DRILLBITS – July 2016
This Month’s Articles
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U.S. House Interior Appropriations Act Recognizes Energy Industry’s Economic Contribution
In response to the passage of H.R. 5538, the Interior Appropriations Act on 14 July by the U.S. House of Representatives, IADC President Jason McFarland issued the following statement:
“The passage of the Interior Appropriations Act with robust support for oil and gas provisions indicates that House members recognize the tremendous role the energy sector plays in ensuring America’s economic stability. IADC is pleased that the $32 billion measure, which will fund the Interior Department, EPA and other related agencies in fiscal year 2017, contains language that is supportive of oil and gas activities.
“Passage of several amendments restricting the Department of Interior from moving forward on several recent harmful regulations including BSEE’s Well Control Rule, arctic regulations, financial assurance, venting and flaring and methane regulations, and the BLM’s hydraulic fracturing rule is a recognition that imposing costly, prescriptive and duplicative regulations is unnecessary and impedes economic development.”
“The approval of this bill is an important step forward in ensuring that oil and gas regulations are fair and sensible. IADC thanks those House members who voted in support of the energy industry, and for the leadership of those Members who proposed amendments to scale back these harmful regulations to help ensure America’s continued energy renaissance.”
Specifically, approved amendments that were supported by IADC include:
- #13 – Prohibits funds to be used to remove 3 Arctic Sales from the 2017-2022 Outer Continental Shelf Oil and Gas Leasing Proposed Program – Continued Arctic leasing is important to US energy and national security. The proposed lease sales should be retained in the 2017-2022 Five Year Leasing Program. http://amendments-rules.house.gov/amendments/RedoDY134711161119441944.pdf
- #5 – Ensures that no money is permitted for the implementation of the Well Control Rule – Given the uncertainty with the rule and the fact that BSEE still has not responded to necessary questions for clarification, the rule is not ready to be implemented on its July 28thimplementation date so BSEE needs more time. http://amendments-rules.house.gov/amendments/BOUSTA_071_xml711161551485148.pdf
- #4 – Prohibits the Secretary of the Interior to implement, administer, or enforce any rule or guidance substantially similar to the proposed guidance that the Bureau of Ocean Energy Management made available for public comment on September 22, 2015, regarding financial assurances for oil and gas operations on the Outer Continental Shelf. – The changes proposed and expected by BOEM are not necessary to ensure financial assurances and will make it impossible for a number of entities to explore and produce U.S. oil and natural gas. http://amendments-rules.house.gov/amendments/BOUSTA_072_xml71116155207527.pdf
- #37 – Prohibits funds to be used to finalize, implement, or enforce new regulations on offshore Arctic energy exploration and development. – The final DOI Arctic rules will continue to stifle offshore oil and natural gas production and certain requirements may not improve safety and in fact may inhibit innovation and technological advancements. http://amendments-rules.house.gov/amendments/YoungAK003761618070878.pdf
- #26 – Prohibits the use of funds to implement, administer, or enforce the final rule entitled “Hydraulic Fracturing on Federal and Indian Lands”. – The courts recently struck down this BLM hydraulic fracturing rule because it ruled the BLM lacks authority to regulate hydraulic fracturing. http://amendments-rules.house.gov/amendments/LAMBOR_079_xml76161659355935.pdf
- #44 – Prohibits funding from being used to implement, administer, or enforce the Obama administration’s National Ocean Policy. – The National Ocean Policy was created by an Executive Order to circumvent Congress which has voted again and again opposing the idea of an Ocean Policy which operates outside of governing federal statutes passed into law by the Congress. http://amendments-rules.house.gov/amendments/Amdmt176161759455945.pdf
- #93 – Ensures no funds are provided to finalize or implement the Fish and Wildlife Service rule entitled “Management of Non-Federal Oil and Gas Rights.” – The Proposed Rule, if promulgated in final, would mark a sea change in the management of non-federal oil and gas activities on NWRS lands. However, the authority claimed by the Service to promulgate the proposed regulations is not as broad as the Service assumes so this USFWS proposal needs to be withdrawn. http://amendments-rules.house.gov/amendments/CRAMND_030_xml78161647274727.pdf
- #41 – Prohibits funds from being used to designate a National Marine Monument in the EEZ via presidential proclamation. – Designation of a national marine monument would unnecessarily limit multiple use to the detriment of potential energy production and security. http://amendments-rules.house.gov/amendments/ZELDIN_045_xml711161345254525.pdf
