Opposition to New Offshore Safety Rules

Wednesday, July 22, 2015 @ 12:07 PM gHale

Offshore oil and gas industry groups are against the Obama administration plan to safeguard exploration, saying the Deepwater Horizon-inspired proposal imposes costly and “ill-advised” mandates that could make some wells impossible to drill.

The Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE) rule, unveiled in April, aims to prevent a repeat of the 2010 Gulf of Mexico disaster by codifying a number of voluntary steps that companies have already taken to better keep offshore wells in check.

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It also lays out specific mandates for the design of wells and emergency devices known as blowout preventers meant to serve as a final protection against uncontrolled surges of oil and gas.

Oil trade groups said the proposed rule goes too far by establishing “prescriptive new requirements that would impose unjustified economic burdens, discouraging economic growth (and) innovation” often without a clear rationale.”

And the groups — including the American Petroleum Institute, Independent Petroleum Association of America and International Association of Drilling Contractors — said some of the proposed mandates “would introduce new risk rather than reduce (it).”

More than a dozen oil companies and drilling contractors filed public comments critical of BSEE’s well control rule.

Exxon Mobil Corp. said the proposed mandates would do more harm than good, adding “new potential sources of failure” to “safely run” operations.

“Risk would be increased by technically unsubstantiated and overly prescriptive rules that would prevent operators from applying the most fit-for-purpose well design and operations to the given risk profile of a drilling opportunity,” the company said. “The proposed regulations would significantly increase the size, cost and footprint of a drilling facility and in many cases could not be installed or retrofitted on existing drilling and production facilities.”

The industry focused much of their criticism on a proposal to define the “safe drilling margins” in which companies can operate. A safe drilling margin should ensure drilling fluids exert enough pressure inside a well to keep oil and gas from flowing out of the underground formation — without exerting so much pressure they fracture that rock itself.

Wells that have wide drilling margins are generally easier wells; narrow margins make for more complex operations.

Under current regulations, operators must maintain a safe drilling margin, as identified in their drilling permits, but federal regulations don’t define exactly what it should be nor what data should factor into the calculation.

Under the new proposal, the safe drilling margin would end up codified at a half pound per gallon between the weight of drilling fluids and the amount of pressure a formation can withstand before fracturing.

One criticism of the management of BP’s failed Macondo well was that the drilling margin was analyzed without data from deep underground. Under the new proposal, that would change; oil companies would have to calculate the drilling margin using downhole data, including measurements indicating the weakest amount of pressure that might cause a crack in the formation.

Companies would have to stick within the safe drilling margin or halt operations.

The industry trade group coalition said nearly two-thirds of offshore wells drilled since June 2010 in U.S. waters would not be possible under the proposed new safe drilling margin requirements.

“The current risk-based approach to managing drilling margin, in combination with existing regulatory oversight, has been demonstrated to safely and economically drill wells having narrower drilling margins than (those that would be allowed),” the coalition said.

“Given that hundreds of wells have been successfully and safely drilled with drilling margins smaller than would be allowable under the proposed rule, it is not clear what problem the rule is trying to solve,” the groups said.

Chevron said it drilled 163 well bores in the Gulf of Mexico since Macondo, following industry standards updated since the 2010 spill. But some of the proposed requirements don’t build on that “significant progress,” Chevron said, and instead “would only impose an increased and capricious burden that may make some wells uneconomical, resulting in abandoned or undrilled projects and stranded reserves.”