The U.S. Bureau of Safety and Environment Enforcement (BSEE) announced this Thursday that it’s considering lower royalty payments to offshore producers in the Gulf of Mexico (GOM); this in order to help them increase production and reduce stranded resources in the area.
The decision comes after BSEE’s sister agency, the Bureau of Ocean Energy Management (BOEM) published a research paper indicating that certain economic policy changes would help increase offshore oil and gas production, using deep-water infrastructure already in place.
“This research provides critical information that demonstrates energy production in the Gulf of Mexico should not be managed with a ‘one size fits all’ approach,” said Casey Hammond, Principal Deputy Assistant Secretary of the Interior.
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The intent is to draw on 4,5 billion barrels of oil equivalent resources estimated nearby these facilities.
BOEM’s research “examined future wells using subsea tiebacks, including extended-reach tiebacks, that require high-cost enhanced flow assurance technologies, such as subsea booster pumps.”
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Offshore projects would be more viable
Using these initial data, the agency identified “economic considerations specific to subsea tiebacks requiring enhanced flow assurance technologies;” that would “provide more opportunity for operators to earn the needed rate of return while minimizing stranded resources,” Walter Cruickshank, BOEM’s director explained.
As about four of every five deep-water facilities in the area are producing at less than 50% of their maximum capacity rates, a move such as this would rebound America’s oil and gas production, as intended by the Trump administration.
This move comes in a series of other last-minute decision by Trump’s administration as it draws upon its final days in office. Just this week, a notice for sale in Alaska’s Arctic National Wildlife Refuge was announced, even before the call for admissions ended.
“We want to make sure America doesn’t have stranded assets; reducing the royalty rate to pay for the incremental cost of the subsea flow assurance means that more offshore projects may be economic,” said to Reuters Scott Angele BSEE’s director.