lmoga offshore issues update · 2018-03-07 · 1 lmoga offshore issues update lars herbst, p.e....

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LMOGA OFFSHORE ISSUES

UPDATE

Lars Herbst, P.E. BSEE Gulf of Mexico Regional Director 28 February 2018

“To promote safety, protect the environment and conserve resources offshore through vigorous regulatory

oversight and enforcement.” 1

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BSEE Updates

• Regulatory Reform • GOM Activity • High Pressure High Temperature

Permitting • Risk-based inspections • Decommissioning planning • Other Priorities in 2018

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EXECUTIVE ORDER IMPLEMENTING AN AMERICA-FIRST OFFSHORE ENERGY STRATEGY—

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the Outer Continental Shelf Lands Act, 43 U.S.C. 1331 et seq., and in order to maintain global leadership in energy innovation, exploration, and production, it is hereby ordered as follows: …….

Sec. 2. Policy. It shall be the policy of the United States to encourage energy exploration and production, including on the Outer Continental Shelf, in order to maintain the Nation's position as a global energy leader and foster energy security and resilience for the benefit of the American people, while ensuring that any such activity is safe and environmentally responsible.

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IMPLEMENTING AN AMERICA-FIRST OFFSHORE ENERGY STRATEGY— Sec. 7. Reconsideration of Well Control Rule. The Secretary of the Interior shall review the Final Rule of the Bureau of Safety and Environmental Enforcement (BSEE) entitled "Oil and Gas and Sulfur Operations in the Outer Continental Shelf-Blowout Preventer Systems and Well Control," 81 Fed. Reg. 25888 (April 29, 2016), for consistency with the policy set forth in section 2 of this order, and shall publish for notice and comment a proposed rule revising that rule, if appropriate and as consistent with law. The Secretary of the Interior shall also take all appropriate action to lawfully revise any related rules and guidance for consistency with the policy set forth in section 2 of this order. Additionally, the Secretary of the Interior shall review BSEE's regulatory regime for offshore operators to determine the extent to which additional regulation is necessary.

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EXECUTIVE ORDER

Presidential Executive Order Implementing an America-First Offshore Energy Strategy EXECUTIVE ORDER - - - - - - - DONALD J. TRUMP THE WHITE HOUSE, April 28, 2017.

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Order 3349 – American Energy Independence Supports Executive Order signed March 28, 2017 Directs DOI to review all existing regulations, orders, guidance documents and policies that potentially burden development

Order 3350 – America-First Offshore Energy Strategy

Implements Executive Order signed April 28, 2017 Directs BSEE to reevaluate the “Well Control Rule”

Order 3351 – Strengthening the DOI Energy Portfolio

Directs BSEE to identify regulatory burdens that unnecessarily encumber energy exploration, development, production transportation; and develop strategies to eliminate or minimize the burdens.

Secretary’s Orders on Energy Free industry to discover and produce

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Well Control Rule Review

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Review of Deepwater Horizon recommendations(300+) Public Forum – May 2012 Completion of industry standards – November 2012 Publication of proposed regulations – April 2015 Final rule published – April 28, 2016 Implementation over several years

Development Process for

Current WCR

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BSEE utilized the following sources of information in reviewing its regulations for potential revision:

• Reviewed BSEE internal policies • Implementation of the original WCR • BSEE webpage Q and As • Review of permitting process • BSEE WCR public forum (September 20, 2017) • Comments submitted to BSEE

BSEE Regulatory Review

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Well Control Rule Public Forum Sept. 20, 2017, 1919 Smith Street, Houston, Texas

Goal: To ensure a complete and thorough review of the Well Control Rule with stakeholder input. Are there potential revisions to the rule that would significantly reduce regulatory burdens without significantly reducing safety and environmental protection on the OCS? • BSEE accepted both written and oral presentations

from interested parties at the forum • Two sessions were held

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Major issues raised during the WCR implementation and BSEE public forum:

• Safe drilling margin • Real-time monitoring • Accumulator systems • BSEE Approved Verification Organizations(BAVOs) • Casing and cementing

General Issues

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Concerns raised with WCR requirements:

• Not able to get pre-approval of margin at well planning stages. Concerns about getting consistent approval in APD

• If no offset well data, concerns about getting

approval for lower margin • Concerns about having to stop and remedy losses

while drilling situation – use API bulletin 92L

Major issues raised during the WCR implementation and BSEE public forum

Safe drilling margin

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• The potential for an increase in rig personnel response time and a decrease in the accountability of the offshore personnel

• Concerns about the meaning of proposed requirements to “immediately transmit” these RTM data and to maintain “continuous contact” between onshore personnel and rig personnel

• Requires RTM centers


Real-time Monitoring (RTM)

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• The increased number and weight of accumulator bottles could cause structural concerns for the BOP frame and the rig (especially for additional dedicated subsea bottles for deadman/autoshear functions)

• Costs associated with the additional bottles would be

significant • Additional system modifications such as open function for

ROV provides additional points for potential leaks


Accumulator systems

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• Redundant with current independent 3rd parties • Increased compliance costs to use a BAVO • Oversight of BAVO operations • Unsure of what to expect


BAVOs

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• Concerns about the use of centralizers and should just reference API standard 65-2

• Concerns about indications of an inadequate cement job and taking appropriate actions to determine adequacy.

