DRILLBITS – July 2019
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Proposed Regulation Aims to Streamline Permit Approval Process for Offshore Oil and Gas Industry
U.S. Representative Mike Johnson (LA-04) recently reintroduced Streamlining Environmental Approvals Act (SEA Act) to increase efficiency in the lengthy permit approval processes that have caused setbacks and delays for offshore oil and gas exploration. The bill reduces excessive government regulations developed over more than 45 years under the Federal Marine Mammal Protection Act (MMPA).
In remarks about the SEA Act, Congressman Johnson said, “Government-imposed regulations continue to overwhelm hardworking Americans, diminishing efficiency and stunting productivity. In our region specifically, unnecessary permit approval delays have halted critical restoration projects, hindered offshore drilling and unnecessarily redirected military resources to comply with excessive regulations. The SEA Act will cut bureaucratic red tape to ensure timely and fair permit approval processes, promoting innovation and unleashing our businesses.”
In a press statement, IADC President Jason McFarland supported the SEA Act, saying, “IADC thanks Congressman Johnson for his leadership in reintroducing the SEA Act to clarify and streamline the Marine Mammal Protection Act. The U.S. OCS holds the promise of vast natural energy resources, with BOEM estimating as much as 89.9 billion barrels of oil and 327.5 trillion cubic feet of gas yet to be discovered. This bill paves the way for seismic permitting to efficiently locate said resources, as well as decrease permitting delays and increase regulatory efficiency, a win for both government and industry.”
Key components of the bill include:
- Sets a Permitting Timeframe:The bill sets a clear framework for permits to be accepted or denied by the secretary of the appropriate agency.
- Authorizes More Approvals:The secretary has 120 days after an application has been deemed complete to issue the authorization allowing for activity to begin; if not, the authorization will be deemed approved on the terms stated in the application.
- Creates a Science-Based Extension:The bill allows the option to extend certain permits for more than a year if there has been no substantial change to the marine mammal population.
- Removes Duplication:The bill eliminates the duplicative process currently in place surrounding the Endangered Species Act (ESA), exempts MMPA-covered marine mammals from the requirement of additional, less rigorous standards used in the ESA process and prohibits any related federal activity from the ESA’s consultation requirement as applied to marine mammals.
House Natural Resources Committee Vote on Offshore Energy Moratoria Shortsighted
On 19 June, the U.S. House Natural Resources Committee considered two bills banning the exploration and production of oil and natural gas offshore. In response, IADC President Jason McFarland issued the following statement:
“The bills debated and ultimately approved today by the House Natural Resources Committee are shortsighted, particularly to IADC’s members who safely help develop oil and natural gas for the U.S. and the world. The U.S. Outer Continental Shelf is estimated to contain more than 89.9 billion barrels of oil and 327.5 trillion cubic feet of gas that have yet to be discovered. Establishing a permanent offshore energy moratorium in the Atlantic, Pacific and/or Eastern Gulf of Mexico not only stifles job growth, but also deprives the U.S. Treasury of considerable revenues that would provide funding for vital government programs. The reality is demand for oil and natural gas will continue to rise for decades to come. Permanent moratoriums here in the U.S. will only push this development to other countries who are happy for the tax dollars and job creation. IADC has long advocated for government policies that allow for responsible development of the nation’s vast natural resources, and today’s Committee vote is shortsighted. IADC thanks several members of the Committee for their support of the offshore industry, particularly Congressman Graves who continues to be a steadfast supporter of the industry and uses facts to show that offshore exploration and production and protection of the environment are not mutually exclusive.
U.S. Supreme Court Rules on State vs Federal OCSLA Jurisdiction
On 10 June, the Supreme Court vacated the 9th Circuit Court of Appeals ruling in the Parker Drilling Management Services, Ltd. V. Newton case. The case hinged on whether or not California’s wage laws were applicable to time spent on “standby” on rigs on the outer continental shelf. In 2018, the 9th Circuit Court of Appeals ruled that offshore workers were entitled to minimum wage and overtime laws of the adjacent state. However, in the unanimous ruling, Supreme Court Justice Clarence Thomas wrote, “All law on the OCS is federal, and state law serves a supporting role, to be adopted only where there is a gap in federal law’s coverage.” Under the Offshore Outer Continental Shelf Lands Act (OCSLA), structures attached to the continental shelf more than three nautical miles from the coast are under federal control and therefore governed by federal law.
