The Interior Department issued new rules Thursday that will make it harder for the oil and gas industry to drill offshore.
The Bureau of Ocean Energy Management issued a notice to all federal permit holders announcing it will be changing the financial rules of the road.
It will be requiring more upfront capital to cover the risks posed by each oil and gas lessee not fulfilling its permit obligations and decommissioning wells.
Industry groups immediately gave their assessment: The new measures are an unfair "mandate," especially for independent companies.
The notice details new ways the agency will assess a lessee's ability to carry out decommissioning offshore well sites "and whether to require lessees to furnish additional financial assurance," the bureau said.
But the bureau said it will offer them more flexibility, while being fair to the taxpayer.
"BOEM's goal is to modernize its approach to risk management in a way that better aligns with the realities of the industry and protects the U.S. government and taxpayers from risk in a manner that isn't overly burdensome to the oil and gas industry," said bureau Director Abigail Ross Hopper.
"By implementing these changes, we will create comprehensive procedures to decrease risks to taxpayers while providing industry flexibility to negotiate adaptive solutions and use tailored financial plans to meet their financial assurance requirements."
Dan Naatz, the head of government affairs at the Independent Petroleum Association of America, said he isn't buying Hopper's flexibility argument. He said the new financial requirements will double the cost of offshore drilling, which already is expensive.
"The bureau's new mandatory financial requirements will force each lease owner to fully insure upfront all of its exploration wells, despite the fact that these wells may never be drilled," Naatz said. "This mandate unfairly places the burden on independent offshore producers, removing operators' flexibility and making it as difficult as possible for these smaller, independent companies to remain in business.
"The new financial requirements will double the cost of insurance premiums for offshore companies and will tie up much-needed capital that would otherwise be available for development, American jobs and revenues to states and the federal government," he said.
The changes were announced as the Interior Department prepares its final five-year drilling plan, which many expect will cut back on leasing, in line with the White House's environmental and climate change agenda.