• Concerns about applying API spec 11D1 to all packers or

bridge plugs


Casing and Cementing

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Production Safety Systems Rule

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• Media reports have confused the Production Safety System Rule (PSSR) with other oil and gas regulations

• The PSSR was not updated due the Deepwater Horizon incident, requirements updated due to that event are outside of the scope of the PSSR

• The opening of new federal leases in the Atlantic, Pacific, and Alaskan waters are not within the scope of the PSSR

Subpart H – Scope Clarification

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• Industry needed more time to comply with certain regulations contained within the 2016 update to Subpart H

• Departures were given to certain regulations to allow production operations to continue in the Gulf of Mexico

Subpart H – Departures

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• 5 current regulations have active departures • 250.842 – PE Stamping of Drawings • 250.872(a) – Chemical tanks with Class 1 liquids

must comply with API 14C • 250.872(b) – Level Safety High (LSH) must be

installed to sense the level in the oil bucket • 250.880(c)(2)(i) – PSVs must be tested annually.

The piston must lift during this test • 250.880(c)(3)(iii) – Flame arrestors must be visually

inspected annually

Subpart H – Departures Granted

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Chart1

250.842 Drawings

250.872(a) Chemical Tanks

250.872(b) LSH in Oil Bucket

880(c)(2)(i) PSVs

880(c)(3)(iii) Flame Arrestors

Series 1

Number of Operators with a departure

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4

6

14

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Sheet1

Series 1

250.842 Drawings14

250.872(a) Chemical Tanks4

250.872(b) LSH in Oil Bucket6

880(c)(2)(i) PSVs14

880(c)(3)(iii) Flame Arrestors12

To resize chart data range, drag lower right corner of range.


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Chart1

250.842 Drawings

250.872(a) Chemical Tanks

250.872(b) LSH in Oil Bucket

880(c)(2)(i) PSVs

880(c)(3)(iii) Flame Arrestors

Series 1

Number of Platforms with a departure

919

283

133

643

551

Sheet1

Series 1

250.842 Drawings919

250.872(a) Chemical Tanks283

250.872(b) LSH in Oil Bucket133

880(c)(2)(i) PSVs643

880(c)(3)(iii) Flame Arrestors551

To resize chart data range, drag lower right corner of range.

• Currently 2 of the 5 regulations that departures have been granted for have proposed changes • 250.842 is proposed to be changed to reduce the

amount of drawings that require a PE stamp • 250.872(b) is proposed to grandfather in existing

vessels • The other 3 regulations were only a problem

because operators needed appropriate time to comply

Subpart H – Departures

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Proposed changes to regulations with departures

Gulf of Mexico Activity

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Drilling Rigs in US Gulf of Mexico

Platform Rig = 12

Semi-submersible = 5

Drillship = 19

Jack-up rig = 7

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Production Facilities

Shallow Water Production Facilities

(less than 500 ft)

1951 Fixed

Single Caisson 4 Pile

Caisson

Deepwater Production Facilities (greater than 500 ft)

76 SPAR

TLP FPSO

Fixed

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Projects with Final Investment Decisions (FID)

Deepwater GOM Operator Area Type Water First Gas

Capacity Oil

Capacity

New Projects Block Depth (ft.) Prod. (MMscfpd) (Mbopd)

Big Foot Chevron WR029 TLP 5,200 2018 25.0 75.0 Stampede Hess GC468 TLP 3,500 2018 60.0 80.0 Appomattox Shell MC392 Semi 7,200 2020 100.0 150.0 Mad Dog Phase 2 BP GC825 Semi 5,000 2021 25.0 110.0

Subsea Tiebacks 2018 – 6, 2019 - 12 300 240 Potential Activity

Potential Floating Platforms 4-9 yrs out 400 500 Subsea Tiebacks to existing platforms 2-5 yrs out 480 400

Timeline from Lease Date to First Production: Lease date to Initial Discovery Date – 5 year average Discovery date to Final Investment Decision – 5 year average FID to First Production (construction & installation) – 3 year average * For larger and more complex projects, the timeline can be longer

