BOEM has changed how we manage financial assurance. NTL No. 2008-07 has been superseded and replaced with NTL No. 2016-N01 which puts into place new financial assurances for the Bureau. Key changes include:
- Lessees will no longer be granted waivers, but may be eligible for self-insurance to meet some or all of their supplemental bond obligations.
- Lessees may be eligible for self-insurance regardless of their Net Worth.
- Waivers were available for those with a decommissioning liability up to 50% of their net worth, but self-insurance will not exceed 10% of tangible net worth.
- BOEM will no longer waive bonds automatically based on the combined financial strength and reliability of co-lessees or operating rights holders, but will permit lessees qualifying for self-insurance to share it with co-lessees and operating rights holders.
- The minimum credit rating that a party must have to be allowed to apply its self-insurance to sole liability properties will be A3 (Moody’s) or A- (Standard and Poor’s).
- There will be a phase-in period to comply with these revised financial assurance requirements. We are implementing a strategy of dealing with the highest risk properties first (e.g. sole liability properties as defined in the NTL), and we are working with industry to prioritize their properties.
- BOEM may consider alternative forms of financial assurance to provide additional flexibility for lessees to meet their additional security requirements. This will allow companies to create a tailored financial assurance plan that best meets their needs while ensuring their OCS liabilities are adequately covered.
NTL Implementation Timeline
For any additional questions or inquiries, please contact Risk.Management@BOEM.gov