Drilling safety mandates on the way

The federal government is on track to soon issue a final set of standards meant to boost the design and cementing of offshore wells in the wake of the Deepwater Horizon disaster two years ago.

James Watson, the director of the Interior Department’s Bureau of Safety and Environmental Enforcement, said the drilling safety measure is set to be finalized “any day now.”

“That one is in its very final stages of review at the Office of Management and Budget,” Watson said.

When it comes out, the final drilling safety rule will tweak existing mandates issued in October 2010 in response to the lethal blowout of BP’s Macondo well in the Gulf of Mexico.

The original measure, imposed on an emergency basis, essentially codified industry’s existing best practices for designing and securing offshore wells. The regulation also imposed new requirements for certifying, inspecting and maintaining emergency devices known as blowout preventers that are a last line of defense against unexpected oil and gas surges.

Although the mandates applied immediately in October 2010, regulators made clear they would take public comments and might revise the rule as a result. They also issued a five-page memo in March 2011 meant to clarify the requirements, amid oil and gas industry complaints that the mandates were muddled.

The main problem stemmed from regulators’ decision to refer to two sets of recommended practices for emergency equipment and well design developed by the American Petroleum Institute. Instead of rewriting those mandates in their own words, regulators simply referenced API documents and specified that any time the recommended practices said “should,” the government considered the standard a “must.”

Industry representatives complained that the change affected more than 14,000 discretionary provisions in 80 different standards and that in many cases the new requirements conflicted. For instance, API’s recommended practices sometimes offer operators an array of choices for securing a well, but the language of the rule seemed to make all of those options mandatory.

Watson said the “should-to-must issue will get addressed” in the final rule.

Other new drilling safety mandates are looming. Watson’s safety bureau is set this fall to propose new requirements meant to boost the reliability and power of blowout preventers, after potentially widespread problems revealed during a forensic examination of the device unearthed from BP’s failed Macondo well.

Interior Department officials have foreshadowed the coming mandates and signaled that they may propose requiring offshore drillers to add to their BOPs a second set of blind shear rams capable of cutting through drill pipe and helping to seal a well in an emergency. They also have made clear they want blowout preventers to be equipped with better sensors that can tell operators how the devices are functioning and the position of key components.

The rule is likely to prompt changes to the blowout preventers now carried on many deep-water drilling rigs in the Gulf of Mexico.

But FBR Capital Markets analyst Benjamin Salisbury warned that if the government requires a second shear ram, which would be bigger and take up more space, it could make dozens of deep-water rigs obsolete without major upgrades. It’s a bigger challenge for older rigs with limited derrick capacity, Salisbury said.

Watson has said his agency would be considering a phase-in period as part of any new rule to allow time for manufacturers to redesign blowout preventers to meet new standards and to get the equipment to the marketplace.

For rigs with limited space — where a second set of shearing rams is impossible without a major overhaul — the government also could give drillers the option of replacing existing rams with more powerful versions capable of cutting through thick sections of connected drill pipe and debris. BOP manufacturers are developing and marketing new shearing rams they say can cut through more obstacles.