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Chart1

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Installations

Removals

Federal OCS Production FacilitiesInstallations and Removals, 1956-2016

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Sheet1

YEARInstallationsRemovals

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197611629

197711318

197817126

197917334

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198219715

198317438

198422554

198521455

198611134

198711723

1988167100

198919794

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199288105

1993122172

1994176124

1995131118

1996152120

1997146178

199814876

1999104143

2000150142

2001161109

2002100122

2003119169

2004128194

2005110123

2006119116

200793160

200878154

200933235

201029218

201119295

201210286

201317223

201421203

20154128

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Sheet1

Installations

Removals

Federal OCS Production FacilitiesInstallations and Removals, 1956-2016

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Gulf of Mexico OCS Region Total Well Drilled and PA'd & TA'd by Year

Wells Drilled

Wells PA'd & TA'd

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Risk Based Inspections

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Risk Based Inspections

Facility Based Risk

Inspections- Based on analysis

of low probability, high consequence areas of a

specific facility

Performance Based Risk Inspections-

Based on Analysis of Key Performance Indicators and utilizing Trend Analysis to focus on reducing likelihood of events and compliance issues Gulf

wide

Annual Production Facility Inspections and Monthly Well Operation Inspections-

Based on OCS mandate for inspections, Regional policy. Includes Follow-up on specific facility based on Increased

Oversight Identification 33

Performance Based Risk Inspection Gas Releases

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Gas Release PBRI – Findings

Seventeen (17) percent of the facilities involved in the PBRI had documented oil or gas accumulation. Eight (8) of the thirty six (36) PBRI facilities, or 22-percent, had a non-operable gas detector, no process implemented for calibrating devices, failed a bump test, or had no documentation on the frequency / results of inspections. The facilities associated with the Gas Release PBRI had no issues identified by BSEE staff on excessive temperatures. In fact, most observations made by inspectors indicated high temperature areas were well insulated and out of human reach.

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High Pressure High Temperature

(HPHT) Prospects

or The Next Frontier

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BSEE believes that the deployment of high pressure and high temperature (HPHT) equipment is a high risk activity with high consequences for failure. These activities require a higher level of scrutiny to insure that BSEE accomplishes their primary responsibility of protecting people and the environment and to conserve resources on the Outer Continental Shelf.

HPHT Projects

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• 30 CFR 250.807 - Additional requirements for subsurface safety valves and related equipment installed in high pressure high temperature (HPHT) environments

• (a)(1) Design Verification Analysis

• (a)(2) Design Validation Testing

• (b) HPHT is greater than 15,000 psi or 350°F

Code of Federal Regulations for HPHT Projects

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Decommissioning Planning

Rigs to Reefs Program o FY17 - 27 permits approved that proposed converting decommissioned

structures into artificial reefs; 16 have been reefed o Fieldwood – 9 o W&T - 5

o Last 5 years-128 platforms have been approved for the program in the

Gulf of Mexico

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Decommissioning Planning

Areas of Concern o Backlog of facilities and wells that need to be removed on expired

and active leases(idle iron) still needs to be addressed. o Bankruptcies have caused some decommissioning liabilities

[facilities and wells] to become uncovered (no financial assurance in place and/or no co lessee or prior lessee).

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Other BSEE 2018 Focus Areas

• Well intervention • Subsea leak detection • Royalty policy • Support to BOEM leasing draft proposed

program

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BSEE Website: www.bsee.gov

@ BSEEgov BSEEgov

Bureau of Safety and Environmental Enforcement

BSEEgov

https://www.facebook.com/BSEEgov/ “To promote safety, protect the environment and

conserve resources offshore through vigorous regulatory oversight and enforcement.”

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http://www.bsee.gov/http://www.facebook.com/

LMOGA�OFFSHORE ISSUES�UPDATEBSEE UpdatesSlide Number 3Slide Number 4 EXECUTIVE ORDERSecretary’s Orders on EnergyWell Control Rule ReviewDevelopment Process �for �Current WCR BSEE Regulatory ReviewWell Control Rule Public Forum General Issues Major issues raised during the WCR � implementation and BSEE public forum Major issues raised during the WCR � implementation and BSEE public forum Major issues raised during the WCR � implementation and BSEE public forum Major issues raised during the WCR� implementation and BSEE public forum Major issues raised during the WCR � implementation and BSEE public forumProduction Safety Systems RuleSubpart H – Scope ClarificationSubpart H – Departures Subpart H – Departures GrantedSubpart H – Departures GrantedSubpart H – Departures GrantedSubpart H – DeparturesSlide Number 24Drilling Rigs in US Gulf of MexicoProduction FacilitiesSlide Number 27Slide Number 28Slide Number 29Slide Number 30Slide Number 31Risk Based InspectionsRisk Based InspectionsPerformance Based Risk Inspection Gas Release PBRI – FindingsHigh Pressure �High Temperature�(HPHT)�Prospects�or �The Next FrontierHPHT ProjectsCode of Federal Regulations �for HPHT ProjectsDecommissioning PlanningDecommissioning PlanningOther BSEE 2018 Focus AreasBSEE Website: www.bsee.gov

lmoga offshore issues update · 2018-03-07 · 1 lmoga offshore issues update lars herbst, p.e....

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