Friday, October 1, 2010

New regulations, old dilemma

Once US Interior Secretary Ken Salazar announced his anticipated offshore safety regulations on Sept. 30, it became immediately apparent that the Department of the Interior and its US Bureau of Ocean Energy Management, Regulation, and Enforcement must answer a traditional regulatory question: How prescriptive can their new rules be before they quit being effective and start causing serious problems?

Industry sources told me that their biggest immediate concern is with the blowout preventer requirements in the interim final rule aimed at strengthening offshore oil and gas safety equipment, well control, and BOP requirements. They basically worry that DOI and BOE will mandate specific equipment which would not be effective in some situations or work as well as well as other approaches outside the BOPs. Producers have said that each well is different, and that they need to be able to adapt quickly when situations change, which raises a question about reporting requirements.

Federal regulatory policymakers generally have tried to avoid overly prescriptive “one size fits all” requirements in recent years so regulated industries could be more flexible in addressing problems. The fact that the Apr. 20 Macondo well blowout and rig explosion took 11 lives and subsequently spilled 5,000 bbl of crude into the Gulf of Mexico has largely trumped this philosophy the past few months. Too much is at stake when people die, a major spill results, and the livelihoods of a US region’s entire population are put in jeopardy, proponents of stricter regulation contend.

Everyone seems to agree that more information needs to be shared and employees need to be better trained. When the International Association of Drilling Contractors testified in New Orleans on July 13 before President Obama’s independent oil spill commission, it recommended subjecting all offshore personnel to industry and government-accepted standards for well control such as IADC’s own Well Control Accreditation Program (WellCAP). IADC also has a rig-floor orientation program, RIG PASS, which many of its members use for their new employees.

A fact sheet which BOE issued with its announcement of a new offshore workplace safety rule said operators would be required to develop and maintain a Safety and Environmental Management System on each rig and platform. Each SEMS is a comprehensive management program to identify, address, and manage offshore operational safety hazards and impacts, it explained. “Many companies objected to this common-sense rule when we put it out for public comment before Apr. 20,” Salazar said.

The workplace safety rule makes mandatory current voluntary practices in American Petroleum Institute Recommended Practice 75. BOE said that it was preparing to finalize it before the Macondo well accident and subsequent crude oil spill. It continued to analyze RP 75 and decided to incorporate all of it in its workplace safety rule. It also said that it would address other safety concerns it identifies in future rulemakings.

These could include possible work hour limits and other ways to combat employee fatigue. BOE did not mention this in its workplace safety fact sheet, but the federal government has tried to address this issue in other industries as well as other parts of the US oil and gas business. I’ll be surprised if it isn’t raised here.

I won’t be surprised if API, IADC, the Independent Petroleum Association of America, and the National Ocean Industries Association weigh in with substantial comments and recommendations concerning both of these new regulations in the coming weeks. Too much is at stake for them not to.


Post a Comment

Subscribe to Post Comments [Atom]

<< Home