DRILLBITS – July 2017
In This Edition
Sign Up For the DRILLBITS Email Newsletter!
Streamlined Process for Onshore Federal Land Leases Welcome News for Drilling Contractors
On 6 July, U.S. Interior Secretary Ryan Zinke issued Secretarial Order 3354 to streamline the process by which oil and gas leasing permits are granted for work on onshore federal lands. In response, International Association of Drilling Contractors (IADC) President Jason McFarland issued the following statement:
“IADC appreciates Secretary Zinke’s dedication to reduce permitting times to encourage more interest in the development of our Federal lands. The current processing time for onshore federal land leases discourages development of our nation’s resources. The revenue generated from this activity is an important source of funding for the Treasury, providing funds for National Parks and infrastructure, among other activities. Drilling contractors aim to serve as responsible environmental stewards on all lands in which we conduct operations, and we welcome this effort by the Secretary to increase development on our nation’s Federal lands.
U.S. Trade Representative Releases Summary of Objectives for NAFTA Renegotiation
On 17 July, The United States Trade Representative released a detailed and comprehensive summary of the negotiating objectives for the renegotiation of the North American Free Trade Agreement (NAFTA).
The summary is part of the required notifications to Congress prior to beginning formal negotiations. As it pertains to the energy, the summary includes a broadly-worded statement, “Preserve and strengthen investment, market access, and state-owned enterprise disciplines benefitting energy production and transmission and support North American energy security and independence, while promoting energy market-opening reforms.”
Other provisions included in the summary could also impact drilling contractors wishing to pursue cross-boundary drilling operations.
NAFTA came into effect on 1 January 1994. Canada, Mexico and the U.S. will begin the first round of talks on the modernization of NAFTA on 16-20 August.
The full text of the Summary can be found on the Office of the United States Trade Representative website.
Oil and Gas Development on U.S. Outer Continental Shelf Important for Jobs, Economy
On 12 July, the U.S. House Natural Resources Subcommittee on Energy and Mineral Resources hosted a hearing to evaluate federal offshore oil and gas development on the U.S. Outer Continental Shelf (OCS). In response to the testimony, IADC President Jason McFarland issued the following statement:
“IADC thanks the Committee for holding this hearing to discuss responsible development of our nation’s offshore oil and gas reserves. Offshore oil and gas is important as its operations support millions of American jobs, and contributes $2.8 billion in federal revenues, which has a large impact on the U.S. economy. During today’s hearing, opposing witnesses discussed several perceived roadblocks to further development, including clean air, clear water and recreational hunting and fishing. Having a robust oil and gas industry isn’t mutually exclusive of these environmental concerns, and in fact, oil and gas operations are conducted within the strict confines of U.S. environmental regulations, with many companies going above and beyond what is required. IADC continues to support a U.S. offshore energy policy that provides further access to the OCS, and has publicly encouraged Interior to review the offshore leasing plan to incorporate more areas for development.”
36 Senators Send Letter to Interior Secretary Zinke in Support of New OCS Five-Year Leasing Plan
On 26 July, 36 Republican Senators sent a letter to Interior Secretary Ryan Zinke in support of the Department of the Interior’s new Outer Continental Shelf (OCS) Five-Year Oil and Gas Leasing Program for 2019-2024. The plan promises to increase offshore access and development, which will in turn boost the economy, keep energy affordable and reinforce the United States’ position as an energy dominant superpower.
A total of 94 percent of the federal OCS is currently unavailable for leasing. According to the Bureau of Ocean Energy Management, the nation’s OCS contains 89.9 billion barrels of oil and 327.5 trillion cubic feet of natural gas.
In the letter, the Senators noted that, “Offshore development has undergone rapid technological innovation ensuring it is cheaper, safer, and provides access to previously out-of-reach areas. Offshore leasing benefits the economies of all of the states, helps reduce the federal deficit, provides affordable energy to families and businesses and strengthens our national security.”
The Outer Continental Shelf Lands Act, which governs the development of the nation’s offshore energy resources, declares that “the outer Continental Shelf is a vital national resource held by the Federal Government for the public, which should be made available for expeditious and orderly development, subject to environmental standards, in a manner which is consistent with the maintenance of competition and other national needs.”
In their letter to Secretary Zinke, the Senators concluded, “Offshore projects often have long lead times, so it is important to start today to make sure that the United States is planning for the future to maintain its steady and stable supply of production. We look forward to working with the Department of the Interior as you advance the new Five-Year Program.”
The full letter can be accessed via the IADC Advocacy webpage.
IADC Joins Industry Associations to Comment on Marine Sanctuary Expansion
On 26 July, IADC joined with API, NOIA, IAGC, and the OOC to offer comments in response to the National Oceanic and Atmospheric Administration’s (NOAA) request for comments on designations and expansion of the National Marine Sanctuaries and Marine National Monuments.
