Agency Touts Streamlining of Rule While Maintaining the Rule’s Safety Culture
On April 27, 2018, the federal Bureau of Safety and Environmental Enforcement (“BSEE”) announced proposed revisions to its well control rule, one of the decisive regulatory initiatives implemented under the Obama Administration in response to the loss of life and historic crude oil release arising out of the Deepwater Horizon blowout in 2010. In recommending these revisions, the agency emphasizes the practical implications of the changes while maintaining the safety culture fostered by the rule. The proposed rulemaking was published in the Federal Register on May 11, 2018, and public comments on the rule must be submitted to BSEE by July 10, 2018.
BSEE’s Proposed Changes are in Furtherance of the Trump Administration Agenda
After the 2010 Deepwater Horizon blowout, BSEE, acting under the Obama Administration, implemented a series of rules intended to reduce operational risk in the offshore oil and gas exploration and production industry and prevent future well control incidents resulting in significant crude oil releases. A cornerstone of this regulatory effort was the April 2016 publication of the Blowout Preventer Systems and Well Control Rule (“WCR”), 81 Fed. Reg. 25,888 (April 29, 2016), which imposed updated requirements for equipment and operations associated with well control activities in connection with offshore drilling, completion, workover and decommissioning operations.
In April 2018, soon after the Trump Administration came into office, President Trump issued Executive Order No. 13795, “Implementing an America-First Offshore Energy Strategy.” President Trump directed the Secretary of the Interior to review and reconsider the existing WCR in the context of encouraging energy exploration and production on the Outer Continental Shelf and fostering American energy independence, while ensuring that any such activity is safe and environmentally responsible. Secretary of the Interior Zinke promptly issued Secretarial Order No. 3350, which, among other things, directed BSEE to undertake review of the WCR. The revisions proposed by BSEE on April 27th represent the agency’s formal response to those orders.
Changes Proposed to the WCR
Primary revisions to the April 2016 version of the WCR, including specifically the operation and maintenance of the blowout preventer (“BOP”), that are proposed by BSEE include:
- Replacement of a BSEE-approved verification organization (“BAVO”) with the use of an independent third party for specified BOP certifications and verifications;
- Eliminate the need for a BAVO-issued mechanical integrity assessment report for the BOP stack and system;
- Removal of certain “prescriptive” requirements of real-time monitoring of certain data for well operations that use a BOP system;
- Removal of lift boats from the types of vessels that would trigger a shut-in of producing wells when they approach within 500 feet of a platform;
- Revision of BOP control station and pod testing schedules to limit duplicative testing;
- Clarification of rig movement and certain other reporting requirements to avoid duplicative or redundant notices; and
- Revision of certain well control standards contained in the rule to clarify or better align those standards with applicable API Standards.
Elimination of the BAVO System.
Under the original WCR, BSEE sought to create a more rigorous third party certification and/or verification process for certain critical well control functions (e.g., the ability of the BOP to shear drill pipe and any electric-, wire-, and slick-line to be used in the well) and established the BSEE-approved verification organization that would replace the myriad of independent third-party reviewers that were in use at the time. However, BSEE reports that since the publication of the original WCR, the agency has had increased interaction with independent third parties to better understand how they operate and carry out certifications and verifications. BSEE is now of the opinion that there is no real meaningful change to the confirmatory process by replacing independent third-party reviewers with BAVOs and, thus, the agency proposes that the BAVO system be eliminated. The rationale for eliminating the BAVOs is that the agency expects most of the independent third parties currently being used by offshore operators (and that have been extensively used by such operators in the past) will apply to become, and are expected to become, a BAVO. Consequently, addition of the BAVO system would be redundant, resulting in increased procedural burdens and costs without giving right to meaningful improvements to safety or environmental protection. Moreover, BSEE believes that if it becomes aware of any performance issues with an independent third party, there remain options for BSEE to address the issues, such as through a Safety and Environmental Management System (“SEMS”) audit or verifications made through the permitting process.
Elimination of a BAVO-Issued Mechanical Integrity Assessment for the BOP.
The original WCR, requires operators to, once every 12 months, submit a Mechanical Integrity Assessment (“MIA”) Report for a subsea BOP, a BOP being used in a high pressure, high temperature environment, or a surface BOP on a floating facility. This MIA Report is required to be completed by a BAVO, and the BAVO must also certify that the report had been submitted. Notwithstanding the proposed elimination of the BAVO process, BSEE has further assessed the basis for the MIA Report and determined that the information in the report is redundant, as there is an unrelated, separate requirement that operators provide information and verification on BOP equipment capabilities. The agency views the independent third-party verifications imposed on operators with respect to BOP equipment capabilities (i.e., that the BOP systems have the appropriate capabilities and are fit for service for a specific well and location) as adequate, obviating the need for the separate MIA Report.
Removal of Certain Prescriptive Real-Time Monitoring for a BOP.
BSEE proposes to replace many of the prescriptive real-time monitoring requirements for a BOP with a performance-based approach. The agency would still require the ability to gather and monitor real-time well data using an independent, automatic and continuous monitoring system that records, stores and transmits data for the BOP control system, the well’s fluid handling system, and the well’s downhole conditions. However, as proposed, BSEE would eliminate certain provisions in the WCR containing inflexible requirements regarding how the data is to be handled and, instead, allow for operator-specific approaches for handling the data. The operator would continue to be obligated to develop and maintain a real-time monitoring plan, and the plan and all real-time monitoring data must be made available to BSEE upon request. The agency is seeking public comments on alternative ways to meet real-time monitoring requirements, as well as comments about the appropriateness of using real-time monitoring for workover, completion and decommissioning operations or whether such monitoring should be limited to drilling operations.
