CATEGORIZED | 2010, November/December

Deepwater moratorium is dead: But does Son of Moratorium still stalk the Gulf of Mexico?

Posted on 08 November 2010

By Mike Killalea, editor & publisher

Editor’s note: At press time, a federal judge in New Orleans had rejected BOEMRE’s interim final rule on drilling safety. The Department of Interior said the rules remain in effect. In any case, DC has recapped principal elements of the BOEMRE rule, which are likely to affect GOM drilling over the longer term.

While the Gulf of Mexico deepwater drilling moratorium was lifted on 12 October, it remains unclear when drilling in water deep or shallow will return to anything like normal levels. Promulgation of new rules and apparent shortages of necessary inspectors and government personnel have already combined to bottleneck permitting of wells in shallow water. Since the Macondo blowout, just 12 permits to drill new wells have been issued through 14 October for water depths of 500 ft or less. This statistic for the purportedly moratorium-free zone does not bode well for a speedy resumption of drilling in the Gulf of Mexico, irrespective of depth.

The major task now is unraveling and gaining clarification of the 111-page interim Final Drilling Safety Rule, which was posted 7 October in the Federal Register’s reading room in advance of the Department of Interior’s (DOI) move to end the moratorium.

The rule covers wellbore integrity, well control equipment and specifications, and training. Officially issued on 14 October, it became effective immediately. Most of the rule’s provisions were already required under NTLs N05 and N06 issued earlier this year.

26-YEAR BLOWOUT CYCLE

The DOI estimates the rule’s annual implementation cost to industry at $183.1 million. It pegs the cost of a “catastrophic” blowout at $16.3 billion and anticipates such an event will occur once every 26 years, “based on historical trends and the number of expected future wells.”

Despite compelling evidence that blowouts are rare and have historically resulted in minimal pollution and damage, DOI clings to the idea that the Macondo blowout was no rogue event but indicative of a trend. “Circumstances suggest that, while a blowout and spill of this magnitude have not occurred before on the OCS, it is unlikely that the problems are unique to the Deepwater Horizon and BP’s Macondo well,” the regulation reads.

MORE RULES TO COME

This interim drilling safety rule sets the stage for future rulemakings or further evaluations across a number of areas – cementing and casing, fluid displacement, BOPs, secondary control systems and ROVs, wild-well intervention, training, oil-spill response, and organization and safety management.

In particular, says the Bureau of Offshore Energy Management, Regulation and Enforcement (BOEMRE), the regulations were developed “without the benefit of the conclusive findings from the ongoing investigations into the root causes of the explosions and fire on the Deepwater Horizon. In the future, based on the comments we receive on this rule and the additional findings of ongoing investigations, BOEMRE may issue additional regulations or amendments to these regulations that will be intended to further increase the safety of offshore oil and gas operations.”

DEEPWATER TRAINING

While the rule calls for “new requirements for specific well control training to include deepwater operations,” detail is sparse. IADC, whose WellCAP accreditation program is the world’s premier well-control training tool, has determined that the regulation’s call for deepwater well-control training is already addressed in the existing WellCAP supervisory curriculum. Operators and contractors were previously required to determine what type of training is appropriate for their operations; the interim final rule modified that section to include a specific reference to deepwater drilling. Nonetheless, the IADC Well Control Committee will consider at its next meeting possible development of supplemental WellCAP courses dedicated to deepwater.

The rulemaking also means boom times for qualified professional engineers or other “independent third parties,” such as technical classification societies or API-licensed manufacturing, inspection or certification firms. OEMs are specifically excluded. Among the items the third party must certify are:

•  That blind-shear rams can cut any drill pipe under maximum sustained pressure;

•  That subsea BOP is designed for specific equipment on the rig and the specific well design;

•  Certification of two independently tested barriers and that casing & cementing designs are appropriate;

•  Well abandonment design and procedures, including existence of at least two independently tested barriers during abandonment, one of which must be mechanical, and that the plug meets specified requirements.

INCORPORATING API

The new regulations incorporate numerous documents published by the American Petroleum Institute (API). In so doing, BOEMRE has enshrined several Recommended Practices as mandatory. “For API documents incorporated by reference into this part, the terms ‘should’ and ‘shall’ mean ‘must’,” the agency declared.

Highlights of from the new interim final rule include:

CASING & CEMENTING

BOEMRE’s new regulation now requires the operator to include in its Application for Permit to Drill (APD) an evaluation of best practices identified in API RP 65-Part 2, “Isolating Potential Flow Zones During Well Construction.”

“Incorporating this document by reference will help ensure operators use best practices when designing their casing and cementing programs and will help ensure the integrity of the well,” the rule reads.

Operators must include in their write-ups the mechanical barriers and cementing practices to be used for each casing string.

