American Oil and Gas Reporter - September 2016 - 119

Firm Questions BOEM Bonding Rules
CLEVELAND, OH.-The Bureau of
Ocean Energy Management's latest financial assurance and risk management
requirements violate federal regulations
and are unenforceable, an analysis by
Baker Hostetler's energy industry team
contends.
BOEM's Notice to Lessees No. 2016N01, "Requiring Additional Security,"
was to become effective Sept. 12. It regulates a lessee's obligations for decommissioning wells, platforms and pipelines
on oil and gas leases on the Outer Continental Shelf, Baker Hostetler describes.
The firm's analysis argues that while
the new NTL mirrors a proposed guidance
advertised by the agency in September
2015, the final guidelines fail to respond
to fundamental concerns submitted in response by affected companies and trade
groups. Baker Hostetler says the new
NTL is subject to three challenges:
* Its linked attachments conflict with
the regulations.
* By ignoring asset retirement obligations (AROs), which already are included in a company's audited financial
statements, BOEM effectively doublecounts the costs of removing a platform
by subtracting its own estimates of removal
liability from a tangible net worth already
reduced by AROs.
* The 10 percent cap on self-insurance
is a rule adopted outside of a proper rulemaking process.
Baker Hostetler says that if the new
NTL is found to be unlawful, the superseded supplemental bond procedures in
NTL No. 2008-N07 would not be resurrected automatically because, at a minimum, the earlier NTL also violated regulations in its treatment of AROs in
audited financial statements.

to discuss their financial capacity need
to be mindful of the agency's inconsistent
messaging. And lessees must be aware
that the second message is unlawful,"
Baker Hostetler says.
According to its analysis, the regulations applicable to leases require BOEM
to ask two questions:
* Does a lessee have the financial
ability to carry out its present and future
lease and regulatory obligations?
* If not, how much additional security

must be provided?
BOEM recognizes this two-step process
in its latest NTL, Baker Hostetler says,
which authorizes the regional director to
evaluate a lessee's financial ability and impose additional security requirements, if
needed. If a lessee is determined to have
the financial ability to meet its obligations,
that should end the scrutiny and call for
additional security, Baker Hostetler asserts.
Despite its apparent recognition of the
two-step process, the new NTL's incor-

Following Regulations
Baker Hostetler says BOEM's new
NTL appears to have been written by
two committees prohibited from speaking
to each other.
The one that drafted the NTL text, the
firm says, recognized that the agency,
before requiring a supplemental bond from
a lessee, had the burden of showing the
lessee lacked the financial capacity to perform its obligations under its OCS lease.
The other committee, which wrote the
linked attachments, Baker Hostetler adds,
takes for granted that no one has that required financial capacity, making the only
relevant question how big the supplemental
bond must be.
"Lessees now meeting with BOEM
SEPTEMBER 2016 119


http://www.ocsbbs.com

Table of Contents for the Digital Edition of American Oil and Gas Reporter - September 2016