In the letter, the Associations noted that its’ members have significant interest in ensuring future opportunities for offshore oil and natural gas exploration are not unduly restricted by expanding sanctuaries to include new geographic areas for which expansion is not necessary, or with boundaries in excess of those needed to protect appropriate areas. It also advocated for a regulatory environment where all agencies responsible for protection and use of the marine environment work together collaboratively to create straightforward, clear and consistent requirements.
The full text of the letter can be found on the IADC Advocacy webpage.
Washington D.C. Updates
Canada, Mexico and the U.S. will begin the first round of talks on the modernization of NAFTA on August 16-20.
The Senate has spent July processing more nominations, including confirming the Deputy Director of Interior, David Bernhardt. It otherwise was immersed in healthcare and the decision to repeal ‘Obamacare’ and replace it with an alternative healthcare law, an effort that was voted down on 28 July. Once the healthcare debate ends, there is a possibility of taking up NDAA to allow Senator McCain to manage his bill before heading off for cancer treatment. The Senate is expected to go into recess the first week of August until after Labor Day.
The House passed, by a vote of 419-3, H.R. 3364, the Countering Americas Adversaries Through Sanctions Act – a bill imposing sanctions against Russia, North Korea and Iran. It will go next to the U.S. Senate for a vote. Additionally, it passed the National Defense Authorization Act (NDAA), which will also now go to the U.S. Senate for approval.
The House also passed a ‘mini-bus’ appropriations package that includes the Energy & Water, Legislative Branch, MilCon/VA and Defense Appropriations bills for FY18. The House Energy and Natural Resources Committee held several hearings on oil and gas production and focused on developing energy legislation this fall to advance energy production on Federal lands and in Alaska.
The House is expected to go into their August recess on July 28th,, returning after Labor Day.
OSHA Launches Application to Electronically Submit Injury and Illness Data
OSHA recently announced that on 1 August 2017 it will launch the Injury Tracking Application (ITA). The web-based form allows employers to electronically submit required injury and illness data from their completed 2016 OSHA Form 300A. The application will be accessible via the ITA website. The secure website offers three options for data submission:
- Manually submit data in a web form
- Upload a CVS file to process single or multiple establishments at the same time;
- Users of automated recordkeeping systems may transmit data electronically via application programming interface.
Colombia Issues New Offshore Drilling Regulations
On 18 July, Colombia’s Ministerio de Minas y Energia published new technical regulations for drilling exploratory wells to determine the presence of oil and gas in shallow, deep and ultra-deep waters in Colombian territory
The new regulations require:
- Safety management systems in accordance with API RP 75
- BOPs IAW API STD 53
- Training IAW OPITO or IMO standards
- Weekly function testing of the BOP
- MODUs compliance with the MODU Code.
To access the full text of the regulations (in Spanish), please visit: https://www.minminas.gov.co/documents/10180/23517/37521-res_40687_180717.pdf
6 Drilling Contractors to Participate in GOM Cyber-Themed Table Top Exercise
Six drilling contractors – Diamond Offshore, Helmerich & Payne, Nabors, Noble, Parker Drilling, and Rowan – will be joining more than 30 other organizations in a cyber-themed table top exercise on 8 August at the New Orleans office of the US Bureau of Safety and Environmental Enforcement (BSEE). The cyber exercise is geared toward port and maritime stakeholders. It is being coordinated among the Maritime and Port Security Information Sharing and Analysis Organization (MPS-ISAO), the Department of Homeland Security’s National Cyber Exercise and Planning Program (NCEPP), and the US Coast Guard Outer Continental Shelf Division with its Area Maritime Security Committee’s Exercise Team.
The exercise’s fictitious scenario will likely involve an industrial control system (ICS)/SCADA incident on an offshore platform/port in the Gulf of Mexico (GOM). Success criteria will include identification of the incident, communications and an understanding of cascading consequences across stakeholders. Recovery from this type of incident may also be examined.
For the exercise, the NCEPP team will provide resources to support administration, planning, preparation and exercise execution.
Participants include organizations from both the public and private sectors, along with academia outside the GOM, who have an interest in maritime and port cybersecurity; expertise in running a similar exercise or an interest in gaining such experience; expertise in identifying ICS/SCADA incidents; or an interest in understanding the impact of such an incident.
U.S. Unified Agenda of Regulatory and Deregulatory Actions Published
The U.S. Office of Information and Regulatory Affairs Office of Management and Budget (OMB) recently published the current Unified Agenda of Regulatory and Deregulatory Actions. It provides an updated report on the actions administrative agencies plan to issue in the near and long term. The Agenda represents the beginning of fundamental regulatory reform and a reorientation toward reducing unnecessary burdens.