Results of DRILLERSPAC Campaign
IADC’s DRILLERSPAC ran a fundraising campaign from May 20-June 20 with a goal to raise $50,000. To date, $26,250 has been received from 55 individuals and 10 companies! Thank you for those contributions. In addition, Latshaw Drilling had 43 employees who committed to supporting the PAC. Thank you Trent and Latshaw Drilling!
In the 2018 midterm elections, the IADC DRILLERSPAC supported 14 candidates in Senate and Congressional races, with 13 of those winning their races, a 93% success rate. The next election cycle includes key races in Texas, Louisiana, Oklahoma, Colorado, Wyoming, Mississippi and Alaska, among others, and IADC will again be supporting candidates who have demonstrated a commitment to supporting energy and the drilling industry.
The DRILLERSPAC was sanctioned by IADC’s Board of Directors to further IADC’s goal of advocacy engagement with federally elected Members of Congress. DRILLERSPAC is not affiliated with any political party. It is organized and conducted on a voluntary, non-partisan basis. DRILLERSPAC is overseen by the PAC Board of Trustees, which is comprised of 10 members – three from offshore companies, three from onshore companies, two from drilling services companies and two IADC employees.
Matt Giacona Joins IADC
Matt Giacona has joined IADC as Legislative Assistant, based in the IADC Washington, D.C. office. In his Government and Industry Affairs role, he will focus on U.S. Congressional Affairs. He formerly worked for U.S. Representative Fred Upton (R-MI) and for a DC-based consulting firm. He served in the Michigan National Guard and is a graduate of Michigan State University.
He can be reached at Matt.Giacona@iadc.org.
Washington D.C. Updates
The House is now in full swing processing spending bills for FY2020 appropriations. Lawmakers have begun finalizing H.R. 3055, the minibus bill that contains five appropriations bills including Interior-Environment funding, notably adding several amendments that would curtail offshore leasing, drilling and exploration activities in several OCS areas throughout the Gulf, the Atlantic and the Pacific. As far non-appropriations legislation is concerned, lawmakers on the Natural Resources committee have been moving several bills aimed at limiting offshore drilling activities. The furthest along of these are H.R.205 and H.R.1941, which have been reported favorably out of committee and will likely be considered on the House floor for amendment and eventual passage in the coming months. Bills aimed at curtailing onshore drilling activities in certain areas, like the Chaco Cultural Heritage Area Protection Act (H.R.2181), have seen movement as well and are making their way through subcommittee considerations. Another point of contention that has recently arisen is the issue of permanent LWCF funding; Democratic lawmakers in both chambers have offered bills that would permanently fund the LWCF with royalties collected from oil and natural gas activities. Moving forward into July, the House will have its hands full with appropriations and the need to address the executive branch’s renewed calls for House leadership to pass legislation addressing several contentious policy areas like immigration and the USMCA trade deal.
Despite Majority Leader Mitch McConnell’s call in May for a shift away from nominations and towards passing legislation, the Senate still spent most of June confirming presidential nominees, completing over 21 confirmations in 26 days. While most appropriations bills are still being formulated in the House, the Senate has begun considering S. 1790, its 2020 National Defense Authorization bill (NDAA), which notably includes bipartisan provisions aimed at addressing PFAS contamination in U.S. drinking water. A key development to watch for going into July will be whether or not Senate Democrats and several moderate Senate Republicans attempt to block the bill due to the absence of an amendment authored by Sen. Tom Udall (D-NM) that would ensure Congressional approval is required for any use of military force involving Iran. In the Energy and Natural Resources committee, hearings have now been held on two bills aimed at curtailing onshore drilling activities in the Chaco and Buffalo Tract areas of New Mexico (S.1079 and S.526). Being that BLM has asserted that it does not oppose S.1079, the Chaco Cultural Heritage Area Protection Act, and that the bill has companion legislation working through the House Natural Resources committee, it will be important to watch for any momentum in this vein. Regarding broad legislative action as we move forward into the summer, bipartisan efforts to pass comprehensive bills addressing pressing issues like infrastructure improvement and consumer data privacy reform seem to have stalled for the time being.
