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Deepwater Disaster Spurs Offshore Rules

Monday, April 18, 2016

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Federal officials have announced the release of new well control regulations intended to reduce the risk of death, serious injury or substantial harm to the environment as the result of an offshore oil or gas blowout.

Secretary of the Interior Sally Jewell and Brian Salerno, director of the Bureau of Safety and Environmental Enforcement, unveiled the new rules—said to be one of the most significant safety and environmental protection reforms the Interior Department has undertaken since the 2010 Deepwater Horizon explosion and oil spill—Thursday (April 14).

According to the joint announcement, the final rule is a comprehensive regulation addressing all aspects of well control. It establishes more stringent design requirements and operating procedures for well control equipment in oil and gas operations, as well as for the design and monitoring of high-pressure undersea oil wells.

offshore oil rig
© iStock.com / Serge Dubrovskii

The Department of the Interior and Bureau of Safety and Environmental Enforcement recently unveiled a final rule intended to reduce the risk of death, serious injury or substantial harm to the environment as the result of an offshore oil or gas blowout.

“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,” Jewell said.

“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.”

Intended to be phased in over the course of several years, Jewell said implementation could cost the oil and gas industry about $890 million over the next 10 years while delivering approximately $636 million in benefits in the same time frame through a reduced risk of oil spills and workplace accidents.

For companies that may need time to bring their operations into compliance, most of the requirements do not become effective until 3 months after publication of the final rule. Several requirements have more extended timeframes for compliance.

Strengthening, Modernizing Offshore Standards

The regulations are said to build upon findings and recommendations from investigations into the root causes of the Deepwater Horizon disaster, in which a chain of multiple failures resulted in the loss of well control, an explosion and fire which claimed the lives of 11 workers, as well as a months-long spill.

The rule also developed from a number of reforms put into practice since the accident to strengthen and modernize offshore energy standards and oversight and made use of input from consultation with industry groups, equipment manufacturers, federal agencies, academia and environmental organizations.

According to business and market news site Bloomberg, the Deepwater Horizon tragedy brought attention to the process of cementing wells offshore, as well as the multistory blowout preventers in place as as a final protection against uncontrolled surges of oil and gas.

As a result, the final rule specifically addresses the full range of systems and equipment related to well control operations, with a focus on blowout preventer requirements, well design, well control casing, cementing, real-time monitoring and subsea containment.

It requires rigorous testing to ensure equipment is operable and provides for the continuous oversight of operations, all with the goal of improving equipment and systems reliability in order to protect workers and the environment from the potentially devastating effects of blowouts and offshore oil spills.

Deepwater Horizon, 2007
© iStock.com / Bradford Martin

The Deepwater Horizon tragedy (site shown here in 2007) is said to have brought attention to the process of cementing wells offshore, as well as the multistory blowout preventers in place as as a final protection against uncontrolled surges of oil and gas.

“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 Salerno.

As a result, the new rule is said to be in harmony with industry best practices, standards and equipment specifications. For example, the officials noted, new drilling rigs are already being built according to updated industry standards that BSEE used as a foundation for the new rule. Additionally, most rigs comply with recognized engineering practices and original equipment manufacturers’ requirements related to repair and training, they said.

Focus on Safety

Jewell also said the regulations contain measures meant to ensure that oil and gas companies and offshore rig operators are promoting a culture of safety that minimizes risk.

Key features include requirements for blowout preventer systems, double shear rams, third-party reviews of equipment, real-time monitoring data, safe drilling margins, centralizers, inspection intervals and other reforms related to well design and control, casing, cementing and subsea containment.

“We listened extensively to industry and other stakeholders and heard their concerns loud and clear—about drilling margins, blowout preventer inspections, accumulator capacity, and real-time monitoring,” said Assistant Secretary for Land and Minerals Management Janice Schneider.

“This rule includes both prescriptive and performance-based standards that are based on this extensive engagement and analysis.”

Deepwater Horizon 2010
By Petty Officer 2nd Class Justin Stumberg / Public domain via Wikimedia Commons

The regulations are built upon findings from investigations into the root causes of the 2010 Deepwater Horizon disaster, in which a chain of multiple failures resulted in the loss of well control, an explosion and fire which claimed the lives of 11 workers, as well as a months-long spill.

The new regulations also allows for flexibility so that regulatory oversight keeps pace with technological changes, provided future innovations can meet the rule’s standards for safety performance, Jewell and Salerno noted.

Industry Response

While environmental advocacy groups are reported to welcome the tightened federal safety rules, representatives from the oil and gas industry have expressed concerns about costs and investment obstacles, according to The Washington Post.

“We are committed to safe operations and support efforts by the government to build upon the progress already made by the industry on safety,” Erik Milito, director of upstream operations for the American Petroleum Institute, said in a statement. “We must make sure that technical changes were made to aspects of the government’s initial proposal that could have made offshore operations less safe.”

Exxon Mobil Corp., Chevron Corp., Anadarko Petroleum Corp. and other oil companies reportedly lobbied against the final rule, claiming it could bring with it “potentially tens of billions of dollars in new costs, could make some drilling less safe and threaten to reduce energy development in the Gulf of Mexico, which accounts for about 17 percent of U.S. crude production,” Bloomberg wrote.

Further, in a separate report, Bloomberg stated that Exxon, in a March closed-door meeting with DOI officials, said the government “underestimated the time and complexity needed to implement the rules, ignored the reduced production and stranded reserves that would result, and added unneeded operations that could boost risks rather than decrease them.”

According to Exxon, the new rule would bring $25 billion in costs and increase the danger of blowouts by removing the decision-making authority from on-site engineers with decades of experience.

Similarly, according to the news site, an American Petroleum Institute study indicated the draft rule proposed last April would levy new costs of $31.8 billion over the next decade—far higher than DOI estimates.

   

Tagged categories: Bureau of Safety and Environmental Enforcement ; Cement; Certifications and standards; Government; Health and safety; Marine; Offshore; Oil and Gas; Regulations

Comment from M. Halliwell, (4/18/2016, 11:00 AM)

I find the fall out from Deepwater Horizon to be quite interesting. I've recently been dealing with the Atlantic No. 3 site in Alberta, where decisions by the on-site engineers and "industry practice" contributed to a 9 month blowout / wild well and 59 hour fire in 1948. Fortunately, on land, they were able to recover most of the estimated 2 million barrels released (other than what burned), the reservoir damage was generally considered minimal and there was no loss of life. Just like with Deepwater Horizon, Atlantic No. 3 led to new regulations and standards...the industry learned from the mistakes of Atlantic No. 3. Will they learn from Deepwater Horizon, or will the price tag to do things better lead to a Deepwater Horizon version 2.0?


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