Salazar imposes new ground rules for offshore drilling

Before oil companies resume drilling deep-water wells in the Gulf of Mexico, they will have to comply with sweeping new rules designed to prevent a repeat of the Deepwater Horizon disaster, Interior Secretary Ken Salazar said this morning.

The mandates outlined today will govern everything from the design of wells to the equipment used to control them in emergencies. Salazar said the requirements paved the way for the United States to take the lead in ensuring its offshore oil and gas exploration is the safest in the world.

“We have launched the most aggressive and comprehensive reforms to offshore oil and gas regulation and oversight in U.S. history,” Salazar said, while discussing the future of offshore drilling at the Woodrow Wilson International Center for Scholars.

“Operators will have to clear a higher bar,” Salazar said. “Operators will be required to meet new standards for well design, casing and cementing. Their drilling plans have to be certified by a professional engineer.”

The new drilling safety rule — one of two rules announced today — paves the way for the Obama administration to lift its deep-water drilling moratorium ahead of its Nov. 30 expiration date. But it could take weeks — and possibly months — for oil and gas companies to comply and regulators to issue them new drilling permits.

Michael Bromwich, the director of the federal the Bureau of Ocean Energy Management, Regulation and Enforcement, is giving Salazar a report today that outlines ways the deep-water drilling moratorium can be lifted — and what changes are needed to step up offshore safety.

The administration’s new drilling safety rule incorporates requirements that already were imposed on all offshore exploration in a so-called “notice to lessees” in June. Although they applied broadly, in practice, the requirements have so far only governed new shallow-water projects that were allowed to continue during the ban.

But the Obama administration is going further with expanded mandates for blowout preventers, well casing designs and cementing procedures. Those changes were foreshadowed by a May 27 Interior Department report on offshore drilling safety.

And Salazar made clear that more changes are on the horizon, insisting that the Gulf of Mexico oil spill has thrust the government and industry into a “dynamic” regulatory environment. More new rules for blowout preventers and offshore drilling practices will be proposed in coming weeks, he said.

The mandates announced today come as a result of vulnerabilities revealed when the five-story blowout preventer at BP’s doomed Macondo well failed to block an estimated 4.9 million barrels of oil from gushing into the Gulf of Mexico over 85 days.

The new drilling safety rule would require independent certification and enhanced testing of BOPs — the massive stacks of pipe-cutting and hole-closing rams designed as a final safeguard against oil and gas escaping from wells. Salazar said blowout preventers “must be capable of severing the drill pipe under the anticipated conditions of the well.”

The administration also is imposing its long-awaited “Safety and Environmental Management Systems” rule for companies drilling on public lands.

“Once you have a rig that is entering into a drilling operation, oil and gas companies must adhere to tougher workplace safety and environmental management” requirements, Salazar said.

Industry leaders are worried that even after they comply with the new rule, it could take too long for the government to review and sign off on new drilling permit applications.

“A lot has been done . . . to put us in a position to get operations moving,”  said Erik Milito, the upstream director for the American Petroleum Institute. “It would be a little disappointing if we weren’t able to get up and running when the moratorium is lifted. ”

The administration’s ban on deep-water drilling has been widely panned by Gulf Coast lawmakers and oil industry leaders who warned it could jeopardize thousands of jobs connected to offshore exploration. Offshore supply companies also have challenged the moratorium in federal court.

Salazar today defended the ban as a prudent “time out” while BP’s well was gushing and investigators probed what led to the disaster and regulators developed new offshore safety rules.

Even once the ban ends — whether by court order or administration action — no one expects a rush of new deep-water drilling.

“You’re not going to see drilling going on the next day or even the next week,” Bromwich said on Monday. It’s going to take time for companies to submit new applications and for regulators to review them.

More on FuelFix:

Read details of the two rules.

Watch a webcast of Salazar’s speech.

Follow industry leaders’ reactions.

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