Amendments that would have proved harmful to industry, and were defeated, include:
- #134 – Provides that none of the funds from this act shall be used to carry out seismic airgun testing or seismic airgun surveys in the OCS Planning Areas located within the EEZ bordering the State of Florida. – Data acquisition through seismic is vital for developing those leases. Seismic surveys have been conducted safely in the U.S. and around the world for decades. http://amendments-rules.house.gov/amendments/MURPFL_051711161645164516.pdf
- #138 – Would have required that no funds made available by this Act be used to authorize, permit, or conduct geological or geophysical activities in support of oil, gas, or methane hydrate exploration and development in the Atlantic. – Seismic surveys have been conducted safely in the U.S. and around the world for decades. http://amendments-rules.house.gov/amendments/BEYER_080_xml77161018431843.pdf
- #113 – This amendment would have allowed the BLM to finalize its costly and duplicative venting and flaring methane regulations which it lacks the authority to propose and could discourage production of U.S. oil and natural gas, disrupt U.S. progress reducing emissions, and increase the cost of energy for American consumers. http://amendments-rules.house.gov/amendments/LUJANM_068_xml77160951405140.pdf
- #22 – Strikes Section 127 – The OCSLA requires that BOEM demonstrate significant impacts to onshore air quality as a result of offshore activities. It has not done that to date. BOEM is currently undergoing two studies commissioned to inform this rulemaking which won’t be completed until 2017. BOEM should wait on the science and demonstrate the significant impact before proceeding with this premature rulemaking. Section 127 was added by a bipartisan majority during full Committee markup. http://amendments-rules.house.gov/amendments/HUFFCA_175_xml76161631593159.pdf
- #143 – The final BSEE well control rule will be implemented on July 28, 2016it is still very uncertain how BSEE will implement the drilling margin section of the rule. Given that BSEE has failed to address and answer a number of necessary questions for clarification including how BSEE will implement the drilling margin section of the rule, BSEE is not ready to implement this rule which still has potentially ambiguous and significant impacts on drilling operations. http://amendments-rules.house.gov/amendments/H5538_001_xml77161130363036.pdf
- #17 – Would have Ensured that none of the funds made available by the Act may be used to research, investigate, or study offshore drilling in the Eastern Gulf of Mexico Planning Area. http://amendments-rules.house.gov/amendments/JOLLY_05177161341524152.pdf
- #94 – Would have prohibited funds to be used to process any application for a permit to drill or a permit to modify that would authorize use of hydraulic fracturing or acid well stimulation treatment in the Pacific Outer Continental Shelf. – The amendment is unnecessary as BOEM and BSEE released an environmental assessment on 27 May, 2016, confirming that offshore hydraulic fracturing and acid well stimulation have no significant impact on the environment. These stimulation techniques have been used safely offshore for decades. http://amendments-rules.house.gov/amendments/CAPPS_04977160932223222.pdf
Phase II of BOP JIP Open to New Participants
Phase II of the IOGP/IADC BOP Reliability JIP is planned to kick off in August, opening the project to participation by additional operators and drilling contractors.
Phase I of the JIP began in January 2016, incorporating a BOP failure database originally started by seven offshore drilling contractors in early 2015. Phase I participants include the original seven contractors, 10 operators and three equipment manufacturers.
The project has already produced measureable benefits to participants through the reduction of BOP non-productive time. The database includes OEM reporting requirements per API Standard 53, and discussions are also ongoing with BSEE over how the JIP can assist operators and contractors to comply with the equipment failure provisions of the Well Control Rule.
In addition to operators and offshore contractors with subsea BOPs, Phase II will offer participation to offshore contractors with surface BOPs only and to onshore contractors.
Phase II will provide further opportunities to improve the quality of the database and provide members with access to key learnings through JIP collaboration. New participants will obtain industry-wide BOP defect and failure knowledge which should lead to improved BOP safety and integrity in their own operations.
The original “Group of 7” contractors participating in Phase I are Diamond Offshore, Ensco, Maersk Drilling, Noble, Pacific Drilling, Seadrill, and Transocean. Operator participants are Anadarko, BP, Chevron, CNOOC/Nexen, Kosmos, ExxonMobil, Petrobras, Shell, Statoil, and Total. The equipment manufacturers are Cameron, GE Oil & Gas, and NOV.