In the midst of dealing with a multitude of hot-button domestic policy issues and several deteriorating international security and trade situations, President Trump and his Administration have continued to promote the expansion and deregulation of U.S. oil and natural gas markets. In late June, the President again touted the continued success of the U.S. petrochemical industry and detailed that his current focus is on securing the approval of several pipeline projects, most notably Kinder Morgan’s planned Permian Highway project in Texas. At the agency level, the Administration has continued to push its deregulatory agenda in Washington DC as well as at the state level. EPA recently proposed more lax methane emission rules, which are now under review, and DOI has continued to fight various federal judges over challenges to a wide range of initiatives across the country. In late June, BLM brought in Nicholas Douglas, a geologist with extensive experience in handling oil and natural gas issues, to oversee onshore energy development on BLM-managed lands. Going forward, the Trump Administration will look to continue its support for America’s petrochemical energy industry while addressing pressing issues like immigration reform, trade considerations with China and our allies, Iranian aggression in the Straits of Hormuz, and the impending 2020 Presidential election.
IADC Australasia Chapter Recognizes Excellence in Industry Safety
During the IADC Australasia Chapter’s Annual General Meeting in Brisbane on 29 May, the group recognized industry safety excellence in 2018 with safety awards. The Award program is open to all Onshore and Offshore members with a winner designated in each area. Seven of the nine Australasia chapter members participated, resulting in an uptake rate of 81%, which was the same as the previous year.
The safety statistics for the participating companies were supplied quarterly and submitted in accordance with 2018 IADC Incident Statistics Program Official Rules and Guidelines. This year again, the IADC ISP Program was able to support the Chapter’s award program by supplying the data and winner notification.
For Onshore, the winner for 2018 was High Arctic Energy Services (HAES) and for Offshore, the winner was Noble Drilling.
Key combined onshore and offshore statistics for the region included:
- 4,563,910 man hours of operation
- 9 medical treatment cases
- 12 lost time incidents
- 7 restricted work/transfer cases
- TRIFR = 2.6300
- DARTFR = 4.16
- TRIRFR = 6.14
- 0 fatalaties
Jens Hoffmark Receives IADC President’s Citation for Leadership
During the IADC World Drilling Conference in Milan, IADC Regional Vice President – European Operations, Jens Hoffmark was awarded the IADC President’s Citation for Leadership in recognition of his contributions to the Association. After nine years of distinguished service to IADC, Jens retired on 30 June.
He joined IADC in 2010 following a 40-year career at A.P. Moller Maersk. In his position at IADC, he played a critical role in ensuring that IADC delivered value to its members in Europe, contributing to numerous conference programs and strengthening relationships between key IADC Chapters and Headquarters. He also represented IADC, and its members, in key regulatory arenas, including the International Regulators Forum and European Union Offshore Oil and Gas Authorities Group, and liaised with individual regulatory agencies in Norway, Denmark and Holland, among others.
IADC Nigeria Chapter Hosts 2019 HSE Awards and Technical Session
On 11 June, he IADC Nigeria Chapter hosted its 2019 HSE Awards and Technical Session in Lagos, where they recognized KCA Deutag with an award for Best 2018 HSE Performance. Other companies recognized during the event for excellence in safety included Shelf Drilling Nig Ltd., Cardinal Drilling Nig, Ltd.; Seadrill; Uniterm Nig Limited; AOS Orwell Ltd.; Scorpio Drilling International Ltd.; Ocean Deep Drilling ESV Nig Ltd. – ODENL; OES Energy Services Ltd.; and Depthwize Nig Limited.
IADC’s Derek Morrow to Retire
Derek Morrow, IADC’s Regional Representative for the Australasia Region will retire from IADC in July.
He joined IADC in 2009 after a long career with Atwood Oceanics, and he is a former chairman of the IADC Australasia Chapter.
“Derek has a deep knowledge of the oil and gas industry in the Australasia region, and the relationships he has built over the years have been an asset to IADC and our members. He will be greatly missed, and we wish him all the best in his retirement,” said Jason McFarland, IADC President.
