DRILLBITS – March 2017
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IADC Praises Senate Confirmation of Ryan Zinke as Secretary of the Interior
On 1 March, the U.S. Senate confirmed Ryan Zinke as Secretary of the Department of Interior (DOI). In response, IADC President Jason McFarland issued the following statement:
“It is the mandate of the Department of Interior to develop the tremendous natural resources within the U.S., and to ensure that this is done in a safe and environmentally sound manner. IADC looks forward to working with Secretary Zinke and his staff on a wide variety of issues including the BSEE Well Control Rule, BOEM’s Air Quality Rule, BLM’s Hydraulic Fracturing Rule and other issues related to contractor liability and financial assurance.
“We were heartened to hear Secretary Zinke describe his belief in the economic benefits that a robust oil and gas industry has on the U.S. in his committee confirmation hearings. Over the course of the last eight years, oil and gas leases on federal lands declined 65%, denying Americans the right to develop lands that could spur economic development for local communities, not to mention the resulting taxes and royalties paid to the U.S. Treasury. It is IADC’s stance that the Department should allow more access, both onshore and offshore, for oil and gas operations. In addition states should continue to regulate activities, as they have done for decades, without federal government interference. These are philosophies that we believe we share with Secretary Zinke, and we look forward to serving as an educative resource for the department on all matters that affect the U.S. oil and gas industry.”
Interior Moves to Repeal Oil, Natural Gas and Coal Valuation Rule
In March, the U.S. Department announced plans to repeal the Office of Natural Resources Revenue’s (ONRR) “Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Rule”. The rule, which has not yet gone into effect, would have changed the way royalties are calculated for fossil fuels produced on federal lands.
The 2017 Valuation Rule was published on 1 July, 2016 and took effect on 1 January, 2017, with first reports due on 28 February. In December of 2016, several petitioners filed separate petitions challenging the rule in the U.S. District Court for the District of Wyoming. In light of the pending litigation, the ONRR requested a stay on litigation related to the rule, indicating the forthcoming rulemaking to repeal it.
For the oil and gas industry, the rule posed several threats due to it’s lack of clarity and certainty, and industry associations have previously argued that instead of achieving its stated goals, the rule would have likely hampered energy production on federal lands.
Please visit the Office of Natural Resources Revenue website for more information.
Proposed Rewrite of Decades-Old Customs Rules Impact Nearly all Gulf of Mexico Rigs, Platforms
A proposed new interpretation of decades-old customs rules could significantly increase costs for offshore drilling by reclassifying as “merchandise” much of the drilling equipment and consumables used in the US Gulf of Mexico. On 18 January, US Customs and Border Protection (CBP) proposed a revoking or modifying of at least 30 rulings, which, according to the CBP, are “contrary” to the original definition of vessel equipment – “portable articles necessary and appropriate for the navigation, operation or maintenance of the vessel and for the comfort and safety of the persons on board.”
Under the Jones Act, only US-flagged and qualified vessels can transport “merchandise” in which citizens hold at least a 75% interest in the vessel.
Changes to the rule could require drilling equipment and consumables to be offloaded from the rig to US-flagged and qualified vessels for transport to the next well. Impacted equipment is likely to include risers, drill pipe and collars, BOP stacks and consumables, such as cement and chemicals. The costs associated with the new proposal could increase rig costs by more than $1 million, and moving the equipment to boats could easily damage the riser and other gear, resulting in further costs.
IADC, API and IMCA, along with allies, are working the issue. The deadline for comments is 17 April, an extension from the original 17 February deadline.
For more information, please visit the US Customs and Border Patrol website.
Washington D.C. Updates
In March, the President signed more Congressional Review Act (CRA) Disapproval Resolutions passed by Congress into law, including the BLM ‘land planning 2.0’ rule which established the procedure used to prepare, revise, or amend land use plans pursuant to the Federal Land Policy and Management Act of 1976 and two Department of Education rules. Another CRA bill is sitting on the President’s desk regarding the DOL rule allowing drug testing for certain unemployment compensation applicants.
