Proposed Production Safety Rules Attempt to Bring Outer Continental Shelf Regulations into the Twenty-First Century

by King & Spalding
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Over the last two decades, Outer Continental Shelf (OCS) production technology has advanced considerably while federal regulations governing OCS production have remained relatively unchanged. In an attempt to modernize OCS production safety rules, the Bureau of Safety and Environmental Enforcement (BSEE) [1] has proposed revisions to the Oil and Gas Production Safety Systems (OGPSS) rules and the best available and safest technology (BAST) rule.[2] The OGPSS rules have not had a major revision since they were originally published in 1988. The proposed rule revisions would require certain newly developed production safety equipment. Similarly, the BAST rule has not be revised since 1978. The BAST revision would eliminate operator discretion in determining what is economically feasible BAST. These proposed revisions represent major regulatory changes, and operators have asked for additional time to consider the implications of the amendments.[3]

After the 2010 Macondo incident , BSEE undertook significant steps to update various OCS regulations governing both drilling and production. Earlier this year, BSEE revised the safety and environmental management systems (SEMS) rule covering OCS drilling operations.[4] SEMS II is based on recommended practices from the American Petroleum Institute (API) and provides a framework for OCS drillers to "formulate policy and objectives concerning significant safety hazards and environmental impacts over which they can control and can be expected to have an influence."[5] The U.S. Coast Guard also recently announced its intent to promulgate a SEMS rule for vessels engaged in OCS activities.[6]

Beyond the SEMS II rule, BSEE is working on additional updates and additions to OCS regulations. Further looming on BSEE's horizon is a blowout preventer rule that is already creating significant controversy.[7] Currently up for consideration, however, are major revisions to the OGPSS rules and revisions to the BAST rule that propose elimination of operator discretion.[8]

Updating the Oil and Gas Production Safety Systems Rules to Reflect Current Technology

Believing that OCS regulations have not kept pace with improvements in technology, BSEE proposes revisions to the OGPSS rules aimed at improving "human safety, environmental protection, and regulatory oversight of critical equipment involving production safety systems."[9] Issues addressed include lifecycle analysis of safety and pollution prevention equipment (SPPE), subsurface safety devices, and safety device testing. Given the large practical impacts from the proposed revisions, numerous regulated parties have requested that BSEE extend the comment period.[10]

Since publication of the OGPSS rules in 1988, advances in offshore production technology have increased the depth at which offshore platforms can operate.[11] Shallow water platforms have traditionally used "trees" on the deck to control production and flow of product from the well. These "dry" trees are directly accessible and allow direct monitoring of well conditions such as pressure, temperature, and flow rate. Modern production wells now producing from water depths greater than 4,000 feet utilize "wet" trees, also known as subsea trees. Subsea trees are placed directly on the sea floor and well conditions are monitored remotely. With the advent of subsea trees, new companion devices and technology such as foam firefighting systems, electronic shutdown systems, and subsea pumping and gaslift equipment have been developed.[12] The OGPSS amendments address these production safety systems, as well as electronic-based emergency shutdown systems, valve closure times, and equipment used on high pressure and high temperature wells.[13]

Though couched as updating amendments, the proposed revisions would add regulatory requirements mandating installation of new technologies and maintenance procedures by operators. Each new regulation for previously unregulated equipment would require time and money for an operator to achieve compliance. For example, new regulations for foam firefighting systems require an operator to inspect annually foam concentrates and their tanks for excessive sludging or deterioration.[14] Furthermore, operators would be required annually to send samples of foam concentrate for testing and certification of the suitability of the foam for firefighting. Documentation of this certification must be readily available during a field inspection.

The foam firefighting regulation is just one example of numerous additions to the rules. With the OGPSS proposed revisions, content that currently spans nine regulations would balloon to nearly seventy-five.

Revisions to the BAST Rule Will Eliminate Operator Discretion

In addition to the OGPSS rules, BSEE has proposed revising the best available and safest technology (BAST) rule. This rule has not had a major revision since 1978 and the full implications of the proposed rule remain unclear.[15] Current regulations require that operators use BAST "whenever practical on all exploration, development, and production operations."[16] The proposed revision would update this section to track the Outer Continental Shelf Lands Act, which states that operators use BAST determined to be economically feasible "wherever practicable."[17] BSEE found that current regulations "provide[] an operator substantial discretion in the use of BAST."[18] The proposed changes would result in operators having little to no discretion in the adoption of BAST and seem to allow BSEE to dictate what measures constitute economically feasible BAST.[19]

Determining BAST can be subjective and some in the regulated community have expressed concern that BSEE, without suitable input from operators, could select technologies that prove impractical.[20] One commenter pointed out that everyone "from Hollywood stars to U.S. Senators" have a preferred BAST, reflecting a concern that political pressure could shape BSEE's determination.[21]

As proposed, it is unclear how BSEE would make BAST determinations and how operator input could be incorporated into any decision making process. BSEE's comment period is open until December 5, 2013.

The author would like to acknowledge the valuable assistance of Jim Vines and Kelsey Desloover in preparing this article.

[1] On October 1, 2011, BOEMRE was replaced by the Bureau of Ocean Energy Management ("BOEM") and the Bureau of Safety and Environmental Enforcement (BSEE) as part of a major reorganization. Bureau of Ocean Energy Management, Regulation and Enforcement, www.boemre.gov/ (last visited Oct. 17, 2013). BOEM is responsible for oil and gas lease sales and offshore renewable energy programs, including environmental reviews, while BSEE provides regulatory oversight focused on operators' compliance with environmental regulations. Bureau of Ocean and Energy Management, About BOEM, www.boem.gov/About-BOEM/index.aspx (last visited Oct. 17, 2013); Bureau of Safety and Environmental Enforcement, About BSEE, www.bsee.gov/About-BSEE/index.aspx (last visited Oct. 17, 2013).

