Rule change gives industry more time

A final rule by the federal Bureau of Safety and Environmental Enforcement published in the Federal Register June 9 doubles the time offshore oil and gas operators have to coordinate development operations and retain leases in waters of the U.S. outer continental shelf.

“This rulemaking extends the time from 180 days to one year between production, drilling or well-reworking operations on a lease,” BSEE Director Scott Angelle said in a statement. He said the additional months will give companies working on the OCS “more planning flexibility, which will help them to more cost efficient, create more jobs and maximize the economic benefit for the entire nation.”

The rule had stated that a lease expires if the lessee or operator stops conducting operations (drilling, well-reworking or production in paying quantities) during the last 180 days of the lease term or on a lease that has continued beyond its original term unless the operator resumes operations or receives a suspension of operations or a suspension of production from the regional supervisor with 180 days of stopping operations.

The final rule changes all references to the period of time before which a lease expires due to cessation of operations from 180 days and 180th day to a year and from a 180-day period to a one-year period.

BSEE said because Congress directed the agency to make the change by June 4 in the Consolidated Appropriations Act of 2017 it was “both unnecessary and impracticable for the BSEE to publish a notice of proposed rulemaking and provide an opportunity for public comment before issuing a final rule.”

The extension also affects related BSEE guidance documents and unitization agreements that follow a BSEE-approved model. The agency said it plans to revise the relevant notices to reflect extension of the 180-day requirement to one year and encourages parties with existing unit agreements to consider revising agreements to reflect the change.

- Petroleum News