Contents
American Oil and Gas Reporter - September 2016 - Cover1
American Oil and Gas Reporter - September 2016 - Cover2
American Oil and Gas Reporter - September 2016 - Contents
American Oil and Gas Reporter - September 2016 - 4
American Oil and Gas Reporter - September 2016 - 5
American Oil and Gas Reporter - September 2016 - 6
American Oil and Gas Reporter - September 2016 - 7
American Oil and Gas Reporter - September 2016 - 8
American Oil and Gas Reporter - September 2016 - 9
American Oil and Gas Reporter - September 2016 - 10
American Oil and Gas Reporter - September 2016 - 11
American Oil and Gas Reporter - September 2016 - 12
American Oil and Gas Reporter - September 2016 - 13
American Oil and Gas Reporter - September 2016 - 14
American Oil and Gas Reporter - September 2016 - 15
American Oil and Gas Reporter - September 2016 - 16
American Oil and Gas Reporter - September 2016 - 17
American Oil and Gas Reporter - September 2016 - 18
American Oil and Gas Reporter - September 2016 - 19
American Oil and Gas Reporter - September 2016 - 20
American Oil and Gas Reporter - September 2016 - 21
American Oil and Gas Reporter - September 2016 - 22
American Oil and Gas Reporter - September 2016 - 23
American Oil and Gas Reporter - September 2016 - 24
American Oil and Gas Reporter - September 2016 - 25
American Oil and Gas Reporter - September 2016 - 26
American Oil and Gas Reporter - September 2016 - 27
American Oil and Gas Reporter - September 2016 - 28
American Oil and Gas Reporter - September 2016 - 29
American Oil and Gas Reporter - September 2016 - 30
American Oil and Gas Reporter - September 2016 - 31
American Oil and Gas Reporter - September 2016 - 32
American Oil and Gas Reporter - September 2016 - 33
American Oil and Gas Reporter - September 2016 - 34
American Oil and Gas Reporter - September 2016 - 35
American Oil and Gas Reporter - September 2016 - 36
American Oil and Gas Reporter - September 2016 - 37
American Oil and Gas Reporter - September 2016 - 38
American Oil and Gas Reporter - September 2016 - 39
American Oil and Gas Reporter - September 2016 - 40
American Oil and Gas Reporter - September 2016 - 41
American Oil and Gas Reporter - September 2016 - 42
American Oil and Gas Reporter - September 2016 - 43
American Oil and Gas Reporter - September 2016 - 44
American Oil and Gas Reporter - September 2016 - 45
American Oil and Gas Reporter - September 2016 - 46
American Oil and Gas Reporter - September 2016 - 47
American Oil and Gas Reporter - September 2016 - 48
American Oil and Gas Reporter - September 2016 - 49
American Oil and Gas Reporter - September 2016 - 50
American Oil and Gas Reporter - September 2016 - 51
American Oil and Gas Reporter - September 2016 - 52
American Oil and Gas Reporter - September 2016 - 53
American Oil and Gas Reporter - September 2016 - 54
American Oil and Gas Reporter - September 2016 - 55
American Oil and Gas Reporter - September 2016 - 56
American Oil and Gas Reporter - September 2016 - 57
American Oil and Gas Reporter - September 2016 - 58
American Oil and Gas Reporter - September 2016 - 59
American Oil and Gas Reporter - September 2016 - 60
American Oil and Gas Reporter - September 2016 - 61
American Oil and Gas Reporter - September 2016 - 62
American Oil and Gas Reporter - September 2016 - 63
American Oil and Gas Reporter - September 2016 - 64
American Oil and Gas Reporter - September 2016 - 65
American Oil and Gas Reporter - September 2016 - 66
American Oil and Gas Reporter - September 2016 - 67
American Oil and Gas Reporter - September 2016 - 68
American Oil and Gas Reporter - September 2016 - 69
American Oil and Gas Reporter - September 2016 - 70
American Oil and Gas Reporter - September 2016 - 71
American Oil and Gas Reporter - September 2016 - 72
American Oil and Gas Reporter - September 2016 - 73
American Oil and Gas Reporter - September 2016 - 74
