GULF OF MEXICO

Bruce Beaubouef • Houston

Feds conditionallylifts GoM drilling ban

At last, some good news from the Gulf of Mexico. On Oct. 12, the federal government conditionally lifted its ban on deepwater drilling in the Gulf. Secretary of the Interior Ken Salazar determined that deepwater oil and gas drilling should resume, provided that operators certify compliance with all existing rules and requirements, including those that recently went into effect; and demonstrate the availability of adequate blowout containment resources.

Secretary Salazar reached his decision after reviewing a report from Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) Director Michael R. Bromwich and considering other information about offshore oil and gas safety reforms, the availability of spill response resources, and improved blowout containment capabilities.

“In light of theDeepwater Horizon oil spill, we must continue to take a cautious approach when it comes to deepwater drilling and remain aggressive in raising the bar for the oil and gas industry’s safety and environmental practices,” said Salazar. “We have more work to do in our reform agenda, but at this point we believe the strengthened safety measures we have implemented, along with improved spill response and blowout containment capabilities, have reduced risks to a point where operators who play by the rules and clear the higher bar can be allowed to resume.”

In his decision, Salazar directed BOEMRE to require the following before approving drilling in deepwater that would have been subject to suspension under his July 12 Decision Memorandum:

• The operator must demonstrate that it has enforceable obligations that insure containment resources are promptly available in the event of a deepwater blowout, regardless of the company or operator involved. The Department of the Interior has a process under way to establish a mechanism relating to the availability of blowout containment resources, and Salazar said he expects that this mechanism will be implemented in the near future.
• The CEO of each operating company seeking to perform deepwater drilling must certify to BOEMRE that the operator has complied with all regulations, including the new drilling safety rules.

Bromwich said that before deepwater drilling will resume, BOEMRE intends to conduct inspections of each deepwater drilling operation for compliance, including testing of BOPs.

In addition to the recently issued Drilling Safety Rule, Salazar said he anticipates that Interior and BOEMRE will undertake further rulemaking that considers additional safety measures – such as redundant blind shear rams, remote activation systems for BOPs, and enhanced instrumentation and sensors on BOPs – to further enhance safety. Future rulemakings may consider information developed by ongoing investigations into theDeepwater Horizon oil spill, or as a result of public comments on the recently issued Drilling Safety Rule.

New GoM regulations released

Speaking of those new regulations: On Oct. 1, the US Department of Interior (DoI) released two new rules that aim to “help improve drilling safety by strengthening requirements for safety equipment, well control systems, and blowout preventer practices” offshore by reducing the risk of human error. The new Drilling Safety Rule and the new Workplace Safety Rule are part of the reforms DoI has undertaken since theDeepwater Horizon accident.

The Drilling Safety Rule prescribes proper cementing and casing practices and the appropriate use of drilling fluids for well bore integrity. It also adds oversight of shut-in equipment, mainly BOP, shear ram, and pipe ram requirements, including ROV use. Operators also must get independent, expert review of well design, construction, and flow intervention mechanisms.

The Workplace Safety Rule requires a Safety and Environment Management System and makes API Recommended Practice 75 mandatory. Additional rules are in the offing.

“Under these new rules, operators will need to comply with tougher requirements for everything from well design and cementing practices to blowout preventers and employee training,” said Ken Salazar, DoI secretary. “They will also need to develop comprehensive plans to manage risks and hazards at every step of the drilling process, so as to reduce the risk of human error.”

“These two rules are part of a broader series of reforms we are undertaking to reduce the risks of offshore energy operations,” said Michael R. Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement. “We are substantially raising the standards for all offshore operators, and are doing it in an orderly and responsible way. We will continue to move forward with other changes and reforms in what will remain a dynamic regulatory environment. We owe the public nothing less.”

Shell confirms momentum in GoM

Meanwhile, a handful of operators have affirmed their positive views of drilling and production opportunities in the Gulf going forward. These have included Apache, ConocoPhillips and Royal Dutch Shell.