Recent accidents highlight shallow water dangers, departing regulator says

Recent accidents at offshore oil and gas facilities highlight the risks of producing energy on the shallow continental shelf as well as the Gulf of Mexico’s deepest frontiers, said a departing top U.S. regulator.

The incidents include the evacuation of 44 workers after a natural gas well exploded in July and a production platform fire last November that killed three workers from the Philippines. Both episodes happened at older, established facilities in shallow waters — unlike the 2010 Deepwater Horizon disaster that was sparked by the blowout of an exploratory well located under a mile of water.

The accidents are a fresh reminder that offshore regulators and the oil industry need to remain vigilant both close to shore and in deep water, said James Watson, as he ends his one-year stint directing the Bureau of Safety and Environmental Enforcement.

After the 2010 disaster, a host of new mandates for emergency equipment, well designs and testing focused mostly on deep-water activities, though some changes, including a push for more robust modeling of worst-case scenarios, applied widely across the outer continental shelf.

“The majority of our attention was on improving the safety of deep-water operations,” Watson said.

“We may have assumed that shallow water had significantly less risk but, as the recent tragedies show, all offshore operations carry a degree of risk,” Watson added. “We cannot go on the assumption that, because it’s shallow water, there is any less risk to the worker or the environment.”

Whatever the depth, “the offshore oil and gas industry is a risky activity,” Watson added. “That’s why you need a strong regulator. That’s why the industry needs to spend as much time — and, quite frankly, money — doing all the things that are necessary for safety at all levels at all times.”

Gulf of Mexico: Accidents show depth of danger in shallow waters

Watson’s successor, former Coast Guard Vice Adm. Brian Salerno, is assuming control over the agency as the bureau readies new rules for offshore production systems and emergency equipment used to safeguard coastal drilling.

But Salerno and the three-year-old safety bureau — established in a federal reorganization after the Deepwater Horizon disaster — have other big challenges ahead. Chief among them: Overseeing a new era of oil exploration in U.S. Arctic waters north of Alaska.

Shell Oil Company partially drilled two exploratory wells in the Chukchi and Beaufort seas last year, decades after the last wells were bored in shallow U.S. Arctic waters. Although Shell is taking a timeout during the summer 2013 drilling season while its drilling vessels are repaired, it could renew the search next year. ConocoPhillips and Statoil also hold leases to drill in the region.

In those remote Arctic waters, the energy companies are working without the benefit of the infrastructure and experience built up over decades of oil development in the Gulf of Mexico.

“You’re operating where nobody has operated before. In the beginning of that process, companies are kind of each doing things independently, without any kind of infrastructure and without the benefit of learning things over time,” Watson said. “So the government role becomes even more of a factor.”

The Interior Department is working to develop a suite of formal standards for Arctic oil and gas development. For now, some potential obligations — like Shell’s decision to build an oil containment system geared for the area — have not been standardized or clarified.

Even thousands of miles away in the temperate Gulf, oil and gas companies are entering new geological frontiers. Drillers are moving into ever-deeper waters, and, with the aid of new seismic surveys, tapping Pliocene and Miocene sands that can be 20,000 feet under the surface of the sea.

Plans to penetrate those high-pressure reservoirs under ultra-deep waters require robust analysis by industry and engineers at the safety bureau, Watson said.

“There are still some real challenges that we haven’t even had to face yet in terms of permitting different operations,” Watson observed. “We will soon see drilling applications in areas of those pre-salt and pliocene areas that are very high pressure and very high temperature.”

Watson is set to take over as president and chief operating officer for the Americas division of the maritime classification society ABS.

During Watson’s tenure at the agency, the retired Coast Guard admiral presided over the final implementation of broad new rules requiring oil and gas companies to holistically assess and mitigate risks offshore and then subject the resulting safety programs to regular audits.

He also continued a controversial policy, first adopted by Watson’s predecessor, Michael Bromwich, of penalizing offshore contractors and service firms for violations on the outer continental shelf. That strategy moved regulators beyond their traditional focus on policing just the energy companies that hold offshore oil and gas leases to keeping watch over the whole range of companies working on the outer continental shelf.

Oil industry leaders and their allies on Capitol Hill have had a relatively warm relationship with Watson. The industry’s complaints of slow drilling permit processing times after the 2010 spill have been muted.

“Coming in, there was a lot of criticism about things that took a long time, like permitting, and uncertainty about whether we were going to be able to handle the work we had to do,” Watson said. “Frankly, I haven’t heard those concerns and critics as much lately.”

“The industry is actually doing pretty well,” he added, “and I feel that it is safer, cleaner, and they really look to BSEE when they want to know what they can do to improve.”


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