The number of rules identified in the Pre-rule, Proposed Rule or Final Rule are significantly reduced from the Fall 2016 Unified Agenda. According to the OMB, the Agenda represents the following developments:
- Agencies withdrew 469 actions proposed in the Fall 2016 Agenda
- Agencies reconsidered 391 active actions by reclassifying them as long-term (282) and inactive (109), allowing for further careful review
- Economically significant regulations fell to 58, or about 50 percent less than Fall 2016
- For the first time, agencies will post and make public their list of “inactive” rules – providing notice to the public of regulations still being reviewed of considered.
For more information, please visit the OMB website.
Brazil’s ANP Opens Consultation on Local Content
On 18 July, Brazil’s Agencia Nacional do Petroleo, Gas Natural e Biocombustiveis (ANP) opened a consultation on a regulatory act that will govern the criteria, requirements and procedures applicable to the exemption from compliance with Local Content obligations. It will also govern the rules for Percentage Adjustments of Local Content committed and Local Content Surplus Transfers related to concessions from the Seventh to the Thirteenth bidding round.
The consultation runs for 30 days and a public hearing will be held on 1 September 2017, with a final rule to follow.
The full text of the consultation can be found (in Portuguese) at the ANP website.
IMO’s Maritime Safety Committee Adopts MODU Code and Dynamic Positioning Amendments
Two provisions of particular interest to the offshore drilling industry were adopted at the International Maritime Organization’s (IMO) 98thth session of the Maritime Safety Committee (MSC 98) meeting that was held on 7-16 June.
The Committee approved amendments to the IMO’s Dynamic Positioning (DP) Guidelines (MSC.1/Circ.645). This first revision of the guidelines since their introduction in 1994 will better align expected functional performance criteria with technologies that have evolved since. In particular, the updates will place additional focus on the importance of formulating DP system integrity based on Failure Mode Effects and Analysis (FMEA) evaluation. This additional focus is designed to further increase DP system reliability and enhance recognition of DP operating parameters. Having been approved by the Committee, this revised guidance will generally apply to vessels on or after 16 June 2017.
The Committee also adopted amendments to the IMO’s 2009 MODU Code with an “entry into force date” of 1 January 2020. A result of recommendations drawn from investigations of the Deepwater Horizon incident, these amendments will further improve provisions for addressing person in charge considerations, installation and operation of equipment in hazardous zones, providing for more robust structural fire protection design elements, and lifesaving appliance considerations unique to MODUs.
The Committee decisions mark the successful completion of efforts undertaken by key flag states representing a majority of the global Mobile Offshore Drilling Unit (MODU) fleet. Actively collaborating with these countries over the span of several years, IADC is pleased to see these new DP and MODU Code provisions adopted in a manner that will enhance operational safety while not forgetting the practical considerations for implementing these improvements.
IADC WellSharp Now Available in Arabic
The online exam for IADC’s well control training and assessment program, WellSharp, is now available in Arabic. The Arabic translation is now available to all training providers. The exam was previously translated into Portuguese and Spanish, and it will also be available in Mandarin later this year.
WellSharp, introduced in 2015, is a rigorous well control training and assessment program that offers content on prevention, situational awareness, barriers, barrier management, and risk awareness and management. It encourages blended learning to enhance the quality and value of the training, with required independently proctored electronic knowledge assessments and enhanced simulator exercises.
For more information about WellSharp, please visit the IADC Website.
IADC Cybersecurity Subcommittee Drafting Guidelines
The IADC ART Cybersecurity Subcommittee is in full swing drafting five additional guidelines following the guidelines published last year on Assessing and Managing Cybersecurity Risk for Drilling Assets. The five additional guidelines under development are as follows and due to be completed by the end of 2017.
- Guidelines for Minimum Cybersecurity Requirements for Drilling Assets
- Guidelines for Network Segmentation
- Cybersecurity training v1.0
- Guidelines for hardening of control systems focusing on existing drilling assets (to include patching)
- Guidelines for security monitoring and audit
Please join the Subcommittee at the next meeting to participate in or learn more about the progress of the guidelines. The focus of the next subcommittee meeting is to review the guidelines for Minimum Cybersecurity Requirements for Drilling Assets. The next IADC ART Cybersecurity Subcommittee meeting will be at 9 am on 14 September 2017 at IADC headquarters in Houston. If you plan to attend, please register online at the IADC website.
DEC Committee to Host Tech Forum Focused on MPD
The IADC Drilling Engineers Committee (DEC) will host a Tech Forum focused on Managed Pressure Drilling on 19 September from 8 a.m. until noon at Weatherford’s offices located at 11909 Spencer Road in Houston.
For those who wish to register for the Forum, please visit the DEC Committee webpage.
