COBEM99

S4 Ciências e Engenharia do Petróleo

Title:

FINANCIAL ASSURANCE SYSTEM IN THE OIL INDUSTRY: A DECISION MODEL FOR AN ENVIRONMENTAL BOND SCENARIO

Summary :

ABSTRACT. IN SEVERAL COUNTRIES FINANCIAL ASSURANCE REQUIREMENTS ARE NOT PART OF A HYPOTHETICAL SCENARIO. IN FACT, THIS REGULATORY REGIME HAS BEEN ADOPTED BY MANY NATIONS GUARANTEEING THAT SUFFICIENT FINANCIAL RESOURCES ARE AVAILABLE FOR THE CLOSURE AND/OR REMEDIATION OF AN OIL FIELD AT THE END OF ITS ECONOMIC LIFE IN THE EVENT THAT THE OWNERS OR OPERATORS BECOME INSOLVENT. BEFORE A PERMIT IS ISSUED A BOND MUST BE DRAWN TO COVER ALL ABANDONMENT AND DECOMMISSIONING RESPONSIBILITIES. THE BOND PROVIDES AN INCENTIVE FOR REGULATORY COMPLIANCE DURING OPERATIONS AND GUARANTEES THAT THE SITE WILL BE RESTORED AFTER ACTIVITIES CEASE. CONSIDERING A HYPOTHETICAL REGULATORY SCENARIO IN BRAZIL THIS PAPER SHOWS AN OIL-PRODUCING PROJECT FACING THE PROBLEM OF SELECTING THE BEST FORM OF BOND IN ORDER TO MINIMIZE ITS FINANCIAL IMPACT. BASED UPON A DISCOUNT CASH FLOW ANALYSIS THIS PAPER PROPOSES A DECISION MODEL THAT ESTIMATES FOR EACH ENVIRONMENTAL BOND THE OPTION WHICH OFFERS THE LEAST ECONOMIC IMPACT IN THE PROJECT AND, AT SAME TIME, PROVIDES THE BEST FINANCIAL GUARANTEE FOR ALL STAKEHOLDERS INVOLVED IN THE PROCESS. KEY WORDS: FINANCIAL ASSURANCE, ENVIRONMENTAL BONDS, DECOMMISSIONING, DECISION MODEL

Author :

Ferreira, Doneivan F.
Suslick, Saul B.

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