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BSEE and DOI Take Action on Five-Year Anniversary of Deepwater Horizon

Maritime

Action Item: BSEE has proposed significant changes to BOP systems and well operations in light of the five-year anniversary of the Deepwater Horizon incident. Stakeholders in offshore oil and gas operations should carefully evaluate the proposed new measures, review safety procedures, and consider commenting on the Proposed Rule before June 16.

New Developments

Highlighting the five-year anniversary of the M/V Deepwater Horizon incident, the Bureau of Safety and Environmental Enforcement (“BSEE”) issued its long-awaited Proposed Rule on April 17, 2015, regarding Blowout Preventer Systems (“BOPs”) and Well Control, and the Department of Interior (“DOI”) published a joint BSEE/Bureau of Ocean Energy Management (“BOEM”) notice describing the reforms the agencies have implemented since the 2010 incident. (See Proposed Rule and Joint Notice.) The following is a summary of these new developments. Comments are due on the Proposed Rule on June 16, 2015. 

Background

BSEE’s recent actions are tied in with the five-year anniversary of the Deepwater Horizon incident, an explosion and fire that tragically killed 11 workers and injured many more in the Gulf of Mexico on April 20, 2010. Following the Deepwater Horizon incident, the former Bureau of Offshore Energy Management, Regulation, and Enforcement (“BOEMRE”) (now reorganized into BSEE and BOEM) published an Interim Final Rule (“IFR”) titled “Increased Safety Measures for Energy Development on the Outer Continental Shelf” on October 14, 2010. The IFR was based on a May 27, 2010, report of the same title from the Secretary of the Interior, who had been instructed by President Obama to prepare the report as a result of the Deepwater Horizon incident. The Secretary of the Interior then directed BOEMRE to adopt and implement the recommendations contained in the report as soon as possible. BOEMRE was subsequently reorganized into BOEM and BSEE. In 2012, BSEE issued new guidance concerning regional Oil Spill Response Plans, a formalized policy addressing direct enforcement actions against contractors engaged in offshore activities, and a Final Rule implementing new safety measures related to well control operations occurring on the outer continental shelf (“OCS”). We have covered these developments in previous advisories, most notably our September 2012 advisory titled “Bureau of Safety and Environmental Enforcement Issues New Requirements and Policies Addressing Offshore Drilling and Related Activities.” (See www.blankrome.com/index.cfm?contentID=37&itemID=2879.)

BSEE’s Proposed Rule on Well Control

In short, the Proposed Rule incorporates lessons learned from the Deepwater Horizon incident. The Proposed Rule amends standards, controls, and maintenance requirements for BOPs, requires real-time monitoring capability for some drilling activities, and incorporates recommendations from multiple investigative group reports, following the Deepwater Horizon incident. 

The Proposed Rule would, among other things:

  • consolidate equipment and operational requirements pertaining to offshore oil and gas drilling, completions, workovers, and decommissioning;
  • include reforms in well design, well control, casing, cementing, real-time monitoring, and subsea containment;
  • incorporate new industry standards for baseline requirements for the design, manufacture, repair, and maintenance of BOPs;
  • require the use of BOPs with double shear rams, designed to include technology that allows drill pipe centering during shearing operations;
  • require more vigorous third-party verification and certification of  BOP equipment;
  • establish regulatory criteria for testing subsea well containment equipment;
  • increase reporting requirements of failure data;
  • adopt criteria for safe drilling margins, according to recommendations of investigations of the Deepwater Horizon incident;
  • specify requirements for remote operating vehicle use; and
  • incorporate guidance from several Notices to Lessees and Operators.

Additionally, the Proposed Rule specifically requests comments on:

  • a long-term requirement that technology be installed to allow all equipment in a hole to be severed; and
  • decreasing the test frequency for workover and drilling BOPs based on increased safety measures.

BOEM and BSEE Joint Notice

The two agencies of the DOI with jurisdiction over energy production on the OCS published on April 13, 2015, a Joint Notice titled “Reforms since the Deepwater Horizon Tragedy.” The Joint Notice explained reforms regarding offshore oil and gas exploration and production that have been implemented since the 2010 Deepwater Horizon incident. In particular, the Joint Notice highlighted increased standards, inspections, investigations, and limits of liability as particular areas of success. The agencies also highlighted fostering a culture of safety among all participants in the industry, as well as developing the proposed BOP and Well Control rule described above. BSEE and BOEM also highlighted enhanced equipment and technology mandates, noting BSEE funding for the Ocean Energy Safety Institute and requirements that all operators must have the capability to respond to subsea spills. The agencies reiterated their commitment to the safe and continued production of energy resources.

Conclusions

Owners and operators of offshore facilities, contractors, and other stakeholders should review the Proposed Rule and comment on areas that affect their business and operations, including the BOP standards and certification and testing requirements, by June 16. Additionally, the offshore industry would be advised to consider the BSEE/BOEM Joint Notice in light of their own operations and the fact that five years have passed since the Deepwater Horizon incident occurred. The Joint Notice gives valuable insight into how regulators view optimal functioning of the offshore energy sector, and reflects on the progress the regulators and offshore industry have made to date in developing and implementing enhanced safety procedures and reforms.  However, some questions have arisen in recent audits of offshore operations as to whether, in some cases, a safety culture has truly been integrated into day-to-day operations. Therefore, it behooves all stakeholders to reflect on the passage of time to make sure the safety progress and reforms remain effective today and are continuing to improve.

Notice: The purpose of this update is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This update should not be construed as legal advice or or opinion, and is not a substitute for the advice of counsel.