For more information, contact Steve Kropla at ext. 211 or email@example.com.
IOGP Publishes the Technical Notes to Supplement the Guidelines for the Conduct of Offshore Drilling Hazard Site Surveys
In 2013, IOGP published the Guidelines for the conduct of offshore drilling hazard site surveys, which described practices for conducting geophysical and hydrographic site surveys of proposed offshore drilling locations.
The new Technical Notes publication provides extensive supporting technical information to the Guidelines. It includes background theory on the various phases in delivery of a site survey project, on the vessels and equipment used to acquire site survey data, and on the data processing and interpretation techniques.
The Guidelines and Technical Notes can be downloaded for free from the IOGP Library.
BSEE, BOEM Issue Final Rule on Exploratory Drilling on the OCS Seaward of Alaska
The US Department of Interior, through the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM) recently made available in the 15 July Federal Register a notice to establish requirements for exploratory drilling and related operations on the Outer Continental Shelf seaward of the State of Alaska.
This final rule is applicable only to MODUs conducting exploration drilling and focuses solely on the OCS within the Beaufort Sea and Chukchi Sea Planning Areas.
The rule becomes effective 60 days after publication.
Key provisions of the rule include requirements that each operator must:
- Develop an integrated operations plan (IOP) that addresses all phases of its proposed Arctic OCS exploration program, and submit the IOP to BOEM at least 90 days in advance of filing its Exploration Plan (EP);
- Use only equipment or materials that are rated or de-rated for service conditions that can be reasonably expected during operations;
- Conduct a SEMS audit once per year for every year in which Arctic drilling is conducted.
- Employ real-time monitoring (RTM) with the capability to transmit data, as it is gathered, to a designated on shore location where it must be stored and monitored by qualified personnel who have the capability for continuous contact with rig personnel;
- Describe in their APD how they will utilize the relevant provisions of the best practices of API RP 2N Third Edition;
- Perform a pressure test of the BOP system on a 14-day cycle;
- Even if the MODU is designed and classed for Arctic conditions, perform an assessment for the specific environmental conditions during the planned window of operations (Equipment on the MODU used to support the drilling operations should also be evaluated for suitability for Arctic conditions, but should be evaluated using the appropriate standards for equipment operating in the Arctic environment, not a structural design standard for the Arctic region.);
- Capture of all cuttings from operations that utilize petroleum-based mud and, at the discretion of the Regional Supervisor capture of cuttings from operations that utilize water-based mud.
- Have access to, and the ability to promptly deploy, Source Control and Containment Equipment (SCCE) while drilling below, or working below, the surface casing;
- Have access to a separate relief rig located in a geographic position to be able to timely drill a relief well to kill and permanently plug an out-of-control well under the conditions expected at the site in the event of a loss of well control;
- Have the capability to predict, track, report, and respond to ice conditions and adverse weather events;
- Effectively manages and oversees contractors; and,
- Develop and implement an Oil Spill Response Plan (OSRP) that is designed and executed in a manner that accounts for the unique Arctic OCS operating environment, and have the necessary equipment, training, and personnel for oil spill response on the Arctic OCS.
More information can be found in the 15 July Federal Register.
U.S. Senators Ask Department of Interior to Withdraw BOEM Air Quality Control, Reporting and Compliance Rule
In a letter to Department of Interior (DOI) Secretary Sally Jewel, 17 U.S. Senators joined together to express concerns with the Bureau of Ocean Energy Management’s (BOEM) proposed rule titled, “Air Quality Control, Reporting, and Compliance”. The Senators asked that the DOI withdraw the proposal since BOEM has thus far failed to demonstrate that offshore activities are impacting onshore air quality.
In written remarks that closely echo industry’s concerns, the letter notes that BOEM has thus far failed to demonstrate that emissions from offshore oil and gas activities have significant effects on onshore air quality.
The Senators specifically noted, “BOEM is currently performing two air modeling studies that were commissioned at a cost of $4 million to taxpayers to inform BOEM as to whether or not any rulemaking was necessary. The results of these studies are not expected until 2017. BOEM must complete these studies to determine which state air quality impacts, if any, should be attributed to OCS authorized activities. If BOEM wishes to obtain a credible accounting of what should be regulated and what the compliance costs will be, the results of these studies would serve as a basis for assessments. Unless and until such studies are completed, peer reviewed and assessed, it is impossible for BOEM to put forth a credible cost benefit analysis.”