The President also issued on March 28 an Executive Order (EO) on Promoting Energy Independence and Economic Growth. While this EO focuses on scaling back climate initiatives of the Obama era and scaling back rules diminishing the use of coal, it does include four items impacting oil and natural gas rules including: BLM’s hydraulic fracturing rule, NPS rule increasing oversight of oil and natural gas operations, FWS rule increasing oversight of oil and natural gas operations, BLM methane rule.
The Senate was very busy this month approving judicial nominees and an ambassador –David Friedman as US Ambassador to Israel and more nominations – including Dan Coats as Director of National Intelligence. The Senate also passed more CRA Disapproval Resolutions including a rule regarding privacy, FCC rule “protecting the privacy of customers of broadband and other telecommunications services” and a DOL rule on recordkeeping for injuries and illnesses. The Senate also approved of a Treaty measure allowing for the accession of Montenegro to NATO.
The Senate has not moved forward on the Supreme Court nomination of Neil Gorsuch due to the lack of 60 votes needed to move forward on the nomination.
The House likely stole the show this month with the failed attempt to repeal the Affordable Health Care Act (aka Obama Care). The House is shifting gears and moving on toward tax reform and an infrastructure bill. It is unclear whether a healthcare bill, in whatever form, will come back before the U.S. House anytime soon.
Lyndol Dew Named Chairman of Well Control Institute
Lyndol Dew of Diamond Offshore Drilling was confirmed as the new Chairman of the Well Control Institute on 16 March. Mr. Dew is Senior Vice President of Special Projects and Strategic Initiatives for Diamond Offshore, and is a charter member of the Board of Directors of the Well Control Institute. He is also a member of the IADC Executive Committee and Division Vice President for the Offshore Division.
Mr. Dew graduated from Florida State University and received a Master of Engineering from Tulane University. He served in the U.S. Navy as a Surface Warfare Office for six years before subsequently working in various domestic and international positions for Diamond Offshore, on rigs and shore-based, for the past 32 years.
The Well Control Institute is a wholly owned subsidiary of IADC and focuses on improving well control performance in drilling operations worldwide. Its Board of Directors is made up of high-ranking executives from the world’s leading drilling contractors, oil companies, service companies and equipment manufacturers.
Scandrill Inc. Hosts Senator Ted Cruz at its rig Scan Gold Drilling in the Midland Basin for XTO Energy
On 20 February, Scandrill Inc. hosted Senator Ted Cruz at its drilling rig Scan Gold. The Scan Gold rig is shale rig outfitted with advanced walking system and 7500 psi mud system enabling it to drill in excess of 20,000’. Under the careful supervision of rig manager Joseph Schultz, Senator Cruz had the opportunity to get under the brake handle.
Maersk Oil, Danish Undergound Consortium Reach Agreement with Government of Denmark Encouraging Full Redevelopment of Tyra Field
On 22 March, Maersk Oil, on behalf of the Danish Undergound Consortium (DUC), reached an agreement with the Government of Denmark which will facilitate future oil and gas investments in the Danish North Sea and protect industry jobs in Denmark. The agreements provides the terms that enable the DUC partners to progress a full redevelopment plan for the Tyra facilities toward a decision to invest in the project by the end of 2017.
Since 1984, Tyra has been at the center of Denmark’s national energy infrastructure, processing 90% of the nation’s gas production. The Tyra field requires redevelopment due to subsidence of the chalk reservoir which has led to the platforms sinking by around 5 meters in the last 30 years. This has reduced the gap between the sea and platform decks, and as a result, investment is required if the Tyra complex is to continue producing safely into the next decade.
A full redevelopment will restore the current infrastructure, including the gas processing hub and five surrounding satellite fields which include Harald and Valdemar and thereby ensure continued production from the Tyra field. Furthermore, the new asset could enable future production of oil and gas volumes from the DUC license area as well as third party projects.
IMO Ship Systems and Equipment Subcommittee Meeting Updates
Two issues of interest to the offshore drilling industry continued progress toward their expected completion during the International Maritime Organization’s (IMO) 4th session of the Ship Systems and Equipment Subcommittee meeting this month.
- The subcommittee endorsed amendments to the IMO’s Dynamic Positioning (DP) Guidelines (MSC.1/Circ.645). This first revision of these 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 endorsed by the subcommittee, it is expected that adoption of these updates will take place at the 98th session of the Maritime Safety Committee (MSC 98) meeting in June 2017.
