This section provides information on (1) the types of wells and structures in the Gulf, (2) offshore leasing, (3) financial assurance requirements, (4) decommissioning requirements, and (5) oil and gas infrastructure installed and removed in the Gulf. Lessees drill wells to access and extract oil and gas from geologic formations. According to an Interior publication, “exploratory” wells are drilled in an area with potential oil and gas reserves, while “development” wells are drilled to produce oil and gas from a known reserve. An exploratory well may not actually produce any oil or gas, while a successful development well produces oil or gas. Wellheads that are located on a fixed platform (typically in shallow water) are referred to as “dry tree” wells, and wellheads that are located on the seafloor (typically in deep water) are referred to as “subsea” or “wet tree” wells. Offshore oil and gas structures in the Gulf vary in size and complexity. The simplest structures are found in shallow water and include caissons and well protectors. A caisson is a cylindrical or tapered large diameter steel pipe enclosing a well conductor and is the minimum structure for offshore development. A well protector provides support to one or more wells with no production equipment and facilities. A more complex structure in shallow water is a fixed platform, which uses a jacket and pilings to support the superstructure, or deck. The deck is the surface where work is performed and provides space for crew quarters, a drilling rig, and production facilities. Most of the large fixed platforms have living quarters for the crew, a helicopter pad, and room for drilling and production equipment. A typical platform is designed so that multiple wells may be drilled from it. Wells from a single platform may have bottom-hole locations many thousands of feet (laterally displaced) from the surface location. Structures in deep water rely on other methods to anchor to the ocean floor. For example, a “compliant tower” structure supports the deck using a narrow, flexible tower and a piled foundation. According to an industry publication, the flexible nature of the compliant tower allows it to withstand large wind and wave forces associated with hurricanes. Other common deep-water structures include the tension leg platform, floating production system, and spar platform. Illustrations of these structures are shown in figure 1. Management of offshore oil and gas resources is primarily governed by the Outer Continental Shelf Lands Act, which sets forth procedures for leasing, exploration, and development and production of those resources. The act calls for the preparation of an oil and gas leasing program designed to meet the nation’s energy needs while also taking into account a range of principles and considerations specified by the act. Specifically, the act provides that “anagement of the outer Continental Shelf shall be conducted in a manner which considers economic, social, and environmental values of the renewable and nonrenewable resources contained in the outer Continental Shelf, and the potential impact of oil and gas exploration on other resource values of the outer Continental Shelf and the marine, coastal, and human environments.” The Outer Continental Shelf Lands Act also requires the Secretary of the Interior to prepare a 5-year schedule of proposed lease sales, indicating the size, timing, and location of leasing activity as precisely as possible. Every 5 years, Interior selects the areas that it proposes to offer for leasing and establishes a schedule for individual lease sales. These leases may be offered for competitive bidding, and all eligible companies are invited to submit written sealed bids for the lease and rights to explore, develop, and produce oil and gas resources on these leases. These rights last for a set period of time, referred to as the initial period of the lease, and vary depending on the water depth. Historically, Interior’s Minerals Management Service managed offshore federal oil and gas activities and collected royalties for all producing leases. In May 2010, in an effort to separate major functions of offshore oil and gas management, Interior announced the reorganization of the Minerals Management Service into the Bureau of Ocean Energy Management, Regulation, and Enforcement, responsible for offshore oil and gas management, and the Office of Natural Resources Revenue, responsible for revenue collections. Subsequently, in October 2011, the Bureau of Ocean Energy Management, Regulation, and Enforcement was separated into BOEM and BSEE. BOEM oversees resource management activities, including preparing the 5-year outer continental shelf oil and gas leasing program; reviews oil and gas exploration and development plans and environmental studies; and conducts National Environmental Policy Act analyses. BSEE oversees operations and environmental compliance, including reviewing drilling permits, inspecting offshore drilling rigs and production platforms, assessing civil penalties, developing regulations and standards for offshore drilling (including those related to decommissioning), and ensuring the conservation of natural resources. The Outer Continental Shelf Lands Act authorizes the