Financing oil and gas completion operations: ARO tools
DOI: 10.33917/mic-4.105.2022.53-64
Asset Retirement Obligations (ARO) are legal obligations to complete the closure of a facility when a long-lived tangible asset, such as an oil well, offshore platform, pipeline, or terminal, is permanently decommissioned. The most common type of ARO for an oilfield is the legal requirement to plug and abandon and restore the site of oil and gas wells to their original natural level at the end of their useful life.
The term «oilfield ARO» is used to cover the full range of statutory activities for the disposal of oil assets, including reclamation and environmental restoration. Interim and subsequent ARO carry additional financial risks.
References:
1. It’s Closing Time: The Huge Bill to Abandon Oilfields Comes Early. Carbon Tracker, June 2020. URL: https://carbontracker.org/reports/its-closing-time/
2. US GAO. Information on infrastructure Decommissioning, 2017. URL: //www.gao.gov/assets/gao-17-642t.pdf
3. BOEM. Evaluation of a Lessee’s Ability to Carry out Present and Future Obligations. URL: https://www.boem.gov/sites/default/files/documents//Evaluation%20of%20a%20Lessee%27s%20Ability%20to%20Carry%20out%20Present%20and%20Future%20Obligations.pdf
4. Khalidov I.A., Milovidov K.N. Methodology and practice of liquidation fund management: analysis of management decisions in global and domestic oil and gas companies: Monograph. M.: Buki Vedi, 2021. 339 p. (In Russ.).