-N01.
However, the BOEM said that it might may re-issue sole liability orders before the end of the six-month period if it determines that there is a substantial risk of nonperformance of the interest holder’s decommissioning liabilities.
In July 2016, after months of careful consideration and industry engagement, BOEM issued NTL 2016-N01, which detailed improved procedures to determine a lessee’s ability to carry out its lease obligations – primarily the decommissioning of OCS facilities – and to make informed decisions about whether lessees should furnish additional security.
In December 2016, BOEM issued Orders to Provide Additional Security for sole liability properties. Sole liability properties are leases, rights-of-way, or rights of use and easements for which the holder is the only liable party, i.e., there are no co-lessees, operating rights owners and/or other grant holders, and no prior interest holders liable to meet the lease and/or grant obligations.
On Jan. 6, 2017, BOEM announced that it wasextending the implementation timeline for NTL 2016-01 by an additional six months as to leases, rights-of-way and rights of use and easement for which there are co-lessees and/or predecessors in interest, except in circumstances in which BOEM determines there is a substantial risk of nonperformance of the interest holder’s decommissioning liabilities. The agency said that the extension allows an opportunity for additional time and conversation regarding issues that arise in the context of non-sole liability properties.
More information about the NTL can be found at: http://www.boem.gov/Risk-Management/.