WASHINGTON — Oil and gas companies operating in the Gulf of Mexico will have to permanently plug nearly 3,500 temporarily abandoned wells and dismantle about 650 production platforms that are no longer used, the Obama administration announced Wednesday.
The move comes as the energy industry voices complaints that it is being overburdened in the aftermath of the BP oil disaster in the Gulf.
Iinitial reaction from the American Petroleum Institute was that it had been expecting the announcement and had been working with regulators “on a reasonable timeframe for implementation,” spokesman Carlton Carroll told msnbc.com. “We believe that for most operators, compliance will not be an issue.”
Carroll did not have an estimate of potential cost to the industry, but did say that one concern is “the ability of companies to get the permits necessary to undertake decommissioning activities.”
The Wall St. Journal cited one expert as saying the cost could total $1.4 billion to $3.5 billion. Mark Kaiser, R&D director at Louisiana State University’s Center for Energy Studies, also estimated that companies, mostly smaller producers, would be giving up $6 billion to $18 billion in lost revenue from future production.
Environmental groups welcomed the directive. “This is an important first step in cleaning up what’s become a dumping ground for the offshore oil and gas industry,” Peter Galvin, of the Center for Biological Diversity, said in a statement. “These old wells can and do leak oil that only adds to the environmental problems the Gulf has suffered in recent decades.”
The Interior Department says the policy aims to make energy production safer and prevent potentially catastrophic leaks at wells that in some cases have been abandoned for decades.