Weighing BSEE's Well Control Rule

While Director Brian Salerno calls it "one of the most comprehensive offshore safety and environmental protection rules ever developed by the Department of the Interior," one industry group said the rule "could result in unintended negative consequences leading to reduced safety, less environmental protection, fewer American jobs, and decreased U.S. oil and natural gas production."

• By Jerry Laws
• Jun 01, 2016

The U.S. Department of the Interior released final regulations April 14 for blowout preventer systems and well control on offshore installations, with Secretary of the Interior Sally Jewell and Director of the Bureau of Safety and Environmental Enforcement Brian Salerno saying the regulations are intended to reduce the risk of an oil or gas blowout that could result in fatalities, serious injuries, or substantial harm to the environment. They said the new regulations are one of the most significant safety and environmental protection reforms the department has undertaken since the Deepwater Horizon disaster in April 2010.

"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."

According to DOI, the final rule¹ addresses all dimensions of well control, including more stringent design requirements and operating procedures for critical well control equipment used in oil and gas operations on the U.S. Outer Continental Shelf. This includes blowout preventer requirements, well design, well control casing, cementing, real-time monitoring, and subsea containment. The rule requires testing to ensure operability of the equipment and provides for continuous oversight of operations, as well as third-party reviews of equipment, real-time monitoring data, safe drilling margins, centralizers, inspection intervals, and other reforms. "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," Assistant Secretary for Land and Minerals Management Janice Schneider said. "This rule includes both prescriptive and performance-based standards that are based on this extensive engagement and analysis."

Key Standards Incorporated in the Final Rule
Established in October 2011 in the wake of the explosion and oil spill in the Gulf of Mexico, BSEE regulates offshore oil and gas operations and also conducts on-site inspections to ensure they comply with regulations, leases, and approved plans. BSEE held an offshore energy safety forum in May 2012 and later conducted more than 50 meetings with industry groups, trade associations, regulators, operators, equipment manufacturers, and environmental organizations, ultimately receiving more than 5,000 pages of technical comments from stakeholders. "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," Salerno said. "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."

BSEE had proposed regulations in April 2015 that incorporated multiple standards, and the final rule incorporates all or designated portions of several industry standards, including the American Petroleum Institute's Standard 53, Blowout Prevention Equipment Systems for Drilling Wells, Fourth Edition; API Recommended Practice 2RD—Design of Risers for Floating Production Systems and Tension-Leg Platforms; API Specification Q1—Specification for Quality Management System Requirements for Manufacturing Organizations for the Petroleum and Natural Gas Industry, Eighth Edition; American National Standards Institute/API Specification 11D1, Packers and Bridge Plugs Second Edition; API RP 17H, Remotely Operated Tools and Interfaces on Subsea Production Systems; ANSI/API Specification 6A, Specification for Wellhead and Christmas Tree Equipment; ANSI/API Specification 16C, Specification for Choke and Kill Systems; and API Specification 17D, Design and Operation of Subsea Production Systems—Subsea Wellhead and Tree Equipment.

In the Purpose section of the rule, BSEE explained why the rule is necessary to prevent a repeat of the disaster, which killed 11 workers and caused a spill of 134 million gallons of oil: "Despite new regulations and improvements in industry standards and practices since the Deepwater Horizon incident, which have resulted in progress in certain areas of safety and environmental protection, loss of well control (LWC) incidents are happening at about the same rate five years after that incident as they were before. In 2013 and 2014, there were 8 and 7 LWC incidents per year, respectively—a rate on par with pre-Deepwater Horizon LWCs. Some of these LWC incidents have resulted in blowouts, such as the 2013 Walter Oil and Gas incident that resulted in an explosion and fire on the rig. All 44 workers were safely evacuated, but the fire lasted over 72 hours and the rig was completely destroyed, resulting in a financial loss approaching $60 million. This incident occurred in part due to the crew's inability to identify critical well control indicators and to the failure of critical well control equipment. Blowouts such as these can lead to much larger incidents that pose a significant risk to human life and can cause serious environmental damage. Ensuring the integrity of the wellbore and maintaining control over the pressure and fluids during well operations are critical aspects of protecting worker safety and the environment. The investigations that followed the Deepwater Horizon incident, in particular, documented gaps or deficiencies in the OCS regulatory programs and made numerous recommendations for improvements."