President of Dynamic Drilling Visits IADC Houston Headquarters
Suit Filed Over Well Control Rule Repeal in California Federal Court
On 11 June, a group of 10 environmental organizations filed a lawsuit in a federal district court in California challenging the US Department of Interior’s “rollbacks” of safety measures put in place by the Obama administration. The basis of the suit primarily takes issue with the inclusion of API Bulletin 92L – Drilling Ahead Safely with Lost Circulation in the Gulf of Mexico, First Edition and the associated measures exercised by BSEE related to well control concerns.
BSEE Establishes Investigation Panels to Address Recent Incidents
On 4 June, BSEE’s Gulf of Mexico Region announced the establishment of two panels to investigate two serious fatality accidents that occurred in the Gulf of Mexico in late May. Both incidents involved workers falling through platform decks to a lower deck and to the water’s surface. BSEE will work closely with the U.S. Coast Guard’s New Orleans Investigations Unit to review the information provided through interviews by the operator, the contract employees, witnesses and subject matter experts. Investigators will also analyze evidence from forensic testing. Each panel will consist of a team of BSEE investigators, inspectors and engineers. The panels will issue reports with their findings regarding the causes and make recommendations on how to strengthen existing safety measures once the investigations are completed.
More information about the incidents can be found on BSEE’s website.
API, IOGP Sign Memorandum of Understanding, Formalizing Cooperative Relationship
On 6 June, the API and the IOGP signed Memorandum of Understanding (MOU) to establish a stronger partnership, share world-class practices and collectively engage on the industry’s contributions to society. The MOU strengthens the two standards bodies’ ongoing collaboration and marks a milestone in the relationship between the two organizations.
The MOU aims to make further progress on the industry’s priorities, with both parties collaborating and co-branding products in areas such as operation efficiency and excellence, health, safety, the environment and security and sustainability.
IADC North Sea Chapter Makes Charitable Donation
The IADC North Sea Chapter recently donated 6,500 to the RNLI lifeboat station in Aberdeen. The RNLI volunteers provide 24-hour search and rescue services around the United Kingdom and Republic of Ireland coasts, operating more than 238 lifeboat stations and 240 lifeguard units. It is independent and depends entirely on voluntary donations and legacies to maintain its rescue service.
IADC North Sea Chapter vice chairman Gary Holman made the presentation to Aberdeen Lifeboat Operations Manager Bill Deans MBE on board the city’s all-weather lifeboat Bon Accord.
During the check presentation, Mr. Deans said, “The IADC have been very generous over the years in supporting the RNLI’s work of saving lives at sea in Aberdeen. This donation from the North Sea drilling industry will make a significant contribution to vital equipment and training for Aberdeen’s volunteer lifeboat crews.”
Mr. Holman also noted the Chapter’s admiration for the volunteers who make the RNLI service possible.
The Chapter raised the funds for the donation during its annual Safety Awards event in April. During that event, the Chapter also presented a check for 5,000 to the UK Oil & Gas Chaplaincy Trust. The Chapter will host a charitable golf tournament on 21 June to raise money for Charlie House, a local charity supporting children with serious and life limiting illnesses.
For more information about the IADC North Sea Chapter, please visit the IADC website.
Vice President Pence Visits Latshaw Drilling Rig 45
On 17 April, U.S. Vice President Mike Pence visited Latshaw Drilling Rig 45 in Midland, Texas, drilling for Diamondback Energy. In his prepared remarks, Vice President Pence noted, “It’s amazing to think what we can accomplish here in West Texas if we continue to unlock the incredible potential of the Permian Basin. Eighty-six thousand square miles hold 20 of the nation’s top 100 oil fields. And by 2023, I’m told they’ll produce 5.4 million barrels per day. That’s more than any area of the world other than two different countries. More than any single member of OPEC other than Saudi Arabia. That is energy dominance. That’s American leadership.”
The Vice President also recognized the work done by those working on the rig, attributing the success of the Permian Basin to those drilling in the region.
