The Interior Department’s Bureau of Ocean Energy Management (BOEM) has finally issued its promised Notice to Lessees (NTL) No. 2016-N01, “Requiring Additional Security,” which supersedes NTL No. 2008-N07, “Supplemental Bond Procedures.” The new NTL, with multiple linked attachments, becomes effective Sept. 12, 2016. The new NTL largely concerns a lessee’s ability to carry out its obligation to decommission wells, platforms and pipelines on oil and gas leases in all regions of the Outer Continental Shelf (OCS). Lessees are already assessing how these new requirements will impact their OCS operations.
In many respects, the new NTL mirrors the Proposed Guidance advertised by the BOEM on Sept. 22, 2015. Despite inviting comment from stakeholders, the final guidelines fail to take into account several of the fundamental concerns expressed in comments submitted by companies and trade groups directly affected by the financial assurance requirements. As a result, the new NTL is subject to challenge on at least three bases. Continue Reading