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 NTL No. 2008-07 has been superseded and replaced with NTL No. 2016-N01 which puts into place new financial assurances for the Bureau.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.
For more information on factors considered in evaluation of financial ability to carry out obligations and determination of self-insurance please visit: http://www.boem.gov/Financial-Discussion/.
For information on Third-Party Guarantees, please visit: http://www.boem.gov/Third-Party-Guarantees/.
NTL Implementation Timeline
For any additional questions or inquiries, please contact Risk.Management@BOEM.gov