Offshore bonds - 1: Raising supplemental bonding ups small company liabilities

Document Type

Article

Publication Date

9-7-2009

Abstract

The US Minerals Management Service's decision to estimate an updated formula to determine bonding requirements that have been operational since 1990s may result in higher bonding requirements. The MMS requires offshore oil and gas operators to obtain bonds to ensure that they comply with their regulatory obligations. Oil and gas operating companies on the Outer Continental Shelf have an obligation to plug and take away all structures on a lease within one year of production stoppage unless the lease is unitized, in suspension, or the structures serve a useful function for other operations. Surety bonds are a kind of insurance, which transfer risk from the obligee to the surety, not from the principal to the insurers as in traditional insurance. Oil and gas price increases allow small and medium-sized companies to produce more revenue and to qualify more easily for non-collateralized or partially collateralized bonds.

Publication Source (Journal or Book title)

Oil and Gas Journal

First Page

37

Last Page

43

This document is currently not available here.

Share

COinS