Offshore drilling industry takes aim at safety rule

WASHINGTON — Energy companies and industry trade groups broadly criticized a government plan to rewrite standards governing oil and gas production systems used offshore.

The Bureau of Safety and Environmental Enforcement’s proposed rule would require more rigorous cradle-to-grave — or “life-cycle” — assessments of critical safety and pollution prevention equipment, such as foam firefighting systems and electronic emergency shutdown devices, at some 3,000 existing production facilities on the United States’ outer continental shelf.

But the measure, unveiled in August after years of development, also aims to tighten reporting of failures in safety equipment, codify a suite of previous regulatory notices sent to companies working offshore and require certain documents to be stamped by registered professional engineers. The proposed rule also would incorporate American Petroleum Institute recommended practices for offshore production facilities.

And it would force companies to use the “best available and safest technology” whenever the safety bureau deems it economically feasible for new drilling and production operations.

But several oil companies working in the Gulf of Mexico and other U.S. waters said the measure would cause inconsistencies with existing regulations, could muddle oversight of some equipment used offshore and is unduly prescriptive.

In written comments filed with the government ahead of a late Thursday deadline, the Metairie, La.-based Offshore Operators Committee said the safety bureau is also low-balling the potential price tag for companies to comply.

“Our assessment of the agency’s economic analysis of the proposed action finds the analysis inadequate and the impacts underestimated,” said the group, which represents 61 producing companies and 80 industry service providers.

The organization said the government’s economic analysis doesn’t take into account the transportation of people and equipment, has some arbitrary calculations and doesn’t include all of the proposed requirements.

In response to oil industry pleas, the safety bureau gave stakeholders an additional 45 days to weigh in on the proposal, but that fell short of the 120-day extension the industry had been seeking. Several trade groups and energy companies said they hadn’t had enough time to thoroughly vet the proposal.

Wanda June Parker, a Plano, Texas-based professional engineer who works on permitting issues for deep-water facilities, said the agency should have held a public workshop on issues covered by the proposed rule first.

“What would have been the harm in delaying the comment period by a few more months in order to get the rule making fully vetted and commented on?” she asked. “A properly vetted and commented rule making, in the end, would make for a better, clearer rule for both the agency and the regulated community.”

The industry also is looking for clarity on the scope of the regulations. The American Bureau of Shipping, a classification society that has been involved in reviewing design and construction of more than 130 floating offshore production facilities worldwide, noted that the measure could apply to many projects being built now.

“Depending on the effective date of the proposed regulations, it is likely that many of the new construction projects will be affected,” ABS said. “We kindly recommend BSEE to take this into consideration when issuing the final regulation.”

The Williams Companies Inc., said it was not obvious “whether or not existing facilities will be grandfathered in, or when and if they will have to comply with the new rule.”

“It is also unclear whether or not the proposed rule will apply to projects already under construction,” Williams said. “Many exploration and production developments have project design and construction cycles that extend over several years.”

The safety bureau said it would be evaluating the feedback.

“All comments will be thoroughly reviewed and considered as the bureau moves forward with this important rule making,” the agency said in a statement.

The bureau may have to tackle a number of potential conflicts between its 149-page proposal and existing regulations, said Petrobras America. Petrobras said the measure would cause “create numerous conflicting and duplicative requirements” — a theme echoed by several others.

Anadarko, Shell and the Offshore Operators Committee highlighted their fears that the proposed rule clashes with existing agreements that put the U.S. Coast Guard in charge of overseeing fire protection, detection and extinguishing systems used offshore, as well as alarm systems and living quarters on water-based facilities.

Shell said the extensive firefighting system requirements in the safety bureau’s draft rule, along with other proposals dealing with turrets, mooring and other systems, encroach on the Coast Guard’s jurisdiction.

GE Oil & Gas Subsea Product Manager Jon Clark questioned whether it is a “step too far” to require life-cycle analysis of safety and pollution prevention equipment with independent third-party reviews, since those independent auditors may not yet have the required expertise to conduct the analysis.

The American Petroleum Institute and the National Ocean Industries Association asked the bureau to dial back proposed requirements for reporting and investigating equipment failures.

The proposed rule would force offshore operators to notify manufacturers about equipment failures within 30 days and ensure that an investigation and failure analysis are performed within 60 days after the incident.

But API and NOIA say this could rope in “a significant number of non-critical failure conditions,” (such as the failure of a valve position indicator device) or single failures in systems designed with layers or redundant equipment, requiring them to be investigated, analyzed and reported.

“As currently written, the regulation would likely result in a very significant additional burden on operators, suppliers and the BSEE, without delivering equivalent improvements in equipment operation, safety, or reliability,” the two groups said.

The organizations suggested the equipment failure reporting requirement be limited to instances involving an unintended release of hydrocarbons into the environment.

ConocoPhillips raised concerns with the proposal to effectively bar companies from installing single bore production risers from floating production facilities.

The safety bureau had 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 agency said.

But Dan Smallwood, the Gulf of Mexico deep-water asset development manager for ConocoPhillips, said the company disagreed with the safety bureau. And, he said, it clashes with data from operations conducted through single bore production risers at the company’s Magnolia Tension Leg Platform in 2012 and 2013.

Smallwood urged the safety bureau to reconsider the planned single bore production riser ban.