While BOEMRE says API RP 65-Part 2 is an appropriate document for OCS cementing, the agency cautions that additional cementing requirements may be identified through the Macondo investigations.

DIVERTERS & BOPS

BOEMRE now requires submission of a schematic of all BOP control systems — primary, secondary and pods, both for surface and subsea.

Third-party verification is required, as discussed above.

CASING PRESSURE TESTS

Operators are required to perform a pressure test on the casing seal assembly to ensure proper installation of casing or liner in the subsea wellhead or liner hanger. BOEMRE requires this both for intermediate and production casing strings or liner.

Operators must also perform a negative pressure test on all wells.

Procedures and criteria for successful tests must be submitted with the APD.

SUBSEA BOPS

In addition to the requirement that blind-shear rams must be able to shear any drill pipe under maximum anticipated surface pressures, operators must use at least four remote-controlled hydraulically operated BOPs. Each BOP must include an annular preventer, two sets of pipe rams and one set of blind-shear rams.

BOEMRE added requirements for ROV intervention. “The subsea BOP stack must be equipped with ROV intervention capability to operate one set of pipe arms and one set of blind-shear rams, as well as unlatch the LMRP (lower marine riser package). The BOP-ROV interface must allow sufficient volume to actuate all required functions.”

Also, autoshear and deadman-system requirements have been added. All dynamically positioned rigs must have both.

BOP MAINTENANCE, TESTS

BOEMRE now requires the operator to document BOP maintenance and inspections. Maintenance and inspection criteria are unchanged.

As for testing, a new paragraph requires testing of ROV intervention functions on subsea BOP stacks. ROV intervention functions must be tested during the stump test, BOEMRE says, and ensure that hot stabs are function tested and capable of actuating one set of pipe rams and a set of blind-shear rams, as well as unlatching the LMRP.

The operator must also test at least one set of rams during the initial test on the sea floor. The interim final rule will also require function testing during the initial test on the sea floor.

Further, operators must perform full pressure tests when blind-shear or casing-shear rams are used in an emergency. If pipe or casing is sheared during a well-control situation, the operator must retrieve and physically inspect the BOP and conduct a full pressure test of the stack.

FLUID PROGRAM

The BOEMRE district manager must give approval before kill-weight drilling fluid is displaced from the wellbore. The operator must submit with the APD or the Application for Permit to Modify (APM) reasons for displacing the fluid and detail the complete procedure.

This must address:

•  Number and type of independent barriers in each flow path;

•  Tests to ensure the barriers’ integrity;

•  BOP procedures used while displacing kill-weight fluids;

•  Procedures to monitor fluids entering or leaving the wellbore.

European Commission urges its own moratoria; industry fights against ‘unjustified’ move

Even as the deepwater drilling moratorium is lifted in the US, the European Commission urged member states to consider suspending licensing of “new complex oil or gas exploration operations” until European offshore safety regimes are assessed.

“While any decision to suspend offshore drilling operations is left to the discretion of Member States, the commission reiterates its call upon the Member States to rigorously apply a precautionary approach in the licensing of new complex oil or gas exploration operations and to examine whether a suspension of such licensing is needed until the European offshore safety regimes have been assessed in light of the Deepwater Horizon accident,” the commission proclaimed.

The announcement brought a speedy and blistering response from Oil & Gas UK, whose chief executive Malcolm Webb said, “Oil & Gas UK is extremely concerned that, once again, the EU Commission is calling for a suspension of new licensing, a measure that is wholly unjustified and inappropriate for the UK offshore oil and gas industry. It is also deeply worrying that in addition, it now proposes to implement centralized and prescriptive safety regulation.”

The result will be counterproductive, Mr Webb contended. “This would undermine the advanced and highly sophisticated regulatory regimes currently working so well, for example in the United Kingdom, Norway and the Netherlands,” he said.

Mr Webb pointed out that the UK’s Oil Spill Prevention and Response Advisory Group (OSPRAG), a coalition of industry, regulators and trade unions, clearly demonstrates the “responsiveness of the safety-case regime and the open safety culture which it breeds.”

OSPRAG, which kicked off operations in May, recently announced plans to move ahead with commissioning detailed designs for a full/partial pressure-capping device with the potential to serve as a central element of the UK’s oil-spill response contingency plans. The engineering firm Wood Group Kenny developed the system, developing three design concepts. Of these, OSPRAG opted to progress with a modular device to close off a well in the event of a blowout. OSPRAG said that this design is the most appropriate for the weather typical of the UK, particularly West of Shetland.

In the US, five major operators have committed $1 billion to developing the Marine Well Containment System. The operators, Chevron, ConocoPhillips, ExxonMobil, Shell and BP, plan specially designed equipment available for rapid response and capable of operating in water depths to 10,000 ft. This will add containment capability of 100,000 bbl/day, significantly more than the Macondo spill.

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