Feds push stricter rules for offshore production systems

The Obama administration on Wednesday proposed a rule to tighten standards for oil and gas production systems used offshore, in a bid to keep pace with the industry’s march into deeper waters and more challenging terrain.

The 149-page proposal also would require more rigorous cradle-to-grave assessments of critical safety and pollution prevention equipment, such as foam firefighting systems and electronic emergency shutdown devices.

The measure has been in the works for years, as offshore regulators sought to update standards that haven’t been significantly revised since they were first published in 1988.

“Since that time, much of the oil and gas production on the outer continental shelf has moved into deeper waters, and the regulations have not kept pace with the technological advancements,” the Bureau of Safety and Environmental Enforcement said in the proposal.

One major change is the increasing reliance on production equipment buried beneath the surface of the sea, including trees, the assemblies of valves and fittings that are mounted on well heads and used to control the flow of oil and gas.

Decades ago, oil and gas companies generally used dry tree completions, with the equipment easily accessible above water. But “production in the Gulf of Mexico now occurs in depths of 9,000 feet of water, with many of the wells producing from water depths greater than 4,000 feet utilizing ‘wet’ or subsea trees,” the bureau said. Since the subsea trees are located on the seafloor, workers can’t directly access the device’s valves and gauges. Instead, pressure, temperature and flow rate are monitored remotely.

Bureau Director James Watson cast the proposal as a mix of “common-sense changes” that “will help regulations keep pace with changing technologies that have enabled the industry to explore and develop resources in deeper waters.”

Those technologies include stronger alloys and equipment meant to withstand higher temperatures underground and stronger pressures under thousands of feet of water. Even close to shore, new technologies are being used to eke oil and gas from existing reservoirs.

The proposed rule would apply to some 3,000 existing production facilities on the United States’ outer continental shelf, including tiny, unmanned single well caissons built years ago as well as massive new deep-water facilities with scores of workers on board.

Under the rule, oil and gas companies operating offshore would have to more frequently report failures in safety and pollution prevention equipment and better document maintenance of the systems. The government also is proposing the equipment be subjected to “life-cycle analysis,” a kind of vigorous, continual review covering the entire lifespan of the devices, from their design and manufacturing to their final decommissioning.

Although industry standards established by the American Petroleum Institute already recommend such cradle-to-grave analysis, the bureau said the proposed rule “would codify aspects of the life-cycle analysis into the regulations and bring attention to its importance.”

The goal, according to the proposed rule, is “to increase the overall level of certainty that this equipment would perform as intended including in emergency situations.”

Companies would have to notify manufacturers of failures of safety and pollution prevention equipment within 30 days after discovering the problems. And the rule would require operators to conduct investigations within 60 days of the failures, with the manufacturer of the equipment guaranteed a copy of any analysis reports.

Offshore regulators also are insisting on more rigorous design standards and testing of boarding shutdown valves, which allow the flow of oil and gas to be halted in an emergency.

Other changes stem from recent accidents or agency investigations. For instance:

• new inspection and repair requirements for tube type heaters used to help separate water and oil flowing from wells were prompted by recent incidents traced to improper monitoring and maintenance of the parts.
• engineering documents would have to be stamped by registered professional engineers and available to federal regulators on request, following the safety bureau’s investigation into the availability of approved schematics on BP’s Atlantis oil and gas production platform. As-built diagrams of facilities and equipment also would have to be submitted to federal regulators.

The proposed rule incorporates a suite of API recommended practices for offshore production facilities, including a standard on design and hazards analysis of the facilities.

The oil industry trade group said it was reviewing the broad proposal:

“Safety is a core value for our industry, as evidenced by the fact that BSEE has incorporated more than a dozen industry standards developed by API into this proposed rule,” said API spokesman Brian Straessle. “Since this is a major revision to the existing rule, we are reviewing it carefully and will submit comments to BSEE.”

One proposal sure to get industry scrutiny is a mandate that energy companies to use the “best available and safest technology” whenever the safety bureau deems it economically feasible for new drilling and production operations or practicable on existing operations. That is a proposed change to existing regulations that require the use of best available and safer technology “whenever practical” on “all exploration, development and production operations.”

In practice, this would mean the safety bureau generally would dictate what best safety technology is economically feasible, but offshore operators could ask for exceptions when the cost of the technology outweighs its benefits.

Federal officials said the change was meant to steer the regulation closer to the mandates in the Outer Continental Shelf Lands Act, the statute that governs offshore energy development. But industry representatives were skeptical and signaled they would be closely studying the section.

The move to give the safety bureau the decisive role over what qualifies as the best available safest technology seems to be a departure from regulators’ stated intent to adopt more performance-based standards for offshore energy work, rather than prescriptive rules.

In analogous requirements for best available technology, other federal agencies often set operating parameters and give companies the discretion on how to reach them.

The safety bureau’s approach also could have implications for the agency’s forthcoming proposal for new mandates for emergency devices known as blowout preventers, since that likely will include best-available technology requirements.

Within a year of being finalized, the rule would effectively bar companies from installing single bore production risers from floating production facilities. The safety bureau said single bore production risers do not provide “an acceptable level of safety ” when operators have to work through the riser. That can cause wear over time, potentially compromising the riser’s integrity.

The public now has 60 days to comment on the proposed rule, though the oil industry is expected to ask for more time to weigh in, given the measure’s breadth.

In an interview with FuelFix, Watson stressed his desire to heed input from oil and gas operators, drilling companies, equipment manufacturers and other stakeholders in writing the rules.

This likely will be Watson’s last major act as director of the safety bureau. He is leaving later this month to take over as president and chief operating officer for the Americas division of the maritime classification society ABS.

Under incoming director Brian Salerno, the safety bureau is expected to continue working on another major set of regulations that would govern critical emergency equipment known as blowout preventers.

BSEE’s proposed production systems rule