- The subcommittee also endorsed amendments to the IMO’s 2009 MODU Code. 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, more robust structural fire protection design elements, and lifesaving appliance considerations unique to MODUs. As with the anticipated adoption of revised DP guidelines at MSC 98, these revisions to the MODU Code are also expected to be adopted at the Committee meeting in June 2017.
The subcommittee’s endorsements 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 was pleased to see new DP and MODU Code provisions progressed in a manner that will enhance operational safety while not forgetting the practical considerations for implementing new improvements.
For more information, please contact Jim Rocco at Jim.Rocco@iadc.org.
OESI to Host Real Time Monitoring Best Practices Discussion
On 17 April, the Ocean Energy Safety Institute (OESI) will host a discussion on an OESI Best Practice Document for Real Time Monitoring (RTM) of Offshore Well Construction in Houston.
In 2016, new well control rules were established whereby operators are required to provide real time monitoring plans and capabilities for operations in the OCS. As written, the rule is performance based in nature, providing industry with maximum flexibility to develop at RTM program tailored to their individual needs. To provide clarity regarding these requirements and to demonstrate the agency’s intent to cooperate and collaborate with industry, BSEE has requested the OESI provide a collection of recommendations that are likely to satisfy the spirit of the rule without imposing undue burdens on operators or prescribing specific technologies or practices.
For more information, please visit the OESI website.
Initial BSEE BAST Technology Objectives to be Discussed During Public Forum
On 17 April, the Ocean Energy Safety Institute (OESI) will support the Bureau of Safety and Environmental Protection (BSEE) as they announce their assessment and early finding for technology solutions related to ‘Early Kick Detection’ and ‘Methane Gas Detection’ to help safeguard against OCS safety issues during a public forum in Houston.
Use of cost effective Best Available and Safest Technology (BAST) is required by the Outer Continental Shelf Lands Act (OCSLA) to address significant safety issues on the OCS. This public forum provides an opportunity for review of the BAST Determination Process and will allow OCS stakeholders to hold discussions with the agency on this program.
The forum will be held in Houston, from 9:30 a.m. to 2:30 p.m. To register, please click here.
API to Host Next Standard 53 Land Workgroup Meeting in April
The next API Standard 53 Land workgroup meeting will be held on 19 April at BP Helios Plaza in Houston. Notes from the last meeting are included below, and these items are intended to be addressed, and possibly incorporated within, the actual standard at the upcoming meeting.
- Stack classification requirements need to be changed from BOP Stack pressure rating to well MASP (by hole section).
- 188.8.131.52 to be scoped to ‘hoses and hose components’ to align with 16D.
- 16C – hose specification and valve PSL requirements may need to be relaxed for low pressure applications.
- 2.2.18 – either remove ‘and control’ or be specific on what to control and what to monitor. Control of choke for 5k and greater as remote chokes are only required for 5k and greater. Choke control station required for 5k and greater also.
- 4.6.1 – Consider using well pressure classification (by hole section) to drive requirement for trip tanks.
- 4.7.1 – Apply requirements as trip tanks are required.
- 184.108.40.206 – Delete database requirement. Actuation times to be recorded, trending to be optional.
- Suggest pulling all MGS and PBD requirements and definitions together and align/clarify.
- Note 1 for accumulator drawdown testing to be rephrased. 1 hour wait should not be required.
- 220.127.116.11 – Reword to address MGS ‘clearing of debris’ without requiring inspection covers.
- 18.104.22.168 – Consider deleting for surface.
- 22.214.171.124 – 126.96.36.199.4 – Consider removing 2 year documentation requirement or making a recommendation. Change ‘rig site’ to ‘accessible from rig site’. James to submit draft language.
- Discuss failure reporting requirements for land at next meeting. Ask IADC FR lead or chair to talk to group about benefits seen as a result of the JIP.
For more information about the upcoming meeting, and to participate, please contact Rhett Winter at Rhett.Winter@iadc.org.
IADC Launches Accreditation Program for Rigger and Crane Operator Training
IADC recently launched the Crane-Rigger Training and Assessment accreditation program, which offers a training standard that aligns with similar international standards while offering the support and credibility of accreditation. Included in the new program are curricula for basic rigging and crane operation.
