Oil and gas companies forced to plug old wells

Financial Times

BySheila McNulty in Houston

Published: September 15 2010 23:01 | Last updated: September 15 2010 23:01

"The US government is requiring oil and gas companies in the Gulf of Mexico to promptly set permanent plugs in nearly 3,500 non-producing wells.

Under the new rules announced on Wednesday, the companies also must dismantle about 650 oil and gas production platforms if they are no longer being used for exploration or production.

Until now, these companies waited sometimes years after the infrastructure had been out of use to properly seal and dismantle their equipment.

But the Interior Department is mandating that any well that has not been used during the past five years for exploration or production must be plugged and associated equipment must be decommissioned if no longer involved with exploration or production.

They have 120 days to submit a company-wide plan for decommissioning these facilities and wells.

But authorities said the industry had informed companies they would have three years to plug wells on active leases that meet the criteria for being no longer useful for operation and five years to remove platforms meeting the established criteria.

The new rules will force companies to spend millions of dollars on decommissioning far sooner than they might otherwise have done. But companies said they thought the process would go slower than some might fear, given the need for permits and regulatory oversight throughout." More>>>>