WASHINGTON, D.C.–The US House Subcommittee on Energy and Mineral Resources heard from three major federal agencies on President Barack Obama’s 2017 budget and the administration’s regulations.
The panel included representatives from the Bureau of Ocean Energy Management (BOEM), the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Land Management.
One area of focus within the hearing was onBSEE’s proposed well control rule, recently sent to the Office of Management and Budget for final review. This is typically the last step before finalization.
Rep. Garret Graves (R-LA) questioned BSEE Director Brian Salerno on the agency’s proposed well control rule, with the subcommittee referring to it as “a case study into how prescriptive federal regulations could potentially impair projected production increases and future leading activity.”
“This actually threatens safety, it doesn’t improve it,”Graves said, eventually stating that the rule needs to go back out for public comment.
The industry has spoken out against parts of the rule, including the drilling margin outlined within the document, and the cost to an industry already hurting from plunging oil prices. Among others, NOIA and theAmerican Petroleum Institutehave been outspoken opponents.
Industry Advocacy group the Gulf Economic Survival Team said: “If implemented as proposed, the Interior Department’s Well Control Rule may slow or shut downoil and gas drilling in the Gulf of Mexico.”
Days ago, Wood Mackenzie released a report on the impact of the rule that said it is “expected to reduce offshore activity, both development and exploration, due to higher incurred costs and technical constraints of implementation.” It found that industry investment would be reduced by an average of up to $11 billion a year and that exploration drilling would drop 35-55%, or up to 10 wells per year.
However, in his testimony at the hearing, Salerno said that the agency worked with stakeholders to create a rule that made official changes the industry has seen in response to Macondo.
“The bureau codifies risk mitigation measures by promulgating new regulations, such as the Well Control Rule,” he said.
“The Well Control Rule is intended to account for all aspects of drilling operations in order to reduce risks that could lead to technical and operational failures such as those that resulted in the loss of well control and explosion aboard theDeepwater Horizon.
“The bureau conducted an extensive engagement campaign throughout the development of the rule, including a review of over 5,000 pages of technical comments received during the extended 90-day comment period and over 60 individual meetings and over 20 workshops or public forums with stakeholders from industry, trade associations, and environmental groups, among others,” Salerno said.