Interior Department’s financial assurance rule adjusted to help oil producers
Interior Secretary Doug Burgum announced on Friday a major update to a federal rule regarding energy development, aimed at saving costs for private firms. This move comes after Burgum visited a liquefied natural gas (LNG) export facility on the Gulf Coast, signaling a push towards deregulation in the energy sector.
According to a source familiar with the rule, the update will significantly deregulate a rule passed during the Trump administration, paving the way for lower startup costs for energy firms operating in the Gulf Coast region. The rule focuses on financial assurance criteria that producers and grantholders must provide, with a 2024 estimate by the Bureau of Ocean Energy Management (BOEM) suggesting that $6.9 billion in new supplemental assurance would be needed to protect against oil lessees’ default.
The Interior Department highlighted that the $6.9 billion figure translated to an estimated $665 million in additional insurance premiums for energy companies. This financial burden has hindered the industry’s ability to expand operations and achieve what President Donald Trump referred to as “American energy dominance.”
In an exclusive statement to Fox News Digital, Burgum emphasized that the rule revision will empower energy producers to allocate their capital towards future leasing, exploration, and production, all while safeguarding the interests of the American taxpayer. By reducing regulatory obstacles, Burgum believes that American companies will be able to make investments that enhance domestic energy security and benefit communities in Gulf Coast states.
BOEM will continue to mandate financial assurances from lessees operating on the outer continental shelf, as the Trump administration seeks to strike a balance in its regulatory approach. During Burgum’s visit to the Gulf Coast LNG facility, he engaged with energy workers and underscored the department’s commitment to supporting the industry.
The Gulf of America currently plays a significant role in energy production, yielding around 1.8 million barrels of crude oil daily and 2 billion cubic feet of natural gas per day. Burgum’s initiative to update the federal rule reflects a broader effort to streamline regulations and promote growth in the energy sector.
As the Interior Department embraces these changes, it signals a shift towards a more business-friendly environment for energy companies operating in the Gulf Coast region. This move aligns with the Trump administration’s agenda of promoting American energy independence and supporting domestic energy producers.