“We were honored to have VP Pence as a guest on our rig. His visit is a testimony to the support our industry is getting from this Administration and how important our industry is to our economy, our military and our national security,” said Trent Latshaw, President, Latshaw Drilling Co.
Alongside Secretary of the Interior David Bernhardt and Railroad Commission of Texas Chairman Christi Craddick, Vice President Pence also said, “I really did want to come out here just to tell you how much the President and I support the work that you’re doing every day and how inspired we are and the American people are with the incredible progress that’s being made in the Permian Basin. ….And make no mistake about it: As we work to strengthen the foundations of this country, we have a President, you have a Vice President, that understands that our natural resources are central to American greatness.”
IADC Accreditation Department Successfully Passes ISO 9001:2015 Recertification Audit
In February, IADC’s Accreditation Department successfully passed the ISO 9001:2015 recertification audit with zero findings. IADC remains the only well control accrediting body to hold ISO 9001:2015 certification, demonstrating the association’s ability to consistently provide services that meet customer requirements while keeping a focus on quality and integrity. Programs that fall under the ISO certification include RigPass, SafeLand, SafeGulf, WellSharp, WellCAP Plus, DIT, Competence Assurance, Gateway and Crane-Rigger.
The ISO 9001 QMS standard requires that a company identify and describe processes using business metrics, the purpose of which is to better manage and control business processes. The ISO 9001 family addresses various aspects of quality management and contains some of ISO’s best-known standards, which provide guidance and tools for companies and organizations that want to ensure that their products and services consistently meet customer’s requirements. ISO 9001:2015 sets out the criteria for a quality management system and is the only standard in the family that can be certified to. This standard is based on a number of quality management principles including a strong customer focus, the motivation and implication of top management, the process approach and continual improvement.
For more information, please contact Brooke Polk at Brooke.Polk@iadc.org.
Supply Chain Committee Names New Leadership
The IADC Supply Chain Committee recently elected new committee leadership. Tom Steiner, EnscoRowan was named Chair and Brad Green, EnscoRowan was named Vice Chair. The next Supply Chain Committee will be held on August 14 at the IADC office in Houston. All Supply Chain Committee meetings are open to IADC Contractor Members only.
More information about the committee can be found on IADC’s website.
IADC Bookstore Enhanced and Upgraded
The IADC bookstore recently completed a thorough update and streamlining process to further advance the overall user experience. The print and electronic bookstores are now combined into one store and allow customers to quickly link to the desired choice and format of desired books, contracts, daily drilling reports, and streaming media. Top-selling items, including the 2T6 Drilling Report, the IADC Drilling Manual and the Drillers Knowledge Book, are featured.
IADC has worked with its partners, including Techstreet and Moxie Media, in making the user experience much easier while offering new products and delivery methods. The bookstore will continue adding relevant content for our users and customers over the coming weeks.
Android App for Mission Petrohouse Rolled Out
IADC’s Drilling Matters initiative to educate the public and dispel myths and misconceptions about our industry hit the ground running in 2019, with the roll out of an Android app for its popular online game Mission Petrohouse.
Mission Petrohouse players steer a retro rocket ship through a home and “zap” everyday products created from petroleum to fill the rocket’s fuel tank. The game tracks the number of items zapped, and provides helpful information about each item.
The new app can be downloaded from Google Play at https://play.google.com/store/apps/details?id=com.iadc.hydrohouse
Drilling Matters is available on line at www.DrillingMatters.org.
For more information about Drilling Matters, contact Amy Rose (firstname.lastname@example.org).
IADC Lexicon Featured Term for July 2019
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:
“Deep-set” (Source: ISO 16530-1:2017, Petroleum and natural gas industries — Well integrity – Part 1: Life cycle governance, First Edition, March 2017.):
Close to, or at, the cap rock of a reservoir or a depth where it is possible to achieve an overbalance pressure with an hydrostatic column to counter act the maximum anticipated pressure from below.
(click the link to read the full definition on the IADC Lexicon.)
Rigs Receive ISP Certificates
For certificates received since last LTI (in years):
New IADC Members
IADC welcomes 12 new members:
DRILLBITS Volume 29, Number 7
Kevin Neveu, Chairman • Jason McFarland, President • Amy Rose, Editor
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