American Oil and Gas Reporter - September 2016 - 75
American Oil and Gas Reporter - September 2016 - 76
American Oil and Gas Reporter - September 2016 - 77
American Oil and Gas Reporter - September 2016 - 78
American Oil and Gas Reporter - September 2016 - 79
American Oil and Gas Reporter - September 2016 - 80
American Oil and Gas Reporter - September 2016 - 81
American Oil and Gas Reporter - September 2016 - 82
American Oil and Gas Reporter - September 2016 - 83
American Oil and Gas Reporter - September 2016 - 84
American Oil and Gas Reporter - September 2016 - 85
American Oil and Gas Reporter - September 2016 - 86
American Oil and Gas Reporter - September 2016 - 87
American Oil and Gas Reporter - September 2016 - 88
American Oil and Gas Reporter - September 2016 - 89
American Oil and Gas Reporter - September 2016 - 90
American Oil and Gas Reporter - September 2016 - 91
American Oil and Gas Reporter - September 2016 - 92
American Oil and Gas Reporter - September 2016 - 93
American Oil and Gas Reporter - September 2016 - 94
American Oil and Gas Reporter - September 2016 - 95
American Oil and Gas Reporter - September 2016 - 96
American Oil and Gas Reporter - September 2016 - 97
American Oil and Gas Reporter - September 2016 - 98
American Oil and Gas Reporter - September 2016 - 99
American Oil and Gas Reporter - September 2016 - 100
American Oil and Gas Reporter - September 2016 - 101
American Oil and Gas Reporter - September 2016 - 102
American Oil and Gas Reporter - September 2016 - 103
American Oil and Gas Reporter - September 2016 - 104
American Oil and Gas Reporter - September 2016 - 105
American Oil and Gas Reporter - September 2016 - 106
American Oil and Gas Reporter - September 2016 - 107
American Oil and Gas Reporter - September 2016 - 108
American Oil and Gas Reporter - September 2016 - 109
American Oil and Gas Reporter - September 2016 - 110
American Oil and Gas Reporter - September 2016 - 111
American Oil and Gas Reporter - September 2016 - 112
American Oil and Gas Reporter - September 2016 - 113
American Oil and Gas Reporter - September 2016 - 114
American Oil and Gas Reporter - September 2016 - 115
American Oil and Gas Reporter - September 2016 - 116
American Oil and Gas Reporter - September 2016 - 117
American Oil and Gas Reporter - September 2016 - 118
American Oil and Gas Reporter - September 2016 - 119
American Oil and Gas Reporter - September 2016 - 120
American Oil and Gas Reporter - September 2016 - 121
American Oil and Gas Reporter - September 2016 - 122
American Oil and Gas Reporter - September 2016 - 123
American Oil and Gas Reporter - September 2016 - 124
American Oil and Gas Reporter - September 2016 - 125
American Oil and Gas Reporter - September 2016 - 126
American Oil and Gas Reporter - September 2016 - 127
American Oil and Gas Reporter - September 2016 - 128
American Oil and Gas Reporter - September 2016 - 129
American Oil and Gas Reporter - September 2016 - 130
American Oil and Gas Reporter - September 2016 - Cover3
American Oil and Gas Reporter - September 2016 - Cover4
http://www.nxtbook.com/nxtbooks/aogr/202001
http://www.nxtbook.com/nxtbooks/aogr/201912
http://www.nxtbook.com/nxtbooks/aogr/201911
http://www.nxtbook.com/nxtbooks/aogr/201910
http://www.nxtbook.com/nxtbooks/aogr/201909
http://www.nxtbook.com/nxtbooks/aogr/201908
http://www.nxtbook.com/nxtbooks/aogr/201907
http://www.nxtbook.com/nxtbooks/aogr/201906
http://www.nxtbook.com/nxtbooks/aogr/201905
http://www.nxtbook.com/nxtbooks/aogr/201904
http://www.nxtbook.com/nxtbooks/aogr/201903
http://www.nxtbook.com/nxtbooks/aogr/201902
http://www.nxtbook.com/nxtbooks/aogr/201901
http://www.nxtbook.com/nxtbooks/aogr/201812
http://www.nxtbook.com/nxtbooks/aogr/201811
http://www.nxtbook.com/nxtbooks/aogr/201810
http://www.nxtbook.com/nxtbooks/aogr/pbios_201810