Exclusion of Lift Boats from Well Shut-In Procedures.
Under the original WCR, certain safety-related measures, including the shut-in of producing wells, must take place when a mobile offshore drilling unit (“MODU”) or lift boat conducts operations within 500 feet of the platform upon which the wells are located. BSEE has re-evaluated lift boat activities since the adoption of the WCR and determined that the vast majority of lift boats used on the federal Outer Continental Shelf are relatively small as compared to the size of MODUs and thus would not have the same operational impacts and potential risks as a MODU. Consequently, BSEE proposes to exclude lift boats from safety-related measures as these vessels approach to within 500 feet of a platform. BSEE acknowledged, however, that it continues to assess the effects and sizes of lift boats for potential future rulemakings, and may gather additional information and provide guidance on a case-by-case basis for any lift boats comparable in size to a MODU.
Revision of BOP Control Station and Pod Testing Schedules.
Under the original WCR, in connection with BOP system testing requirements, operators are obligated to “[a]lternate testing pods between control stations.” Though direct, this requirement is unclear as to the sequencing and timing of testing control stations and pods and BSEE proposes to clarify the testing schedules so that operators may develop schedules that allow for alternating testing between the control stations, and also between the pods for subsea BOPs. The agency’s intent in alternating the testing is for the operator to ensure that each control station, and each pod for subsea BOPs, can properly function all required BOP components. BSEE reports that based on its experience during implementation of the original WCR, this alternative testing approach would help ensure BOP functionality while not requiring unnecessary duplicative testing.
Clarification of Rig Movement Reporting Requirements.
The original WCR required reporting to BSEE of all rig movements on and off locations. Under the proposed rulemaking, BSEE proposes clarifying provisions on when such notifications would not be required, under circumstances that are not addressed under the original WCR. In particular, reporting would not be necessary for rig movements to and from the safe zone during permitted operations. Additionally, if a rig unit is already on a well, BSEE would not require notification for any additional rig unit movements on that well. BSEE indicated that based on its experience, these clarifying provisions would minimize the number of duplicative rig movement notifications submitted to BSEE under these circumstances but would not impact safety because the agency would still receive initial rig movement notifications and would be aware of rig unit locations.
Sync Up Between Well Control Standards and applicable API Standards.
Changes are proposed to certain of the well control standards under the original WCR to clarify or better align those standards with applicable API Standards. For example, certain accumulator requirements established under the WCR for a subsea BOP system are proposed to be revised to better align with API Standard 53 (regarding Blowout Prevention Equipment Systems for Drilling Wells). In proposing this change, BSEE acknowledges that it was unnecessary in the original WCR to specifically address only subsea requirements when the accumulator system works together with surface and subsurface components to achieve full functionality, and API Standard 53 addresses the surface and subsurface aspects of the accumulator system. The agency states that these accumulator system revisions would increase operator flexibility to utilize the appropriate accumulator capacity to perform the necessary BOP emergency functions. In another example, BSEE points to a conflict between two API standards in the original WCP — Standard RP 17H (first edition) and Standard 53 — and recommends replacement of RP 17H with the second edition of RP 17H to eliminate the conflict. Utilization of the updated API Standard ensures that the appropriate methods are used by operators to comply with the API Standard 53 BOP closure timeframes.
Proposed Changes to the WCR Seek to Jettison Unnecessary Burdens
BSEE describes the proposed rule changes as an infusion of practicality, indicating an effort to maintain BOP system functionality and limit or avoid duplicative efforts not viewed as compromising safety. In all, BSEE reports that only 59 of the 342 provisions comprising the WCR are considered appropriate for revision, representing less than 18% of the WCR.
BSEE views these changes as fortifying the Trump Administration’s policy of increasing domestic oil and gas production and, thus, facilitating the United States’ energy dominance. However, BSEE makes a concerted effort in emphasizing that significant safeguards of the 2016 version of the WCR will remain unchanged by the proposed rulemaking. BSEE’s intent in making these changes is to amend, revise or remove current regulatory provisions creating “unnecessary burdens” on stakeholders while ensuring safety and environmental protection. In particular, BSEE clearly indicates that the proposed rulemaking does not affect WCR requirements relating to the use of BOPs with double shear rams or the standards imposed for the maintenance and repair of BOP equipment. Also, the agency states that personnel training standards for repairs and maintenance and drilling margins required to safely drill a well remain unchanged. Further, BSEE states that the requirements imposed on independent third parties for verification of the shearing capability of BOPs as well as the associated shearing certification process and criteria used to establish shearing performance remain unchanged under the proposed rulemaking.
Commenting on the Proposed Rule
It is expected that the proposed rule changes to the WCR will elicit significant support from the offshore energy industry and claims of less stringent standards and increased risks by environmentalists or other supporters of the original 2016 rule. Consequently, comments to the proposed changes to the WCR are critical in helping to shape the final rule.
Moreover, BSEE is specifically seeking comments on various aspects of the rulemaking, including matters not discussed above, such as:
- the adequacy of the well drilling margin (i.e., the deviation from the established drilling fluid weight used in a well) of 0.5 pounds per gallon;
- the effectiveness of using an alternative cutting device for shearing electric-, wire- or slick-line if the blind shear rams are unable to cut and seal a well under maximum anticipated surface pressure;
- whether the BOP testing interval should be 7 days, 14 days, or 21 days for all types of operations including drilling, completions, workovers and decommissioning; and
- the adequacy of current functional and pressure test requirements in predicting the performance of subsea BOPs in subsequent drilling operations.
The proposed rulemaking was published in the Federal Register May 11, 2018. Public comments on the proposed revisions must be submitted by July 10, 2018.