tangent4ronpaul
09-15-2010, 06:43 PM
http://www.ft.com/cms/s/0/ed82c35a-c10b-11df-afe0-00144feab49a.html
The US government is requiring oil and gas companies in the Gulf of Mexico to promptly set permanent plugs in nearly 3,500 non-producing wells.
Under the new rules announced on Wednesday, the companies also must dismantle about 650 oil and gas production platforms if they are no longer being used for exploration or production.
Until now, these companies waited sometimes years after the infrastructure had been out of use to properly seal and dismantle their equipment.
But the Interior Department is mandating that any well that has not been used during the past five years for exploration or production must be plugged and associated equipment must be decommissioned if no longer involved with exploration or production.
They have 120 days to submit a company-wide plan for decommissioning these facilities and wells.
But authorities said the industry had informed companies they would have three years to plug wells on active leases that meet the criteria for being no longer useful for operation and five years to remove platforms meeting the established criteria.
The new rules will force companies to spend millions of dollars on decommissioning far sooner than they might otherwise have done. But companies said they thought the process would go slower than some might fear, given the need for permits and regulatory oversight throughout.
The American Petroleum Institute, the industry’s national trade group, said, for most operators, compliance will not be an issue. Those likely to be hardest hit are companies that have a number of older platforms, which will likely have more wells or platforms meeting the criteria.
This will be the small, independents that already are under pressure from rising insurance and regulatory compliance costs in the gulf following BP’s Macondo well explosion.
Also, shortening the time frame could mean an overwhelming amount of work at one time, those in the industry caution, which could raise the potential for a higher per centage of accidents.
The rules are part of efforts by the Interior Department to tighten controls on the industry following the BP accident, which killed 11, injured 17 and resulted in the world’s biggest accidental oil spill.
The non-producing wells have until now been stopped up with a subsurface safety valve. But the Interior Department said it had placed the industry on notice that it will be held to the “highest standards” and this notice reiterated that mandate.
“As infrastrustructure continues to age, the risk of damage increases,’’ added Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement. “That risk increases substantially during storm season.’’
He said the new rules, effective this coming October 15 would substantially reduce such hazards.
Until now, oil and gas producers have gotten by with insisting certain platforms, wells and pipelines that have not been plugged and are no longer producing, still added value to the lease or might one day be used to support other, active wells in the area or facilities within the same lease area.
They were reluctant to plug the wells and remove the infrastructure until they met the final decommissioning regulatory requirement, which is within one year after the lease expires or terminates. That can sometimes be years after the infrastructure has been out of use.
The US government is requiring oil and gas companies in the Gulf of Mexico to promptly set permanent plugs in nearly 3,500 non-producing wells.
Under the new rules announced on Wednesday, the companies also must dismantle about 650 oil and gas production platforms if they are no longer being used for exploration or production.
Until now, these companies waited sometimes years after the infrastructure had been out of use to properly seal and dismantle their equipment.
But the Interior Department is mandating that any well that has not been used during the past five years for exploration or production must be plugged and associated equipment must be decommissioned if no longer involved with exploration or production.
They have 120 days to submit a company-wide plan for decommissioning these facilities and wells.
But authorities said the industry had informed companies they would have three years to plug wells on active leases that meet the criteria for being no longer useful for operation and five years to remove platforms meeting the established criteria.
The new rules will force companies to spend millions of dollars on decommissioning far sooner than they might otherwise have done. But companies said they thought the process would go slower than some might fear, given the need for permits and regulatory oversight throughout.
The American Petroleum Institute, the industry’s national trade group, said, for most operators, compliance will not be an issue. Those likely to be hardest hit are companies that have a number of older platforms, which will likely have more wells or platforms meeting the criteria.
This will be the small, independents that already are under pressure from rising insurance and regulatory compliance costs in the gulf following BP’s Macondo well explosion.
Also, shortening the time frame could mean an overwhelming amount of work at one time, those in the industry caution, which could raise the potential for a higher per centage of accidents.
The rules are part of efforts by the Interior Department to tighten controls on the industry following the BP accident, which killed 11, injured 17 and resulted in the world’s biggest accidental oil spill.
The non-producing wells have until now been stopped up with a subsurface safety valve. But the Interior Department said it had placed the industry on notice that it will be held to the “highest standards” and this notice reiterated that mandate.
“As infrastrustructure continues to age, the risk of damage increases,’’ added Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement. “That risk increases substantially during storm season.’’
He said the new rules, effective this coming October 15 would substantially reduce such hazards.
Until now, oil and gas producers have gotten by with insisting certain platforms, wells and pipelines that have not been plugged and are no longer producing, still added value to the lease or might one day be used to support other, active wells in the area or facilities within the same lease area.
They were reluctant to plug the wells and remove the infrastructure until they met the final decommissioning regulatory requirement, which is within one year after the lease expires or terminates. That can sometimes be years after the infrastructure has been out of use.