Offshore Driller Asks Judge To Block Insurers’ Demands For $250m Collateral

W&T Offshore, an independent driller operating successful nan U.S. Gulf of Mexico, has asked a national judge to artifact security companies’ demands for $250 cardinal successful further collateral for taking isolated aged lipid infrastructure.

The offshore drilling manufacture faces mounting unit to supply bonds for decommissioning lipid and state infrastructure successful national waters. The Federal Bureau of Ocean Energy Management (BOEM) successful June enforced a last norm that amended its financial assurance regulations successful a bid to guarantee nan manufacture covers decommissioning costs, not nan taxpayer.

“You’re astatine nan mercy of nan national agency and you’re astatine nan mercy of nan surety providers, truthful location is really not a full batch of power there,” W&T Offshore CEO Tracy Krohn told Reuters successful an interview.

“The regulatory agency has nary existent ground for requiring a awesome woody much bonding than what they already have,” Krohn added.

The BOEM estimates offshore drillers would collectively salary conscionable nether $7 cardinal arsenic a consequence of nan last rule, successful new supplemental financial assurances to screen nan imaginable costs of decommissioning activities.

As of June 2023, much than 2,700 wells and 500 platforms were overdue for decommissioning successful nan Gulf of Mexico, according to nan U.S. Government Accountability Office.

In nan lawsuit, revenge connected Wednesday successful nan U.S. District Court for nan Southern District of Texas, W&T Offshore asked Judge Keith Ellison to state that nan insurers person colluded to harm nan institution by jointly demanding further collateral and premiums.

The institution claims nan insurers utilized BOEM’s last norm to request further collateral for surety, for which nan usability has already paid premiums.

Houston-based W&T Offshore did not instantly supply a comment.

Endurance Assurance Corp and Lexon Insurance Co, some named successful nan suit, did not instantly respond to requests for comment.

Opponents said BOEM’s last norm would disproportionately impact smaller companies that deficiency finance people ratings aliases capable proven lipid reserves. Oil fields are much apt to person ample reserves, aliases meet in installments criteria exempting them from putting up much money to screen imaginable early decommissioning.

Days earlier nan BOEM’s last norm was enforced, Texas, Louisiana and Mississippi sued nan authorities successful a bid to artifact it.

The U.S. Gulf of Mexico produces astir 1.74 cardinal barrels per time of oil, according to nan past authorities figures, astir 13% of full U.S. output.

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