Petroleum Review Publishes Article by Marc Hammerson and Nicholas Antonas on the Costs of Decommissioning
Marc Hammerson and Nicholas Antonas, partner and associate, respectively, in Akin Gump’s oil and gas practice, have written the article “Counting the cost,” which was published in the October issue of Petroleum Review and looks at the costs of decommissioning in a low oil price environment.
According to Hammerson and Antonas, the regulations that currently govern decommissioning “are likely to be tested,” due to depressed oil prices. The authors write that the problems caused by what they describe as “negative equity”—where the expected costs of decommissioning are equal to, or greater than, the expected future revenue—could force some to default by not provisioning amounts when due. They suggest that regulators “need to focus on finding environmentally appropriate ways of reducing the costs of decommissioning,” including rigs-to-reefs programs and facilitating coordinated decommissioning campaigns.
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