GAO: DOI fails to ensure timely decommissioning of federal offshore wells, platforms

Over 75% of end-of-lease and idle infrastructure in federal waters of the Gulf of Mexico—more than 2,700 oil and gas wells and 500 platforms—are overdue for decommissioning, partly because of the Department of Interior’s lax oversight, a government watchdog said in a Feb. 20 report.

Oil and gas companies with offshore infrastructure at the end of its life must plug wells and remove platforms within set deadlines, the Government Accountability Office explained. But the Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE) "does not effectively ensure" that industry operators meet those decommissioning deadlines, the GAO said.

"BSEE's administrative enforcement tools and its use of them are ineffective at incentivizing noncompliant operators," the GAO wrote, noting that "citations for regulatory violations and orders to comply are essentially warnings." It added that "BSEE rarely takes more punitive actions such as issuing civil penalty fines, which can take years, or disqualifying operators, which has unclear trigger criteria."

Enforcement issues have "contributed to widespread decommissioning delays that have grown into a substantial backlog," the report said, noting that for Gulf leases that ended in 2010 through 2022, operators missed BSEE's 1-year decommissioning deadline for more than 40% of wells and 50% of platforms—many of which still have not been decommissioned. 

Delays can increase environmental, safety, and financial risks, the GAO said. The report noted that the decommissioning delays can indicate that companies are in financial trouble and may leave the government to pay for decommissioning. Interior only holds about $3.5 billion in bonds from companies to cover a potential cost of $40-70 billion, the GAO said.

The GAO recommended stronger enforcement and potential congressional action.

In a separate report on onshore oil and gas gathering pipelines, the GAO recommended improved oversight by various Interior Department agencies, better data collection and additional funding. 

Operator failure to decommission gathering lines properly or in a timely manner can pose safety and environmental risks, including spills, emissions, and explosions, the GAO said, citing a 2017 incident in which homeowners accidentally struck an improperly decommissioned gathering line on their property, causing an explosion that killed two people and injured two others.