As pressures build for the energy industry to move away from fossil fuels, two new reports examine the risk that fossil-fuel companies will default on future obligations to decommission offshore oil and gas infrastructure and pass the costs on to the public. The reports lay out recommendations to avoid such a scenario. They were just published by the Sabin Center for Climate Change Law and the Columbia Center on Sustainable Investment (CCSI), as part of their broader Climate Law and Finance Initiative.
More than 12,000 offshore oil and gas installations straddle the globe, and industry analysts anticipate annual offshore oil and gas investments to reach $173 billion by 2024. A number of oil companies are expected to significantly expand their offshore drilling activities in the coming years.
At the same time, many jurisdictions face a growing need to dismantle offshore infrastructure, whether because it is aging, the resources are depleted, or mandated net-zero strategies require some installations to be decommissioned earlier than expected—a process that is can be laborious and expensive. A 2021 forecast by the financial analysis firm IHS Markit estimated that globally, offshore decommissioning […]
As in many areas of life, structure can be your friend. If these recommendations are implemented (and hopefully stronger ones) the regulators can get ahead of the curve with appropriate resources and oversight to address what will be a complex process. We can avoid the on-going cost shifting occurring the States such as Pennsylvania where abandoned wells are costing the tax payers a fortune. Might I also suggest that a few well executed prosecutions and incarcerations of liable board members and executives will assist immensely in compliance.