Offshore Oil and Gas Resources: Information on Infrastructure Decommissioning and Federal Financial Risk

Oil and gas produced on federal leases in the Gulf of Mexico (Gulf) are important to the U.S. energy supply. When oil and gas infrastructure is no longer in use, the Department of the Interior (Interior) requires lessees to decommission it so that it does not pose safety and environmental hazards. Decommissioning can include plugging wells and removing platforms, which can cost millions of dollars. Interior requires lessees to provide bonds or other financial assurances to demonstrate that they can pay these costs; however, if lessees do not fulfill their decommissioning obligations, the federal government may be liable for these costs. This statement by Frank Rusco, Director, Natural Resources and Environment, describes offshore oil and gas infrastructure in the Gulf and Interior’s requirements and procedures for overseeing decommissioning, and the risks posed by its financial assurances procedures. This statement is based on GAO-16-40 from December 2015. For that report, the Government Accountability Office (GAO) reviewed agency regulations and procedures and interviewed officials from Interior, credit rating agencies, academia, and trade associations. GAO also followed up on the implementation status of the report’s recommendations. Among other recommendations, GAO recommended in GAO-16-40 that Interior complete plans to revise its financial assurance procedures to address risks posed by these procedures. Interior concurred with GAO’s recommendations and has taken or described planned actions to address the recommendations, which GAO will continue to monitor.

• Record URL:
  http://www.gao.gov/assets/690/684646.pdf
• 
• Summary URL:
  http://www.gao.gov/assets/690/684640.pdf
• Corporate Authors:

  U.S. Government Accountability Office

  441 G Street, NW
  Washington, DC  United States  20548
• Authors:
  • Rusco, Frank
• Publication Date: 2017-5-17

Language

• English

Media Info

• Media Type: Digital/other
• Features: Figures; References; Tables;
• Pagination: 27p

Subject/Index Terms

• TRT Terms: Costs; Offshore structures; Oil wells; Oversight; Recommendations; Regulations; Risk analysis
• Identifier Terms: U.S. Department of the Interior
• Uncontrolled Terms: Decommissioning
• Geographic Terms: Gulf of Mexico
• Subject Areas: Administration and Management; Finance; Marine Transportation; Terminals and Facilities;

Filing Info

• Accession Number: 01637036
• Record Type: Publication
• Report/Paper Numbers: GAO-17-642T
• Files: TRIS
• Created Date: May 31 2017 2:17PM