Safe or Safer Offshore Regulatory Compliance

Mark Green
Posted February 28, 2019

Months before the federal offshore well control rule went into effect in July 2016, API told Congress the safety regulation could actually increase risks associated with offshore oil and natural gas development – that its rigid requirements could stifle innovation and thwart the effectiveness of new operational technologies.

The 2016 rule is an example of “prescriptive” regulation, a one-size-fits-all approach that requires certain processes, procedures and tests. It was and is the wrong approach for offshore safety – mainly because every oil and natural gas well has different characteristics: geology, depth, water pressure and temperature and other variables that factor into developing the best safety plan for a particular well.

In that context offshore operators seek government-approved alternative compliance paths – which they’ve done since the rule’s launch in 2016, when the Obama administration was in charge of the Bureau of Safety and Environmental Enforcement (BSEE), the overseer of offshore safety. Indeed, the requests show the rule needs fixing.

Recently, there’s been some misleading reporting on these alternative compliance measures (also called “departures”) – incorrectly calling them “waivers” and suggesting BSEE’s approval of them amounts to “gutting” parts of the well control rule while allowing industry to “sidestep” requirements for blowout preventers, a key piece of well safety equipment. 

First, federal regulation allows operators to seek government-approved alternative procedures or equipment – and has done so for decades.

Second, federal regulation allows alternative compliance only when the government determines that the measure provides a level of safety and environmental protection that equals or exceeds safety levels set out in the regulation. Erik Milito, API vice president for upstream and industry operations, says this allows companies to maintain safety across the varied conditions in offshore development through innovation and technological advances, which typically outdistance regulation:

“This is standard operating procedure whereby government regulations are unable really to keep up with technology and innovation. And when you have prescriptive requirements you often have companies going to government to not seek a ‘waiver’ or an ‘exemption’ but to seek a [departure] or alternative means of compliance and to get that approved by government. This has been happening beginning back in the late 60s.”

Milito says the bar for government approval of alternative compliance measures is high:

“You must provide sufficient justification so that the government will be able to determine that your proposed alternatives provide a level of safety and environmental protection that equals or surpasses current requirements. So departures are actually an effective way to ensure you’re maintaining the current level of safety or surpassing it. In many cases you’re seeing companies move forward and deploying technologies designed to increase the level of safety.”

To call these “waivers” is incorrect. The responsibility to comply with safety regulations remains; it is not discarded, as some recent reporting suggests. Milito:

“You’re not getting a waiver from the regulations. The government still has to approve the level at which you’re applying (alternative measure). …Whether it’s testing, maintenance, drilling margin – you have to come forward with or show that you’re going to do it in a different way, but it’s going to be safe or safer than what the regulation requires.”

The bottom line is industry is committed to offshore safety through regulation that smartly provides the flexibility to work effectively across the varied conditions found in offshore energy development and that allows and even encourages innovation and technological advances that enhance safety.

Safety is at the core of sustaining support for the offshore development that’s critical to America’s economy and energy security. This is seen in more than 100 exploration and production standards created or strengthened since 2010 and in the creation of the Center for Offshore Safety, which helps operators develop safety and environmental management systems that ensure proper training and help prevent potential incidents from escalating. Milito:

“Over the past several years you have seen that we have worked closely with the government in making sure that we’re putting forward effective, fit-for-purpose rules that actually increase safety and do not increase risk.”

Last point: Words matter. Calling a government-approved, alternative compliance measure a “waiver” wrongly communicates that the well control rule is being waived or discarded and that safety is being compromised. Neither is true, and the misplaced discussion becomes a distraction to the core mission of safely developing the offshore energy America needs.