[2] Oil and Gas and Sulphur Operations on the Outer Continental Shelf - Oil and Gas Production Safety Systems, 78 Fed. Reg. 52240 (Aug. 22, 2013) (to be codified at 30 C.F.R. pt. 250).

[3] Extension of Comment Period, 78 Fed. Reg. 59632 (Sept. 27, 2013).

[4] Oil and Gas and Sulphur Operations in the Outer Continental Shelf - Revisions to Safety and Environmental Management Systems, 78 Fed. Reg. 20423 (Apr. 5, 2013) (codified at 30 C.F.R. pt. 250) ("SEMS II").

[5] American Petroleum Inst., RECOMMENDED PRACTICE FOR DEVELOPMENT OF A SAFETY AND ENVIRONMENTAL MANAGEMENT PROGRAM FOR OFFSHORE OPERATIONS AND FACILITIES, at 1 (reaffirmed 2008); Stephanie Salek, Jonathan Henry & Kelsey Desloover, Drilling Out the Weak Spots in Auditor Requirements, Law360 (Jan. 26, 2012, 3:36 PM), www.law360.com/articles/303686.

[6] Safety and Environmental Management System Requirements for Vessels on the U.S. Outer Continental Shelf, 78 Fed. Reg. 55230 (Sept. 10, 2013).

[7] See Daniel Wilson, GOP Reps. Want Info on Pending DOI Offshore Drilling Regs, Law360 (July 15, 2013, 7:16 PM), www.law360.com/articles/457460/gop-reps-want-info-on-pending-doi-offshore-drilling-regs; Jennifer A. Dlouhy, Lawmakers Press Feds for info on Blowout Preventer Mandates, FuelFix (July 15, 2013, 4:36 PM), fuelfix.com/blog/2013/07/15/lawmakers-press-feds-for-info-on-blowout-preventer-mandates/.

[8] Oil and Gas and Sulphur Operations on the Outer Continental Shelf - Oil and Gas Production Safety Systems, 78 Fed. Reg. 52240 (Aug. 22, 2013) (to be codified at 30 C.F.R. pt. 250).

[9] Id.

[10] See e.g. Chevron North America Exploration and Production, Public Comment Number BSEE-2012-0005-0010, Oil and Gas and Sulphur Operations on the Outer Continental Shelf: Oil and Gas Production Safety Systems, 78 Fed. Reg. 52240 (Aug. 22, 2013) (to be codified at 30 C.F.R. pt. 250) (Aug. 30, 2013), www.regulations.gov/#!documentDetail;D=BSEE-2012-0005-0010; Offshore Operators Committee, Public Comment Number BSEE-2012-0005-0014, Oil and Gas and Sulphur Operations on the Outer Continental Shelf: Oil and Gas Production Safety Systems, 78 Fed. Reg. 52240 (Aug. 22, 2013) (to be codified at 30 C.F.R. pt. 250) (Sept. 24, 2013), www.regulations.gov/#!documentDetail;D=BSEE-2012-0005-0014. The request for an extension was granted and comments are now due by December 5, 2013. Extension of Comment Period, 78 Fed. Reg. 59632 (Sept. 27, 2013).

[11] Oil and Gas and Sulphur Operations on the Outer Continental Shelf - Oil and Gas Production Safety Systems, 78 Fed. Reg. 52240, 52240-41 (Aug. 22, 2013) (to be codified at 30 C.F.R. pt. 250).

[12] Id.

[13] Id. at 52276 (to be codified at 30 C.F.R. pt. 250.861), 52274 (to be codified at 30 C.F.R. pt. 250.855), 52268-70 (to be codified at 30 C.F.R. pt. 250.838-.839), 52265 (to be codified at 30 C.F.R. pt. 250.804).

[14] Id. at 52276 (to be codified at 30 C.F.R. pt. 250.861).

[15] Chevron North America Exploration and Production, Public Comment Number BSEE-2012-0005-0010, Oil and Gas and Sulphur Operations on the Outer Continental Shelf: Oil and Gas Production Safety Systems, 78 Fed. Reg. 52240 (Aug. 22, 2013) (to be codified at 30 C.F.R. pt. 250) (Aug. 30, 2013), www.regulations.gov/#!documentDetail;D=BSEE-2012-0005-0010; American Petroleum Institute, Public Comment Number BSEE-2012-0005-0007, Oil and Gas and Sulphur Operations on the Outer Continental Shelf: Oil and Gas Production Safety Systems, 78 Fed. Reg. 52240 (Aug. 22, 2013) (to be codified at 30 C.F.R. pt. 250) (Sept. 24, 2013), www.regulations.gov/#!documentDetail;D=BSEE-2012-0005-0007.

[16] 30 C.F.R. § 250.107 (emphasis added).

[17] 43 U.S.C. § 1347(b) (emphasis added).

[18] Oil and Gas and Sulphur Operations on the Outer Continental Shelf - Oil and Gas Production Safety Systems, 78 Fed. Reg. 52240, 52243 (Aug. 22, 2013) (to be codified at 30 C.F.R. pt. 250).

[19] Id.

[20] Robert Hermann, Public Comment Number BSEE-2012-0005-0013, Oil and Gas and Sulphur Operations on the Outer Continental Shelf: Oil and Gas Production Safety Systems, 78 Fed. Reg. 52240 (Aug. 22, 2013) (to be codified at 30 C.F.R. pt. 250) (Sept. 24, 2013), www.regulations.gov/#!documentDetail;D=BSEE-2012-0005-0013.

[21] Id.

Stephen A. McCullers
Atlanta
+1 404 572 3537
smccullers@kslaw.com

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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