Safe or Safer Offshore Regulatory Compliance, Part 2

Mark Green
Posted March 7, 2019

In this post last week we explained how alternative measures, approved by federal officials, may be used to comply with the 2016 well control rule, as well as all regulatory requirements associated with offshore oil and natural gas development.

Erik Milito, API’s vice president for upstream and industry operations, described how alternative procedures or equipment must provide as much or more safety than the rule provides to be approved by the federal Bureau of Safety and Environmental Enforcement (BSEE), which oversees offshore safety.

We posted this information after some misleading reporting claimed these alternatives are “waivers” from the well control rule, which lets industry sidestep safety requirements. Milito said:

“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.”

Now BSEE is chiming in – not surprising, since the agency’s integrity was besmirched. In a letter to members of Congress this week, Lars Herbst, BSEE’s Gulf of Mexico Outer Continental Shelf regional director, called the regulatory provision for alternative procedures or equipment “long-standing,” having been granted by the previous administration as well as the current one. Herbst writes that “zero” waivers have been granted by BSEE regarding the well control rule:

Since 1988, the federal regulations related to the development of the Nation's offshore energy resources have allowed operators, based on BSEE review and approval, to use alternate procedures or equipment (sometimes informally referred to as “alternate compliance”), provided they “meet a level of safety and environmental protection that equals or surpasses current BSEE regulations.” … When an operator makes this demonstration and obtains BSEE approval of its alternate procedures or equipment, it is complying with the regulations.

Herbst writes that BSEE’s engineering review process for alternative procedures or equipment hasn’t changed from the previous administration to the current administration:

BSEE's technical staff critically review each request of this nature to verify that the proposed alternate procedures or equipment meet or exceed the level of safety and environmental protection required in the regulations.

Interestingly, Herbst’s letter details that the pace of approving alternative procedures or equipment was actually higher during the Obama administration:

• The rate of alternate procedures or equipment approvals per day was 79 percent higher during the previous administration as compared to the current administration between Aug. 1, 2016 and March 22, 2018, the timeframe for which data was requested by Politico.
• The rate of alternate procedures or equipment approvals per day was twice as high under the previous administration as compared to the current administration during the same timeframe.

The last point from Herbst is that former BSEE Director Brian Salerno issued a directive effective July 25, 2016 that discussed the use of alternative procedures or equipment and listed the standards and regulatory provisions for which departures should be granted. Herbst ended by taking aim at the misleading report:

We fulfill this mission through vigorous regulatory oversight and enforcement while encouraging industry to seek more efficient and effective means to achieve those goals as they develop and produce America’s energy resources. The article painted a picture of our agency that is contrary to its mission, grossly misrepresents the facts, and would no doubt be confusing to a reader unfamiliar with the long-standing practices of the agency.

Let’s close with a reminder that the oil and natural gas industry is heavily invested in offshore safety – spending, technology, standards, training and safety management. Smart and effective regulation allows offshore operators flexibility, to innovate and develop new technologies to achieve levels of safety required by regulations and higher. Industry takes this approach because safety is foundational to sustaining support for offshore energy development, which our country needs to grow the economy and increase our security in the world.