ASSET RETIREMENT OBLIGATIONS (AROs)
In our regulatory and asset retirement obligation work, 2022 saw our third report, Double or Nothing: How regulators are gambling on the future self-interest of large oil and gas companies to decommission the Gulf of Mexico’s aging infrastructure.
Additionally, we have started working state by state to build a public-information oil and gas ARO database that will streamline the analytics pipeline and enable greater levels of data transparency. Our profile and impact have grown, as evidenced by greater media coverage across top-tier outlets and an invitation to one of our staff to testify before a congressional committee on these issues.
U.S. Senator Michael Bennet drew on Asset Retirement Obligation Research to inform his decision-making and legislative efforts. In other direct impact, the Oil and Gas Governance Network (OGGN) implemented our policy recommendations, underscoring the significance and relevance of our research in the industry. Our research on plugging wells also catalysed the Bell Policy Centre, a regional policy think tank, to consider new policy and regulatory changes in the state of Colorado, demonstrating the impact of our research on shaping industry practices.
Looking Ahead to 2023
Informational asymmetry continues to offer an enormous advantage to the fossil fuel industry. It is exceedingly difficult for a landowner, advocate, or concerned taxpayer to measure and track the flow of decommissioning obligations (from a solvent and profitable driller to a marginal operator without the financial capacity to plug and reclaim its wells). In 2023, we will leverage a new data platform to illustrate the scale and distribution of these risks, both among companies (investor focused) and among states (regulator focused). As interest in our research grows, we will engage further with policymakers and investors. The emergence of novel, viable legal strategies for landowners and other impacted groups has created an opportunity to close the industry’s age-old exit strategy of selling off marginal assets to undercapitalised firms, who then go bankrupt. Our research will provide analysis on companies and jurisdictions that are failing to plan for retirement, especially in instances that offer the possibility for legal action.