Secretary of the Interior to promulgate regulations necessary to administer the outer continental shelf leasing program, including regulations concerning financial assurance. Under this authority, Interior promulgated regulations and developed financial assurance procedures to protect the government from incurring costs if a lessee fails to meet its lease obligations, including its obligation to decommission offshore infrastructure. Under these regulations and procedures, BOEM regional directors may require a lessee to provide a bond —referred to as a “supplemental bond”—that covers the estimated costs of decommissioning for a lease. BSEE is responsible for estimating costs associated with decommissioning liabilities. If a lessee is unable to accomplish decommissioning obligations as required, the federal government can use the bond to cover decommissioning costs. However, if BOEM determines that at least one lessee has sufficient financial strength to accomplish decommissioning obligations on the lease, BOEM may waive the requirement for a supplemental bond. Under BOEM and BSEE regulations, lessee liability is “joint and several”—that is, each lessee is liable for all decommissioning obligations that accrue on the lease during its ownership, including those that accrued prior to its ownership but had not been performed. In addition, a lessee that transfers its ownership rights to another party will continue to be liable for the decommissioning obligations it accrued. According to BOEM officials, BOEM ensures that all decommissioning obligations on offshore leases are required to be covered by either a supplemental bond or a current lessee that has the financial ability to conduct decommissioning. According to Interior regulations, lessees must permanently plug all wells, remove all platforms and other structures, decommission all pipelines, and clear the seafloor of all obstructions created by the lease and pipeline operations when this infrastructure is no longer useful for operations. Lessees must also permanently plug wells and remove platforms within 1 year after a lease terminates. BSEE refers to infrastructure that is no longer useful for operations on active leases as idle infrastructure (or “idle iron”) and infrastructure on expired leases as terminated lease infrastructure. In general, BSEE’s guidance defines idle infrastructure as follows: A well is considered idle if it has not been used in the past 5 years for operations associated with exploration or development and production of oil or gas, and if the lessee has no plans for such operations. A platform is considered idle if it has been toppled or otherwise destroyed, or it has not been used in the past 5 years for operations associated with exploration or development and production of oil or gas. Companies may postpone decommissioning idle wells and platforms to defer the cost of removal, increase the opportunity for resale, or reduce decommissioning costs through economies of scale and scheduling, among other reasons. However, postponing decommissioning can be costly because the longer a structure is present in the Gulf the greater the likelihood it will be damaged by a hurricane. According to Interior documentation, decommissioning a storm-damaged structure may cost 15 times or more the cost of decommissioning an undamaged structure. In 2005, Hurricanes Katrina and Rita destroyed 116 structures and significantly damaged another 163 structures and 542 pipelines in the Gulf, according to Interior documentation. According to BSEE officials, as of April 2015, the Gulf contained 13 destroyed structures with 16 associated wells. Storm-damaged or toppled structures present a greater risk to safety and require difficult and time-consuming salvage work. After preliminary salvage work that can take weeks, divers cut and remove structural components while crane assemblies remove the components and place them on a barge for transport and disposal. Additionally, when working in areas with strong currents and unconsolidated material, coffer dams are often constructed on the seabed to prevent material from slumping back in on the dive crews and equipment. Figure 2 shows the annual number of wells drilled and plugged in the Gulf from 1947 through 2014. During this time period, lessees drilled a total of 52,223 wells in the Gulf (including 18,447 exploratory wells and 33,776 development wells) and plugged a total of 29,879 wells (including 4,017 temporarily abandoned wells and 25,862 permanently abandoned wells). Figure 3 shows the annual number of structures installed and removed in the Gulf from 1947 through 2014. During this time period, lessees installed a total of 7,038 structures in the Gulf. In addition, starting in the 1970s, lessees began removing structures from the Gulf. Specifically, lessees removed a total of 4,611 structures from 1973 through 2014. Most of the structures installed and removed were fixed platforms and caissons installed in shallow water. Between the late 1940s and early 1960s, lessees only drilled wells in shallow water. However, starting in the mid-1960s, lessees began drilling wells in deep water. Figure 4 shows the annual number of wells drilled and plugged in deep water in the Gulf from 1966 through 2014.