"Amplify Energy Cashed Out Cleanup Fund While Racking Up Violations"

"The company’s owners have a history of maximizing profit at the public’s expense."

"Years before Amplify Energy made headlines for its ruptured pipeline that spewed oil into Southern California ocean waters in early October, the company’s owners were successfully fighting in court to change its obligation to maintain federally mandated funds for plugging and abandoning offshore oil and gas wells and equipment.

Capital & Main reviewed records that show the company cashed out funds required by the government so that taxpayers don’t foot the bill for cleaning up these operations, reducing it from $90 million to just $300,000. Instead, it swapped out the cash with surety bonds, which some experts say are a less preferred form of financial assurance when it comes to offshore decommissioning obligations.

“I’d say restricted cash is about as secure as things get so [it] is preferable to a surety bond,” explained Rob Schuwerk, executive director of the Carbon Tracker Initiative, a think tank that analyzes the financial impact of the energy transition.

Amplify was allowed to do this due to lax regulations that don’t require companies to keep enough reserves on hand. Companies can keep cash in a restricted trust or post bonds for cleanup costs, but the total amount currently pledged is woefully inadequate; out of upwards of $50 billion in potential liabilities for plugging and abandoning offshore wells in U.S. waters, only about $3.47 billion has been pledged in total, according to the Carbon Tracker Initiative."

Aaron Cantu reports for Capital & Main October 25, 2021.

Source: Capital & Main, 10/27/2021