OneNexus has reached a definitive agreement with Munich Re Energy Transition Finance (MRETF), a subsidiary of reinsurer Munich Re, to back its new funding product.
Under the terms of the collaboration, MRETF will provide backstop capital for OneNexus’ Asset Retirement Obligation (ARO) product.
The new product is intended to give US onshore oil and gas energy industry a ‘cost-effective’ option to cut its environmental footprint.
The funding product will help the energy firms address decommissioning liabilities linked to retiring hydrocarbon producing assets including wells, production and gathering systems.
The deal will enable OneNexus and its subsidiary OneNexus Oklahoma Captive Corp (OOCC) to secure ARO funds in a regulated ‘lock box’ structure until the funds are needed for decommissioning of oil and gas wells.
Additionally, OneNexus will ensure that the wells do not pose further risks by taking control of the plugged wells.
The company noted that funding by its founding members and the partnership with MRETF will provide OneNexus with adequate financing to cover nearly $1.2bn in ARO liabilities.
OneNexus co-founder Tony Sanchez said: “As we get down to the business of managing ARO liabilities and plugging wells, we will be helping energy companies become proactive in addressing their decommissioning obligations.
“OneNexus products will ensure that funding for plugging and abandonment activities is available, no matter who owns the wells, far into the future.”
Munich Re Energy Transition Finance managing director Vikram Nath said: “Unplugged or improperly plugged oil and gas wells might lead to harmful emissions, but to date there has been no solution that could address this problem head-on. “We have worked closely with the OneNexus team in structuring this product and are confident that, as this product gains acceptance, it will be a win-win solution for all stakeholders.”