16. Commitments

Pursuant to the Purchase and Sale Agreement with Total E&P, we may fulfill security requirements related to ARO for certain properties through securing surety bonds, or through making payments to an escrow account under a formula pursuant to the agreement, or a combination thereof, until certain prescribed thresholds are met. Once the threshold is met for that year, excess funds in the escrow account are returned to us. As of December 31, 2021, we had surety bonds related to the agreement with Total E&P totaling $96.7 million and had no amounts in escrow. The threshold escalates to $103.0 million for 2023 in $3.0 million per year increments.

Pursuant to the Purchase and Sale Agreement with Shell Offshore Inc. (“Shell”) related to ARO for certain properties, we have surety bonds that are subject to re-appraisal by either party. As of December 31, 2021, neither party had requested a re-appraisal to be made. The current security requirement of $64.0 million, which we have met, could be increased up to $94.0 million depending on certain conditions and circumstances.

Pursuant to the Purchase and Sale Agreement with Exxon related to ARO for certain properties, we were required to obtain $33.0 million of surety bonds as of December 31, 2021. This amount increases on June 1 of the following years to $36.3 million - 2022; $40.0 million - 2023; $44.0 million - 2024; $48.3 million - 2025; $53.2 million - 2026, and future increases in increments ranging $5.3 million to $10.4 million per year until the total amount reaches $114.0 million in 2034. We may request a redetermination with Exxon every two years by providing certain documentation as provided in the purchase agreement. We are required to maintain this scheduled level of bonds until the properties are fully plugged, abandoned, and restored in accordance with applicable laws and regulations.

Pursuant to the Purchase and Sale Agreement with Conoco related to ARO for certain properties, we were required to obtain $49.0 million of surety bonds and are required to maintain this level of bonds until the properties are fully plugged, abandoned, and restored in accordance with applicable laws and regulations.

During 2021, 2020 and 2019, we had surety bonds primarily related to our decommissioning obligations or ARO. Total expenses related to surety bonds, inclusive of the surety bonds in connection with the agreements described above, were $6.0 million, $5.4 million, and $4.7 million during 2021, 2020 and 2019, respectively. The amount of future commitments is dependent on rates charged in the market place and when asset retirements are completed. Estimated future expenses related to surety bonds were based on current market prices and estimates of the timing of asset retirements, of which some wells and structures are estimated to extend to 2065. Future payment estimates are (in millions): 

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Future surety bond costs may change due to a number of factors, including changes and interpretations of regulations by the BOEM.

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In conjunction with the purchase of an interest in the Heidelberg field, we assumed contracts with certain pipeline companies that contain minimum quantities obligations that extend to 2021. For 2021, 2020 and 2019 expense recognized for the difference between the quantities shipped and the minimum obligations was $2.1 million, $4.5 million and $4.5 million, respectively. As of December 31, 2021, the estimated future costs are (in millions):

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As of December 31, 2021 we have drilling commitments of $2.9 million for 2022. We do not have any long-term drilling rig commitments as of December 31, 2021.

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See Note 8 – Leases for information on leases.