The program was developed by members of IADC’s Workforce Development Committee, comprising representatives from drilling contractors, operators, training providers and other stakeholder companies.
The goal of IADC’s Crane-Rigger Training and Assessment is to provide a robust program through which training providers can be accredited and audited, which will lead to safer operations. The program is a globally-minded, affordable accreditation which aligns with, and surpasses, the API RP 2D standard.
Crane and rigging experts worked collaboratively with IADC to develop curricula and delivery requirements for the new program, which includes the following:
- Requirements for practical exercises, hardware, and equipment
- Resources to facilitate the standardization of content delivery
- Instructor qualification and assessment requirements
- Standardized skills assessments
- Criteria for content and delivery of knowledge assessments
- Content applicable to both onshore and offshore operations
- A framework for offering consistent, verifiable quality of training
- Crane operations coursework that can be customized by crane type (i.e., mechanical and non-mechanical crane types)
“Development of this program was a long process involving dozens of stakeholders who each brought to the table a unique perspective in rigging and crane operations, both onshore and offshore,” said Patty Tydings, IADC’s Competence and Workforce Development Specialist. “Members of IADC’s Workforce Development Committee serve as the program’s ultimate decision-makers to ensure that the training modules and performance objectives are appropriate and comprehensive and that the accreditation criteria promote quality and consistency.”
For more information about the IADC Crane-Rigger Training and Assessment accreditation program, please email email@example.com.
IADC WellSharp Now Available in Spanish
The online exam for IADC’s well control training and assessment program, WellSharp, is now available in Spanish. The Spanish translation is now available to all training providers. The exam was previously translated into Portuguese, and it will also be available in Arabic and 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 Committee to Draft Additional Cybersecurity 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 due to be completed by the end of 2017. They include:
- 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 these guidelines. The next meeting will be held on 11 May at IADC Headquarters in Houston and the subcommittee will also be joined by Jim McCarthy, from NIST NCCoE to discuss ONG Use Cases. If you plan to attend, please register online via the IADC Website.
- The ART Drilling Control Systems Subcommittee, under the leadership of its chair, Nathan Moralez of BP, will soon issue a survey to IADC-member drilling contractors querying whether development of guidelines on sensor quality would be of value to the industry. The SC has already developed guidelines on cybersecurity and on alarm management. The SC meets next on 25 May at IADC HQ.
- The ART BOP Controls Systems Subcommittee, under the leadership of its chair, Roy Mills of Noble Corp, is developing guidelines for SPM and shuttle valves. The guidance would touch on design, testing parameters, operation, maintenance and record keeping. The SC plans to have the outline of these guidelines complete by its next meeting, 25 April at IADC HQ.
- The Drilling Engineers Committee held a Technology Forum on “Well Life Cycle Design” on 29 March. The event was graciously hosted by National Oilwell Varco at its Parkwood Circle facility. DEC’s next Technology Forum, “Making Data Actionable”, will be held on 14 June, generously hosted by Halliburton at its facility on North Sam Houston Parkway East.
IADC Drilling Matters Updated to Include New Deepwater Drilling Module
IADC continues to expand the DrillingMatters.org website with the addition of a new video module. The new module teaches viewers about the challenges and rewards in deepwater.
Drilling Matters.org is a multimedia, web-based tool to help educate regulators and the general public, with particular outreach to younger viewers. Tell your neighbors, friends and anyone you think can benefit from learning more about the industry.
Click here to access the Drilling Matters website
For more information about Drilling Matters, please contact Mike Killalea via email at firstname.lastname@example.org.
IADC Incident Statistics Report Q4 Data Now Available
105 companies participate in the ISP Program; 35 of which operate on U.S. Land. Participation in the ISP is voluntary and open to all drilling contractors and well servicing companies engaged in oil and gas well drilling. However, a company must participate in the IADC ISP Program & 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 – US, Europe, Canada, Central and South America, Africa, the Middle East and Asia Pacific.
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 23 new members:
DRILLBITS Volume 27, Number 3
Andy Hendricks, Chairman • Jason McFarland, President • Amy Rose, Editor
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