U.S. to enlarge funds for oil & gas regulatory bodies

The U.S. President Barack Obama’s fiscal year 2017 (FY 2017) budget, announced on Tuesday, includes a request of $175.1 million to fund the Bureau of Ocean Energy Management’s (BOEM) mission to manage offshore energy and mineral resources and a request of $204.87 million for the Bureau of Safety and Environmental Enforcement (BSEE). 

According to BOEM, the request would provide BOEM with resources needed to effectively manage oil and gas development, renewable energy, and mineral resources on the U.S. Outer Continental Shelf (OCS) in a way that promotes efficient and environmentally responsible development.

“The President’s budget request for BOEM will support ongoing efforts and important initiatives that are vital to our mission and critical to advancing Administration priorities,” said BOEM Director Abigail Ross Hopper.

“This request reflects the resources and personnel needed to develop our capacity and to carry out our mission carefully, responsibly, and efficiently.”

The President’s FY17 budget request for the bureau focuses on core program responsibilities, such as the Five Year Outer Continental Shelf Oil and Gas Program, oil and gas exploration and development plans, offshore renewable energy and environmental analysis and studies, BOEM said. The request includes an increase of $4.1 million over the FY 2016 enacted level, allowing the bureau to fund important initiatives to fully implement the risk management program and address critical staffing needs.

In FY 2014, BOEM initiated an effort to expand its financial assurance and risk management capability by updating regulations that address the growing cost of decommissioning. This program is an effort to update requirements and develop a comprehensive program to assist in identifying, prioritizing, and managing the risks associated with industry activities on the Outer Continental Shelfm, BOEM explained.

Addition of employees

In FY 2017, the President’s budget request includes funding for 15 additional employees with specialized skillsets to aid in enhancing BOEM’s capacity to identify, analyze, and mitigate financial risk and liability. According to BOEM, its Risk Management Program has the potential to save the American taxpayers from billions in contingent liabilities that could result from industry bankruptcies and associated decommissioning costs. (Estimated total liabilities in the Gulf could be as high as $38 billion). Combined with the resources provided by Congress in FY 2016, the requested funding will bring the program to full staffing capacity, BOEM noted.

The President’s 2017 Request also includes additional resources to support critical resource evaluation and plan review activities and to enable BOEM’s continued emphasis on environmental stewardship. Despite current economic trends with respect to oil and gas prices, BOEM’s responsibilities and associated workload have not diminished, the bureau emphasized. While activity in shallow water has decreased in recent years, deepwater activity has remained robust, and – according to the U.S. Energy Information Administration – deepwater oil and natural gas production will continue to increase over the coming decade. BOEM anticipates that this increased deepwater production will be accompanied by a corresponding increase in associated plan reviews and environmental work.

Finally, the 2017 Request seeks to raise awareness of a looming fiscal challenge: the projected decline in offsetting rental revenue. The rental offsets that fund a significant portion of BOEM and the Bureau of Safety and Environmental Enforcement’s (BSEE) programs are anticipated to decline fairly abruptly beginning in FY 2017, and according to projections, the shortfall could be as large as $82 million by 2025. Although the President’s Budget proposes a solution to this challenge in 2017, BOEM said, a more comprehensive long-term solution will be necessary to ensure that both BOEM and BSEE can continue to carry out their respective missions.

Boost for BSEE too

According to the BSEE, President Obama’s fiscal year 2017 budget request for the BSEE provides critically needed resources to further strengthen BSEE’s regulatory and oversight capabilities for oil, natural gas and renewable energy development on the U.S. Outer Continental Shelf, promoting a culture of safety and environmental protection by ensuring compliance with Federal regulations.

The FY 2017 budget request for the BSEE is $204.87 million, a $196,000 increase above the FY 2016 enacted level, and includes $96.34 million in current appropriations and $108.53 million in revenue from rental receipts, cost recoveries, and inspection fees.

“The President’s proposed FY 2017 budget fully reflects the Administration’s continued emphasis on ensuring the safe and responsible development of the Nation’s offshore energy resources,” said Director Brian Salerno. “The President’s request supports BSEE’s efforts to build a robust culture of safety, with a strong focus on risk reduction to protect lives and the environment.”

“The Bureau uses a comprehensive program of regulations, compliance monitoring and enforcement, technical assessments, inspections, and incident investigations to mitigate and reduce risk,” Salerno said.

The FY 2017 budget also supports research and the development of new technologies and scientific investments to best manage the country’s offshore energy resources. The request includes $190 million for offshore safety and environmental enforcement programs.

The FY 2017 proposal includes $14.9 million for Oil Spill Research, equal to the 2016 request level, to address key knowledge and technology gaps, focusing research on deep-water and Arctic environments.