Feds Direct Gulf Oil Companies to Block Unused Wells

Oil and gas companies with operations in the Gulf of Mexico will be required to permanently plug 3,500 abandoned wells and dismantle 650 unused platforms, according to the U.S. Department of the Interior.

The order will become effective October 15, 2010 and affects what is known in the industry as “idle iron”: wells, platforms and pipelines that are no longer used for production or exploration.

The Interior Department emphasized the risk of damage during storm season as infrastructure ages, stating that the order is intended to reduce those hazards. The order reflects growing scrutiny of offshore oil production following the BP well blow-out that spilled more than 200 million gallons of oil into the Gulf.

In the past, oil and gas producers have claimed that such unused equipment could be used in the future to support other active wells in the same area.

MSNBC.com reported that the American Petroleum Institute said that it had been expecting the announcement and had been working with regulators on a schedule for implementation. Spokesman Carlton Carroll told MSNBC.com, “We believe that for most operators, compliance will not be an issue.”

Companies will have 120 days to submit a company-wide decommissioning plan — including dates and details for each individual well and platform.

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