Senators who signed on to the letter include: Bill Cassidy (LA); John Cornyn (TX); John Thune (SD); Lisa Murkowski (AK); James M. Inhofe (OK); Thad Cochran (MS); David Vitter (LA); Dan Coats (IN); Jeff Flake (AZ); Roger F. Wicker (MS); M. Michael Rounds (SD); Dan Sullivan (AK); Thom Tillis (NC); Ted Cruz (TX); John Hoeven (ND); Steve Daines (MT) and Jeff Sessions (AL).
Coiled Tubing Operations Book Now Available
Coiled Tubing Operations, a comprehensive new book covering the spectrum of coiled-tubing operations, is now available for purchase for both technical and non-technical readers through the IADC Bookstore. The publication provides general descriptions of coiled tubing units (CTU), as well as CTU components, operations and applications, including CT Drilling. Appendices provide detailed mathematical derivations and calculations for CT operations.
U.S. Coast Guard Issues Final Rule on Fire Protection, Detection and Extinguishing Equipment
The U.S. Coast Guard recently issued a Final Rule which addresses the carriage, design and approval standards for fire protection, detection, extinguishing equipment, and materials on inspected and uninspected vessels, outer continental shelf facilities, deepwater ports and mobile offshore drilling units.
The final rule is effective on 22 August 2016 and provides for a compliance period for the grandfathering of certain equipment.
The Final Rule can be accessed via the 22 July Federal Register.
IOGP Issues Report 556, Process Safety – Leading Key Performance Indicators
The International Association of Oil and Gas Producers recently issued IOGP Report 556, Process safety, leading key performance indicators as a supplement to IOGP Report 456. The overall aim is to enable companies to establish effective leading indicators that proactively assess the health of barriers that manage the risk of process safety events (PSEs), particularly those that would result in a major incident. Appendix A of the report provides the results of an IOGP survey of member practice regarding use of key indicators.
The report can be accessed via IOGP’s website.
IADC Joins IMCA, ECSA in Letter to European Commission Joint Research Centre Regarding Extension of the Scope of EU Product Safety Legislation
On 27 July, IADC, along with the International Marine Contractors’ Association (IMCA) and the European Community Shipowners’ Associations (ECSA) issued a letter to the European Commission concerning a study the European Commission Joint Research Centre issued in April 2016. That study assessed the impacts of possible amendments to the ATEX, Machinery and Pressure Equipment Directives with respect to equipment installed and used on Mobile Offshore Drilling Units (MODUs) for the offshore oil and gas industry.
In the letter, the Association’s noted that the burden would almost solely be offset on the end users of the equipment, drilling contractors and that it remains undocumented that an extension would have a benefit in respect of major accidents. The letter goes on to note that, “the existing rules and standards for MODU equipment already ensure a very high MODU safety standard. Any extension of EU product safety legislation is unlikely to produce an even higher safety standard or reduce the probability or frequency of major accidents on MODUs.”
Implications noted in the letter include market access and mobility, cost and resources and supply shortages that would be associated with any amendments.
To read the letter in it’s entirety and view the accompanying Annex, which analyzes and highlights certain limitations in the research that in some cases led to unwarranted and unjustified conclusions in the Joint Research Centre report, please visit the IADC Website.
IADC Federal Regulatory Summary for Offshore Operations Now Available
On 1 July, IADC will issue an updated edition of the Federal Regulatory Actions Impacting Offshore Drilling Contractors. Released semi-annually, the report details federal regulatory actions that could impact offshore drilling activities.
The report reflects regulatory activities announced in the Federal Register or other available sources through June 2016.
The full report can be accessed beginning 1 July via the IADC Offshore Division webpage.
For the latest safety alerts, visit www.iadc.org/safety-alerts
Alert 15-08: Disabled and non-functional safety devices leads to destruction of derrick board
Alert 15-09: Near miss – dropped six pound sledge hammer
Alert 15-10: Fatality on drill floor
Rigs Receive ISP Certificates
For certificates received since last LTI (in years):
New IADC Members
IADC welcomes 9 new members:
DRILLBITS Volume 26, Number 7
Tom Burke, Chairman • Jason McFarland, President • Amy Rose, Editor
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