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Interior releases well control regs Agency says that the final rule builds on the findings of several investigations into Deepwater Horizon and on stakeholder input ALAN BAILEY Petroleum News
The U.S. Department of the Interior has released new well safety regulations for the drilling of offshore oil wells on the U.S. outer continental shelf. The agency published a proposed version of the regulations in April 2015 and, having revised that version in the light of public comments, has now published the final rule. The regulations, which have come in the aftermath of the Deepwater Horizon disaster in the Gulf of Mexico and have been developed by the Bureau of Safety and Environmental Enforcement, place stringent requirements on well design and the use of well control equipment such as blowout preventers.
Findings from the disaster Interior says that the regulations build on the findings of several investigations into the root causes of the Deepwater Horizon disaster and extensive consultations with industry, equipment manufacturers, federal agencies, academia and environmental organizations.
“The well control rule is a vital part of our extensive reform agenda to strengthen, update and modernize our offshore energy program using lessons learned from Deepwater Horizon,” Interior Secretary Sally Jewell said April 14 when announcing the release of the new regulations. “I applaud BSEE for their work to develop a rule that takes into consideration an intensive analysis of the causes of the tragedy, advances in industry standards, best practices, as well as an unprecedented level of stakeholder outreach.”
“We have made it a priority to engage with industry to strengthen our understanding of emerging technology, to participate with standards development organizations and to seek out the perspectives of other stakeholders,” said BSEE Director Brian Salerno. “We collected best practices on preventing well control incidents and blowouts to inform the development of this rule. As a result this is one of the most comprehensive offshore safety and environmental protection rules ever developed by the Department of the Interior.”
Double shear rams The new regulations require the use of blowout preventers with double shear rams, the devices used to cut through and seal the drill pipe of an out-of control well. The idea is that having two rams at an appropriate spacing, rather than one ram, reduces the possibility of some non-severable joint or other feature of the piping impeding the shearing operation. In addition, the regulations require the use of technology that centers the drill pipe during a shearing operation - piping that had shifted off center in the blowout preventer is believed to be a reason for the failure of the blowout preventer in the Deepwater Horizon disaster.
Other regulations relating to blowout preventers require that inspections, maintenance and repairs of equipment are conducted by appropriately trained personnel and that operators report to BSEE on any significant problem encountered with well control equipment. The reporting requirement would enable BSEE to notify other operators of any problem involving a safety issue, BSEE says.
A requirement to conduct pressure testing of blowout preventers every seven days during well workovers and decommissioning has now been relaxed, to align with a testing frequency of at least every 14 days, as is required during drilling and completion operations. The seven-day frequency of testing would increase equipment wear and tear, BSEE says.
The regulations introduce new drilling safety margins and other mandated safe drilling practices, such as the monitoring from onshore of drilling operations in deep water and of operations involving high pressure and high temperature drilling.
Changes to proposed rule Changes to the proposed rule that was published last April include included a provision to relax a prescribed minimum drilling mud weight, provided that an operator submits adequate technical data supporting a lower mud weight specification. BSEE has also modified the regulations relating to hydraulic accumulators, the devices used to activate a blowout preventer in the event of disconnection of the equipment from the drilling rig.
The regulations require major inspections of blowout preventers every five years, but the originally proposed regulations have been modified to allow these inspections to be phased over time, to avoid putting too many drilling rigs out of service concurrently.
The new regulations have introduced specific requirements for the real time monitoring of offshore drilling operations from an onshore location. Faced with criticism that the proposed rule was too prescriptive over how this monitoring should be carried out, the final rule gives operators more flexibility in meeting the monitoring requirement. In particular, an operator can prepare a plan that meets the regulations through procedures appropriate to that particular operator’s situation.
BSEE has dropped a proposal to introduce a regulation requiring blowout preventer technology that is capable of severing any component of a drilling string except the drill bit. The agency says it needs more time to investigate the practicality of this requirement.
Cost/benefit analysis
BSEE says that implementation of the new regulations will cause a reduction of oil spill risk by at least 1 percent, thus creating an annual risk-weighted benefit of around $152 million in saved oil spill related costs. The agency estimates the total annual cost of implementing the requirements in the regulations to be about $82 million. The net annual benefit of the regulations would, therefore, be around $70 million. This cost-benefit analysis does not consider the additional benefit of avoiding the loss of life that can occur as a result of offshore well blowouts.
Industry concerns Some industry presentation material filed in conjunction with meetings held during President Obama’s Office of Management and Budget review of the final rule indicate that the oil industry views the cost of implementing the rule to be much higher than the BSEE estimates.
An economic analysis conducted by a couple of consulting firms for the American Petroleum Institute and published in July 2015, before completion of the final rule, pegs the total cost of implementing the proposed rule in the Gulf of Mexico at around $2.4 billion. The resultant likely reduction in the oil and gas activity in the gulf might result in the loss of 7,000 jobs in 2017, rising to 51,000 by 2027. There would be a corresponding loss to the U.S. gross domestic product of $1.3 billion in 2017, rising to $4.5 billion, the API report says.
Several of the presentations reference what they refer to as over-prescriptive regulation that increases risk through unintended consequences. In a presentation dated March 21, 2016, a group of oil and gas industry trade associations referenced a continuing need for rule clarification, including a need for an understanding of the specific risks that BSEE is trying to address through prescriptive rules. Extensive technical changes that are needed for the proposed rule should be re-proposed, to give the regulated community a meaningful opportunity to comment, the presentation says.
Environmentalists oppose offshore oil A number of environmental organizations have become adamantly opposed to offshore oil development, saying that the risk of environmental damage is unacceptably high. In a Dec. 1, 2015, presentation to the U.S. Senate Committee on Energy and Natural Resources, Jacqueline Savitz, vice president for U.S. Oceans for Oceana, applauded the U.S. Department of the Interior for developing the new well safety regulations and urged implementation of the regulations as soon as possible.
But Savitz also recommended that Congress and the federal administration hold back on further offshore oil development in new areas of the Atlantic and Arctic oceans, saying that offshore drilling is dangerous, harmful to ocean ecosystems and to the human communities that depend on them. Savitz testified that, while improved safety measures are important, the only way to truly prevent the harm caused by offshore oil spills and accidents is a decreased dependence on fossil fuels and a transition to clean, sustainable renewable energy sources such as offshore wind power.
Murkowski: ‘regulatory onslaught’ In an April 14 press release Sen. Lisa Murkowski, R-Alaska, chair of the Energy and Natural Resources committee, expressed her concern about the publication of the final well safety rule.
“The administration’s regulatory onslaught against Alaskan energy production continues unabated. In a period when we should be thinking about ways of making American oil and gas more competitive, the federal government’s prescriptive approach to rule-making often fails to capture the capabilities of American workers that are more nimble and more immersed in evolving technologies and processes than bureaucrats in Washington,” Murkowski said. “The last version of these regulations was ham-fisted, to the point of potentially making offshore operations more dangerous, so I will read the final rule very carefully.”
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