IADC to Host Inaugural Shale Energy Workshop in September
In conjunction with the IADC Permian Basin Chapter, IADC will host a Shale Energy Workshop in Midland, Texas on 13 September.
Shale oil and gas has transformed the energy landscape in the U.S. and while drilling growth has slowed in other markets, the Permian Basin continues to be a leader. The workshop will explore issues affecting the onshore drilling industry, with presentations on safety and training, cutting edge technology, market outlook and operator outlook. Additionally, the workshop will feature a panel discussion on regulatory and industry affairs, with a presentation from Texas Railroad Commissioner Wayne Christian.
For more information and to register, please visit the IADC Events website.
VPD on Permian D&C challenges Airs 6 September
The heads of drilling and completion for two of the largest operators in the Permian Basin will discuss their companies’ challenges, innovations and goals in this prolific region during a virtual panel discussion sponsored by DrillingContractor.org.
The VPD will air at 10.00 CDT on Wednesday, 6 September.
Panelists for this webcast, “Drilling & Completion in the Permian Basin Today”, are:
- Rodney Littleton, VP, Drilling and Completions, Southern Wolfcamp Asset Team, Pioneer Natural Resources;
- John Willis, Chief – Drilling, Occidental Oil & Gas Corp;
- Mike Killalea, Group VP/Publisher, IADC (moderator).
The panelists will discuss their companies’ goals and scope of drilling/completion operations in the Permian Basin, as well as challenges and lessons learned.
Technical innovations to bring production on stream more quickly and to use water smarter will also be part of the conversation, as well as issues centering on infrastructure, people, and service/manufacturing quality.
To register, click here.
For more information on “Drilling and Completion in the Permian Basin Today”, contact Mike Killalea, email@example.com.
Updated IADC Federal Regulatory Summary for Offshore Operations Now Available
On 25 July, IADC issued 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 2017.
The full report can be accessed via the IADC Advocacy webpage.
Drilling Matters Details the Myriad Products Made From Oil & Gas
Continuing to broaden its scope as an information tool for people outside of the drilling industry, IADC recently updated it’s Drilling Matters website to include a detailed glossary of terms.
The Drilling Glossary can be found on the DrillingMatters.org website.
Drilling Matters is a web-based, modular and interactive website designed to dispel myths and correct misconceptions about the petroleum industry. DrillingMatters.org now comprises 15 modules, from basic introductions to drilling equipment, the value of hydrocarbons, and more. Drilling Matters: Spread the Word.
For more information, contact Mike Killalea (713-292-1956, firstname.lastname@example.org).
IADC Incident Statistics Program 2017 Q1 Data Available
The 2017 IADC Incident Statistics Program Q1 Year to Date Summary Report is now available via the IADC website. The 5 year LTI/RCRD Frequency rate has also been updated and published.
Participation in the IADC ISP is voluntary and open to all drilling contractors and well servicing companies engaged in oil and gas and well drilling. However, a company must participate in the IADC ISP program and be a member of IADC in order to qualify for rig/unit recognition. The ISP has tracked safety and accident information for the drilling industry since 1962. Data are compiled separately for land and offshore operations and for seven geographic regions – U.S., Europe, Canada, Central and South America, Africa, the Middle East and Asia Pacific.
IADC Lexicon Featured Term for July 2017
The IADC Lexicon (IADCLexicon.org) is a compendium of upstream-related terms, which, unlike conventional glossaries, are official definitions drawn from legislation, regulation and regulatory guidance, standards (global, national and regional), and IADC guidelines. Terms often have multiple definitions from different sources.
This month’s Featured Term is:
‘ “What If?” Analyses’ (Source: Approved Code of Practice for Managing Hazards to Prevent Major Industrial Accidents, Health and Safety in Employment Act 1992, Department of Labour, New Zealand, July 1994):
These consist of a structured series of considered questions dealing with… (click to read full definition at http://www.iadclexicon.org/what-if-analyses/).
For the latest safety alerts, visit www.iadc.org/safety-alerts
Alert 17-3: LTI – Hot Water Scald
Alert 15-4: Drill Pipe Screen Lodging in Top Drive Results in Near Hit
Rigs Receive ISP Certificates
For certificates received since last LTI (in years):
New IADC Members
IADC welcomes 8 new members:
DRILLBITS Volume 27, Number 7
Andy Hendricks, Chairman • Jason McFarland, President • Amy Rose, Editor
All listed phone extensions are for IADC’s Houston headquarters,
+1/713-292-1945. Fax +1/713-292-1946.
Send comments/questions to Amy Rose at email@example.com.
To subscribe to Drill Bits, go to www.iadc.org/drillbits.
To change/cancel a Drill Bits subscription, send an e-mail message to
IADC Director – Membership Sharon Thorpe at firstname.lastname@example.org.