US to revise offshore oil and natural gas bonding rules era Biden

The Trump administration is revising a Biden era rule which required the oil and natural gas industry to provide new financial guarantees of nearly $7 billion to cover the costs of decommissioning older infrastructure. This was announced by the Interior Department on Friday.

The agency stated in a press release that it would be developing a new regulatory framework, but gave no specifics. This move aligns with the efforts of President Donald Trump to reduce federal regulation and increase domestic energy production.

A spokesperson for the Interior Department declined to comment further.

In a statement, Interior Secretary Doug Burgum stated that the revision would allow energy producers in the United States to better allocate their capital for future exploration and production, while protecting taxpayers' money.

The Biden Policy, finalized by the Bureau of Ocean Energy Management of the Interior last year, required companies with low investment grade credit ratings and/or insufficient oil and gas reserves to provide additional bonding. This was to reduce taxpayer risk if the driller failed to cover the costs of dismantling equipment.

Three oil-producing states challenged the rule in court, claiming that it would increase costs for small companies. A federal judge refused to block the rule in early this year.

Environmental conservation groups such as the Sierra Club supported the rule, stating that it would "ensure oil and gas companies will be held accountable for their cleanup obligations and taxpayers won't have to pick up the tab."

(source: Reuters)