Analysis of the financial assurance problem for decommissioning of oil and gas wells and facilities

Abstract

The harmful effects of oil and gas projects on the environment are not limited to the production period. Unlike operating production facilities, control over the state of abandoned wells and fields falls on the state. In the Russian Federation, the obligations of subsoil user companies to properly perform decommissioning operations are not legally regulated and financially secured. Based on world experience, the paper analyzes the most common schemes for formation and accounting of financial assurance for decommissioning operations and examines the state of legislative regulation on this problem in Russia and the world. It presents recommendations on state regulation to guarantee full completion of decommissioning operations by subsoil users, improve their quality and monitor the environmental safety of abandoned wells.

Keywords

• hydrocarbon field development
• subsurface management
• decommissioning operations
• decommissioning fund
• decommissioning costs