Dialogue is Key to Getting Offshore Well Control Rule Right

Mark Green
Posted September 14, 2015

Safe, responsible energy development in the Gulf of Mexico is vital to the U.S. economy and job growth, as well as U.S. energy and national security. Each of these points likely will come up during a U.S. House Natural Resources Committee hearing on the impact of federal policies on energy production and economic growth in the Gulf, Tuesday in New Orleans.

Industry is committed to safe offshore operations. This commitment is seen in a number of industry operation standards and also in the creation of the Center for Offshore Safety.  Safe and environmentally responsible offshore operations are the standard in the Gulf and will continue to be through industry stewardship and regulatory oversight.

That’s the point behind an industry request that the federal Bureau of Safety and Environmental Enforcement (BSEE) have additional discussion of the agency’s proposed well control rule – to address fundamental technical and economic flaws in the proposed rule. API Upstream Group Director Erik Milito:

“The oil and natural gas industry supports hundreds of thousands of Gulf Coast jobs .Offshore energy has driven Louisiana’s economy for generations, and building on that growth requires a regulatory approach that embraces safe, responsible development.”

API has asked BSEE to arrange workshops with each of eight industry workgroups that were involved with analyzing certain sections of the proposed well control rule, to discuss problems with the proposal that could increase risks to people and the environment. Milito:

“We are committed to working with government officials to ensure that America’s offshore energy development is the safest in the world. Industry standards and smart regulatory oversight are key to our success, but the well-control rule, as proposed, does not meet this commitment and could ultimately reverse existing improvements to offshore safety.”

In official comments to BSEE in July, API and a number of other energy organizations pointed out flaws in BSEE’s proposed rule. The organizations wrote:

Our members recognize that offshore operations must be conducted safely and in a manner that protects the environment. The U.S. offshore industry has advanced the energy security of our nation, and contributed significantly to our nation’s economy. Our goal is for operations integrity and fit-for-risk designs, and we are concerned that many of the requirements in the proposed rule would increase environmental and safety risk in drilling operations rather than improve safety. In addition, we are concerned that the proposed rule would materially impair the ability to maintain current production operations, reduce future development and production or result in taking of leases and stranding of valuable reserves. To avoid these negative unintended consequences it is imperative that BSEE and industry collaborate to develop rules that are more workable and effective.

Some of the specific problems detailed in the organizations’ comments:

• An “infeasible” timeline to implement the rule. BSEE proposes implementation three months after the rule is published, but engineering and upgrading of blowout prevention (BOP) equipment and control systems will take a minimum of three years to implement.
• Requirements for BOP equipment beyond industry’s standards are unnecessary and will not improve safety. “Heavier stacks will result in unintended negative consequences related to their handling, deployment and operation which will impact well construction and design and impose limitations to re-entry into existing wells.”
• Expanded subsea testing of the Deadman/Autoshear beyond current practices and standards could “increase risk of harm to personnel, negatively impact the environment and cause unrecoverable damage to the rig or well.”
• A number of the casing and cementing requirements in the proposal are unclear and require design changes that are either not feasible or reduce the chance of safe and successful execution.
• Unintended consequences of the proposed rule will include “significant economic and operational hurdles” that could result in 10-year cumulative costs of about $32 billion (compared to the agency’s 10-year estimate of $883 million).

The organizations wrote:

In developing this response, industry drew on the expertise of eight workgroups comprised of over 300 subject matter experts from more than 70 companies and tens of thousands of man hours. Industry is providing this technically-based set of comments to aid BSEE in its efforts to create a robust and effective well control rule. … Going forward substantial industry-regulator engagement is imperative to generate and implement a workable and effective set of rules.

Industry has the experts who best understand the technical aspects of offshore operations and how to effectively advance safety.  Continued dialogue between government and industry experts is key to making sure the final product does just that.