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BSEE Extends Time for Operators to Retain Offshore Federal Leases

The Interior Department's Bureau of Safety and Environmental Enforcement (BSEE) last Friday doubled the amount of time that oil and natural gas operators have to coordinate operations and retain their leases in federal waters of the Outer Continental Shelf (OCS).

Enacting the final rule was requisite following passage in early May of HR 244, an omnibus spending bill also known as the Consolidated Appropriations Act of 2017. President Trump signed the bill in early May, keeping the federal government funded through September.

For offshore operators, the final rule amends Section 250.180 of Title 30 in the Code of Federal Regulations. The law previously stipulated that a lease expires if the lessee or operator stops conducting operations during the last 180 days of the lease term, or on a lease that has continued beyond its primary term, unless the operator resumes operations, or receives a notice from BSEE to suspend operations or suspend production within 180 days of ceasing operations.

Under the revamped rule, "Oil and Gas and Sulphur Operations on the OCS -- Lease Continuation Through Operations," the 180-day limit was extended to one year. BSEE said operations affected include drilling, reworking wells or production in paying quantities.

"These additional months mean companies doing business on the OCS will have more planning flexibility, which will help them be more cost efficient, create more jobs and maximize the economic benefit for the entire nation," BSEE Director Scott Angelle said Monday. Angelle was tapped to lead the BSEE last month.

BSEE said the extension affects related guidance documents and unitization agreements. The bureau added that it "plans to revise the relevant notices to reflect the extension of the 180-day requirement to one year and encourages parties with existing unit agreements to consider revising those agreements to reflect the change."

The BSEE was formed in 2011 following a revamp of the former Minerals Management Services, which initially created its twin agency, the Bureau of Ocean Energy Management. BSEE's formation followed a review of BP plc's Macondo well blowout in 2010 in the deepwater Gulf of Mexico (GOM), which was found to have resulted in part from safety lapses. The BSEE is tasked with ensuring safe and responsible energy development on the OCS and making sure the federal government receives fair royalties on offshore production.

Under an executive order (EO) signed by President Trump in April, BSEE is required to review its proposed Well Control Rule, which was developed in response to Macondo. The EO also directed Interior to consider allowing more oil and gas leasing in several offshore areas, including the Atlantic and Arctic oceans, the Beaufort and Chukchi seas, Alaska's Cook Inlet and the GOM.

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