US DOI to revise the offshore financial assurance rule

The US Department of the Interior has announced plans to revise the Bureau of Ocean Energy Management's 2024 Risk Management and Financial Assurance for Outer Continental Shelf (OCS) Lease and Grant Obligations Rule.

The updated rule aims to align with the regulatory framework proposed by the Trump administration in 2020, significantly reducing costs and regulatory burdens for oil and gas producers in the Gulf of America.

The revision intends to free up billions of dollars for American producers, enabling them to lease, explore, drill, and produce oil and gas while ensuring that American taxpayers are protected from high-risk decommission liabilities.

This move reflects the Department's commitment to bolstering domestic energy production, safeguarding American jobs, and easing regulatory constraints on the oil and gas industry.

Department of the Interior Secretary Doug Burgum said: “This revision will enable our nation’s energy producers to redirect their capital toward future leasing, exploration, and production all while financially protecting the American taxpayer.

“Cutting red tape will level the playing field and allow American companies to make investments that strengthen domestic energy security and benefit the Gulf of America states and their communities.”

The previous rule, implemented under the Biden administration, was projected to heighten financial assurance requirements for offshore operators by an additional $6.9bn in bonding, with businesses incurring an extra $665m in premiums annually.

This has restricted numerous companies in the Gulf of America from investing in energy development projects.

Despite the proposed changes, the Bureau of Ocean Energy Management will maintain the requirement for all operators on the OCS to provide financial assurance for their decommissioning responsibilities.

The Trump administration's stance ensures that the industry, rather than American taxpayers, remains accountable for stewardship as the Administration seeks a more balanced regulatory approach.

The Department is expected to finalise the new rule in 2025 and will invite public commentary on the proposal.

Additionally, last month, the Department has announced a policy update that could significantly boost offshore oil production in the Gulf of Mexico.

This includes revised parameters from the Bureau of Safety and Environmental Enforcement for Downhole Commingling in the Paleogene (Wilcox) reservoirs, increasing the allowable pressure differential from 200psi to 1,500psi.

This decision is in line with President Donald Trump's Executive Order to unleash US energy and has been made following extensive industry consultation.