http://www.nxtbook.com/nxtbooks/aogr/201809
http://www.nxtbook.com/nxtbooks/aogr/201808
http://www.nxtbook.com/nxtbooks/aogr/201807
http://www.nxtbook.com/nxtbooks/aogr/201806
http://www.nxtbook.com/nxtbooks/aogr/201805
http://www.nxtbook.com/nxtbooks/aogr/201804
http://www.nxtbook.com/nxtbooks/aogr/201803
http://www.nxtbook.com/nxtbooks/aogr/201802
http://www.nxtbook.com/nxtbooks/aogr/201801
http://www.nxtbook.com/nxtbooks/aogr/201712
http://www.nxtbook.com/nxtbooks/aogr/201711
http://www.nxtbook.com/nxtbooks/aogr/201710
http://www.nxtbook.com/nxtbooks/aogr/201709
http://www.nxtbook.com/nxtbooks/aogr/201708
http://www.nxtbook.com/nxtbooks/aogr/201707
http://www.nxtbook.com/nxtbooks/aogr/201706
http://www.nxtbook.com/nxtbooks/aogr/201705
http://www.nxtbook.com/nxtbooks/aogr/201704
http://www.nxtbook.com/nxtbooks/aogr/201703
http://www.nxtbook.com/nxtbooks/aogr/201702
http://www.nxtbook.com/nxtbooks/aogr/201701
http://www.nxtbook.com/nxtbooks/aogr/201612
http://www.nxtbook.com/nxtbooks/aogr/201611
http://www.nxtbook.com/nxtbooks/aogr/201610
http://www.nxtbook.com/nxtbooks/aogr/pbios2016_programguide
http://www.nxtbook.com/nxtbooks/aogr/201609
http://www.nxtbook.com/nxtbooks/aogr/201608
http://www.nxtbook.com/nxtbooks/aogr/201607
http://www.nxtbook.com/nxtbooks/aogr/201606
http://www.nxtbook.com/nxtbooks/aogr/201605
http://www.nxtbook.com/nxtbooks/aogr/201604
http://www.nxtbook.com/nxtbooks/aogr/201603
http://www.nxtbook.com/nxtbooks/aogr/201602
http://www.nxtbook.com/nxtbooks/aogr/201601
http://www.nxtbook.com/nxtbooks/aogr/201512
http://www.nxtbook.com/nxtbooks/aogr/201511
http://www.nxtbook.com/nxtbooks/aogr/201510
http://www.nxtbook.com/nxtbooks/aogr/201509
http://www.nxtbook.com/nxtbooks/aogr/201508
http://www.nxtbook.com/nxtbooks/aogr/201507
http://www.nxtbook.com/nxtbooks/aogr/201506
http://www.nxtbook.com/nxtbooks/aogr/201505
http://www.nxtbook.com/nxtbooks/aogr/201504
http://www.nxtbook.com/nxtbooks/aogr/201503
http://www.nxtbook.com/nxtbooks/aogr/201502
http://www.nxtbook.com/nxtbooks/aogr/201501
http://www.nxtbook.com/nxtbooks/aogr/201412
http://www.nxtbook.com/nxtbooks/aogr/201411
http://www.nxtbook.com/nxtbooks/aogr/201410
http://www.nxtbook.com/nxtbooks/aogr/201409
http://www.nxtbook.com/nxtbooks/aogr/pbios2014_programguide
http://www.nxtbook.com/nxtbooks/aogr/201408
http://www.nxtbook.com/nxtbooks/aogr/201407
http://www.nxtbook.com/nxtbooks/aogr/201406
http://www.nxtbook.com/nxtbooks/aogr/201405
http://www.nxtbook.com/nxtbooks/aogr/201404
http://www.nxtbook.com/nxtbooks/aogr/201403
http://www.nxtbook.com/nxtbooks/aogr/201402
http://www.nxtbook.com/nxtbooks/aogr/201401
http://www.nxtbook.com/nxtbooks/aogr/201312
http://www.nxtbook.com/nxtbooks/aogr/201311
http://www.nxtbook.com/nxtbooks/aogr/201310
http://www.nxtbook.com/nxtbooks/aogr/201309
http://www.nxtbook.com/nxtbooks/aogr/201308
http://www.nxtbook.com/nxtbooks/aogr/201307
http://www.nxtbook.com/nxtbooks/aogr/201306
http://www.nxtbook.com/nxtbooks/aogr/201305
http://www.nxtbook.com/nxtbooks/aogr/201304
http://www.nxtbook.com/nxtbooks/aogr/201303
http://www.nxtbook.com/nxtbooks/aogr/201302
http://www.nxtbook.com/nxtbooks/aogr/201301
http://www.nxtbook.com/nxtbooks/aogr/201212
http://www.nxtbook.com/nxtbooks/aogr/201211
http://www.nxtbook.com/nxtbooks/aogr/201210
http://www.nxtbook.com/nxtbooks/aogr/201209
http://www.nxtbook.com/nxtbooks/aogr/2012_pbios
http://www.nxtbook.com/nxtbooks/aogr/201208
http://www.nxtbook.com/nxtbooks/aogr/201207
http://www.nxtbook.com/nxtbooks/aogr/201206
http://www.nxtbook.com/nxtbooks/aogr/201205
http://www.nxtbook.com/nxtbooks/aogr/201204
http://www.nxtbook.com/nxtbooks/aogr/201203
http://www.nxtbook.com/nxtbooks/aogr/201202
http://www.nxtbook.com/nxtbooks/aogr/201201
http://www.nxtbook.com/nxtbooks/demo/aogr_clone
http://www.nxtbook.com/nxtbooks/aogr/201112
http://www.nxtbookMEDIA.com