Industry Groups React to the Rule
The Houston-based International Association of Drilling Contractors and other stakeholders are weighing the impact of the new regulations. IADC President Jason McFarland issued a statement saying in part: "As the owners of drilling rigs and blowout preventers, IADC members are acutely impacted by this rule. Since BSEE issued its initial proposal last year, our members have participated in joint industry work groups to carefully consider each of the points of the lengthy and detailed Well Control Rule, and submitted comments several months ago. Those comments addressed serious issues with some of the technical requirements of the proposed rule, the timing of its implementation and what was determined to be an underestimation of the estimated costs of the proposed requirements. IADC's subject matter experts will, over the next several days, continue to digest the technical aspects of the rule to determine its implications. Our hope, of course, is that BSEE took into consideration the meticulous work of so many industry experts in composing a final rule that enables safe offshore drilling activities without imposing undue financial hardship on those who operate on the outer continental shelf. What often gets lost in this discussion is how much work the industry has done since the Macondo incident to improve offshore safety. This industry did not wait for BSEE to issue regulations to make major changes to our operations and procedures. IADC members are committed to safety and have developed and implemented major changes with regard to equipment, procedures and safety protocols to protect against future well control incidents."

The American Petroleum Institute, a trade association for the oil and gas industry, also said April 14 it was weighing the final rule after warning earlier that BSEE's initial proposal had technical problems that could have made offshore operations less safe. One problematic element was a recommendation to shift operational decision making from rig site personnel to off-site personnel; API said the industry believes on-site personnel "have the best understanding and most complete picture of the current operation, key risks, and critical considerations."

In comments² API submitted in July 2015 along with IADC, the Independent Petroleum Association of America (IPAA), and four other industry groups, they said their 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."

Dan Naatz, IPAA's senior vice president of governmental relations and political affairs, said the final rule could reduce offshore workers' safety and impede energy production. "Offshore producers share the government's goal of enhancing offshore safety and companies continue to work every day to make operations as safe as possible," he said in an April 14 statement.³ "However, after years of the U.S. oil and natural gas industry sharing technical information and areas of concerns in the form of formal comments, letters, and meetings with the Obama Administration, we are disappointed in the final outcome that federal regulators took on this offshore rule. This long-anticipated rule, half a decade in the making, was the federal government’s chance to get it right—to implement new offshore operating standards that would balance workable safety measures with the continued development of America's rich energy resources. Instead, today's highly prescriptive rule could result in unintended negative consequences leading to reduced safety, less environmental protection, fewer American jobs, and decreased U.S. oil and natural gas production. It is imperative that any changes to the current offshore regulatory framework must not compromise the safety of our workers, our environment, and our communities. Federal regulators should seriously reconsider the long-term impacts of this burdensome rule on the uninterrupted supply of affordable, reliable U.S. energy that so many Americans will need for decades to come."

"We are committed to safe operations and support efforts by the government to build upon the progress already made by the industry on safety," said Erik Milito, API's upstream group director. "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. Offshore oil and natural gas development in the U.S. is safer than ever before thanks to diligent, continuous industry leadership and efforts of industry and regulators," he added. "It is imperative that BSEE ensure any new regulatory requirement does not unnecessarily erode the strong safety and national security gains that have been achieved in the last half decade.

"Energy development in the Gulf of Mexico has helped make the U.S. the number one producer of oil and natural gas in the world and has made us energy secure. This rule will affect every offshore energy project for years to come. It is essential to get it right."

Oil & Gas Inspection Activity in OSHA Regions
Region III (Delaware, Maryland, Pennsylvania, Virginia, West Virginia, District of Columbia); Region VI (Arkansas, Louisiana, Texas, Oklahoma, New Mexico); Region VII (Iowa, Kansas, Missouri, Nebraska); Region VIII (Colorado, Montana, North Dakota, South Dakota, Utah, Wyoming); and Region X (Alaska, Idaho, Oregon, Washington state) contain areas of significant upstream activity and have emphasis programs in place to inspect oilfield work sites, according to OSHA.

The Region VI emphasis plan, effective Oct. 1, 2015, notes that Region VI conducted 35 fatality investigations during FY2015 of employers in the upstream oil and gas industry performing activities such as drilling, exploration, and workover—the term that refers to performing major maintenance or remedial treatment on a gas or oil well.

Signed by Regional Administrator John M. Hermanson, the regional notice states that the emphasis program would address explosion, fire, struck-by, caught-in, caught between, and electrocution hazards because past inspections suggested they are the leading causes of death in the oil and gas industry.

OSHA has reported that, from 2003 to 2010, 823 workers in the oil and gas extraction industry died on the job, resulting in a fatality rate for that industry seven times higher than the overall rate for all U.S. industries, according to the Census of Fatal Occupational Injuries.

References
1. http://www.bsee.gov/Regulations-and-Guidance/final-well-control-rule/
2. http://www.api.org/~/media/files/news/letters-comments/2015/15-july/api-iadc-noia-ipaa-ooc-pesa-usoga-well-control-comment-letter-to-bsee.pdf?la=en
3. http://www.ipaa.org/press-releases/obama-administrations-offshore-rule-reduces-safety-hurts-offshore-energy-production/

This article originally appeared in the June 2016 issue of Occupational Health & Safety.