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  1. BOEM notifies offshore leaseholders of decommissioning rule changes

    The US Bureau of Ocean Energy Management notified federal offshore oil and gas leaseholders that it is updating financial assurance and risk management requirements to ensure that taxpayers never have to pay for decommissioning and removing a company’s offshore production facilities. Officials from two trade associations quickly criticized the agency’s action. National Ocean Industries Association Pres. Randall B. Luthi said NOIA is reviewing the July 14 notice. He acknowledged that the notice’s provisions followed extensive discussions between BOEM and federal offshore lessees, but questioned whether they were necessary and suggested they possibly might be counterproductive. An Independent Petroleum Association of America official warned that the new requirements could push many smaller producers off the US Outer Continental Shelf. “It’s widely known that offshore development is an economically challenging business,” IPAA Senior Vice-Pres. for Government Relations and Political Affairs Daniel T. Naatz said. “[BOEM’s] new mandatory financial requirements will force each lease owner to fully insure upfront all of its exploration wells, despite the fact that these wells may never be drilled.” The US Department of the Interior agency said that its Notice to Lessees and Operators (NTL) details improved procedures to determine a lessee’s ability to carry out its lease obligations—primarily the decommissioning of OCS facilities—and whether to require lessees to furnish additional financial assurance. The new requirements take effect on Sept. 12, it indicated. They replace those in NTL No. 2008-N07, and provide updated procedures for requiring additional financial security for oil and gas or sulfur leases. All federal OCS leases require that when decommissioning, a company must remove all facilities and restore the site to its pre-lease state, BOEM said. Due in part to the oil and gas industry’s move into deeper Gulf of Mexico waters, decommissioning costs have risen significantly, it explained. Liabilities around $40 billion As existing infrastructure ages, some larger companies are transferring older facilities to smaller or less-experienced firms, it said. BOEM estimates that current routine decommissioning liabilities on the federal OCS are $40 billion. BOEM said the revised NTL will provide updated criteria for determining a lessee’s ability to self-insure its OCS liabilities based on the lessee’s financial capacity and financial strength. It also provides new methods and additional flexibility for lessees to meet their additional financial security requirements through a tailored plan. The guidance and clarification will apply to all BOEM regions and planning areas. In addition to leaseholders, the NTL also applies to right of use and easement holders, the agency said. It said it would work with leaseholders to develop an approach that works best for the government and for each company while focusing on the highest-risk properties first—namely, properties for which there is only one leaseholder responsible for decommissioning. Those leaseholders will have to comply within 60 days from the date of an order requiring additional financial security. BOEM said for all other holdings, lessees will have 120 days from the date they receive an order to provide additional security, if required. Alternatively, lessees can provide a tailored financial plan to BOEM, which will permit the use of forms of financial security other than surety bonds and pledges of treasury securities and allow companies to phase-in funding of the additional security. The updated guidance is within the parameters of BOEM’s existing regulations so it was not necessary to propose a new rule, the agency noted. Subject of extensive dialogue Responding to BOEM’s announcement, NOIA’s Luthi said the association was reviewing the financial assurance and risk management requirements in BOEM’s NTL, which has been the subject of extensive dialogue between the federal offshore leasing regulator and the oil and gas industry for a long period. “Existing laws and regulations allow federal regulators the flexibility to cooperate with operators to ensure that decommissioning costs are adequately covered, and we remain concerned that this is largely a solution in search of a problem, as US taxpayers have never been left on the hook for offshore decommissioning costs,” Luthi said. NOIA urges the federal regulators to recognize that private agreements between companies can fully address potential liability, he said. “When a company purchases a lease from another company, funds or private bonds are a likely part of the purchase and transfer agreement, making additional supplemental bonding potentially unnecessary,” he explained. “Any additional bonding required by the regulator could create a lose-lose scenario by reducing the amount of capital a company could use to develop a successful well, and thereby decreasing the potential of future revenue to the federal government by what could be millions of dollars. “This NTL could cause some of the very financial instability it purports to protect against,” Luthi warned. IPAA’s Naatz said the requirements unfairly place the financial burden on independent producers, removing operators’ flexibility and making it much harder for these smaller offshore independents to stay in business. “The new financial requirements will double the cost of insurance premiums for offshore companies and tie up much-needed capital that otherwise would be available for development, American jobs, and revenue to states and the federal government,” Naatz said. Contact Nick Snow at nicks@pennwell.com .

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    Thu, 14 Jul 2016

  2. Virginia Hearing Examiner Endorses Doswell's 340-MW Gas Peaker Project

    A Hearing Examiner at the Virginia State Corporation Commission issued a May 3 report recommending approval of a December 2015 application from Doswell Limited Partnership to construct a 340-MW facility in Hanover County, Virginia.

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    Wed, 4 May 2016

  3. As the Us Heads to Climate Talks, It Seeks a Plan to 'Trust But Verify'

    The U.S., like many other countries, has been participating in negotiations in the lead-up to the United Nations' conference on climate change in Paris.

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    Tue, 10 Nov 2015

  4. Illinois EPA OKs air permit for Joliet coal-to-gas conversion

    Five boilers at three units to be switched to natural gas for clean-air purposes

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    Wed, 21 Oct 2015

  1. Implementation of rules and regulations next challenge for Mexican O&G reform

    Online Articles

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    Fri, 24 Jan 2014

  2. Economic growth seen as key determinant for future energy use

    With a growing economy, U.S. energy demand is projected to increase 32 percent from 1999 to 2020, reaching 127 quadrillion Btu, assuming no changes in federal laws and regulations , according to alternative forecasts released today by the Energy Information Administration (EIA).

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    Wed, 3 Jan 2001

  3. The 25 Best Keywords for Your Job Search

    Most resumes end up in a database of some sort. Learn 25 of the best keyword categories to help your resume get noticed and you in front of the right people, for the right job

    Online Articles

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    Thu, 11 Dec 2014

  4. Sinovel Wind’s Loss Widens on Fewer Orders, Asset Impairment

    Sinovel Wind Group Co., once China’s biggest supplier of wind turbines, said its loss more than doubled in the first half as orders fell and asset-impairment losses increased. The net loss was 864.6 million yuan ($135 million) in the first six months ended June 30, compared with a revised net loss ...

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    Fri, 28 Aug 2015

  5. EIA: US power sector CO2 emissions expected to increase through 2040

    CO2 emissions associated with electricity generation have fallen from 2005 levels, but are projected to increase through 2040, based on analysis from the EIA

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    Fri, 15 May 2015

  6. UN climate chief says technology has changed carbon politics

    Technological advances that have reduced prices and improved efficiency of renewable energy have helped transform the politics around climate change since 2009 when an attempt to forge a global deal on reducing greenhouse gas emissions failed, the U.N. climate chief said Thursday.

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    Thu, 7 May 2015

  7. EIA: Gas, renewable energy projected to provide larger shares of generation

    The U.S. Energy Information Administration’s new brief looks at how natural gas and renewable energy will account for a bigger share of future electricity generation

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    Mon, 4 May 2015

  8. EIA confirms rise of natural gas, renewable energy

    Wind and solar generation account for nearly two-thirds of the growth in renewable generation 

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    Mon, 4 May 2015

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