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Vol. 15, No. 25 Week of June 20, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Increasing the safety

MMS spells out new safety stipulations for oil drilling operations on the OCS

Alan Bailey

Petroleum News

Hard on the heels of a U.S. Department of the Interior directive for a six-month moratorium on deepwater drilling on the U.S. outer continental shelf, the U.S. Minerals Management Service has issued a notice to lessees spelling out new required safety measures for OCS drilling. The new measures apply to all OCS waters, including water less than 500 feet deep where drilling is still allowed.

“Oil and gas from the outer continental shelf remains an important component of our energy security as we transition to the clean energy economy, but we must ensure that offshore drilling is conducted safely and in compliance with the law,” said Interior Secretary Ken Salazar in a June 8 news release accompanying the publication of the MMS notice. “The deepwater drilling moratorium that is in place will provide time for the presidential commission to complete its work, but production and shallow water drilling may continue under the stronger safety requirements that we are implementing today.”

The Department of the Interior will also be issuing expanded requirements for OCS exploration plans and development plans and, together with the Council on Environmental Quality, is conducting a review of MMS procedures under the National Environmental Policy Act, MMS said.

“We are following an orderly, responsible process for implementing stronger safety and environmental requirements for offshore drilling,” said Bob Abbey, the director of the U.S. Bureau of Land Management and acting MMS director. “We need to make sure that drilling is done right, that it is done safely, and that oil and gas operators are following the law.”

Certification required

Under the terms of the OCS drilling safety notice, MMS now requires the chief executive officer of a company operating an oil well to certify compliance with all MMS regulations that apply to OCS oil and gas operations. The CEO must also certify that well control equipment has been properly maintained and is in working order; that certain key elements of the drilling operation have been reviewed; that all emergency shutdown and drilling vessel dynamic positioning procedures that interface with emergency well control operations have been reviewed; and that personnel have been properly trained and that they are capable of performing both routine and emergency well-control tasks associated with the drilling operation.

Well operators must submit their certifications to MMS by 5 p.m. EDT June 28 or face the possibility of a well-shut-in order, the MMS notice said.

Safety measures

In addition to the certification requirements, the new MMS stipulations spell out a series of required safety measures. The bulk of these measures relate to a well’s blowout preventer, the device that sits at the top of a well to instantly shut the well in if an oil or gas blowout occurs but which spectacularly failed in the case of the Gulf of Mexico oil spill disaster. And OCS operators who were using a blowout preventer on May 27 must report to MMS by June 17 certain specified information about the blowout preventer configuration, blowout preventer test results and any well loss of control events.

Before conducting any new drilling operations from a floating drilling facility an operator must have an independent third party conduct a detailed physical inspection and design review of the well blowout preventer, with the third party inspector submitting a publicly available review report to MMS.

A third party must also verify that the design of the blowout preventer is appropriate for the drilling operation; that the blowout preventer has not been damaged from previous service; that any modifications to the blowout preventer would not compromise its design; and that the blowout preventer will operate properly in the conditions in which it would be used.

An operator must have documentation showing that the blowout preventer has been maintained in accordance with MMS regulations.

Emergency operation

There is also a series of requirements that relate to the emergency operation of a blowout preventer, including the need for a couple of systems that would automatically close the well under certain circumstances; an independent power bank to power the automatic shut down systems; and a capability to use a remote operated subsea vehicle to activate some of the rams that the blowout preventer uses to close the well.

MMS officials will observe mandatory testing of the use of a remote operated vehicle to activate the blowout preventer. And an independent third party must testify that the blowout preventer rams designed to cut through the well pipe in an emergency situation are in fact capable of shearing the drill pipe under the anticipated drilling conditions.

If a “shear ram” is used to cut through the drill pipe in an actual well control situation, the well operator must ensure the subsequent inspection and testing of the blowout preventer and its components, to verify that the equipment will continue to operate effectively.

MMS has also specified some new requirements for well design and construction, including the verification by a professional engineer of the well casing and well cementing designs. The well casing must be installed to meet certain standards, with dual barriers to prevent the flow of fluids through the well in the event of a failure of cement used to block the well.



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Confusion over new GOM drilling permits

The Obama Administration’s six-month moratorium on deepwater outer continental shelf drilling, announced May 27, allowed drilling to continue in water less than 500 feet and the U.S. Minerals Management Service duly issued two shallow-water drilling permits for the Gulf of Mexico on June 2. But, following an outcry by environmental groups against new offshore drilling, the agency rescinded the permits within 24 hours, according to a June 4 story in the Wall Street Journal.

Oil price futures on the New York Mercantile Exchange rose on June 3 amid concerns about tightening oil supplies, the Wall Street Journal said.

And the MMS action prompted the National Ocean Industries Association to send a letter to acting MMS Director Robert Abbey, expressing concern about the apparent shallow-water drilling restrictions and requesting guidance on new offshore drilling safety measures — Bandon Oil and Gas, one of the companies to have a new permit issued and then withdrawn, is a NOIA member, Nicolette Nye, NOIA spokeswoman, told Petroleum News June 14.

But MMS has now re-instated Bandon’s drilling permit, Nye said. And Tim Duncan, senior vice president for business developments for Phoenix Exploration Co., the other company to have a new drilling permit rescinded, told Petroleum News that his company’s permit had also been restored.

Phoenix is now ensuring that it meets new offshore drilling safety stipulations specified by MMS in a notice to lessees that the agency issued on June 8, Duncan said.

—Alan Bailey