IADC continues to do what’s right for the rig through government affairs, global operations

Posted on 08 November 2010

BRIAN PETTY, EXECUTIVE VICE PRESIDENT – GOVERNMENT AFFAIRS

Indonesian tax, local content

In July 2010, IADC sent a letter to the Indonesian Department of Income Tax (DGT) urging the government to keep the country’s deemed profit rate level at 15%. The DGT is considering raising the deemed profit rate level to offset a reduction in the corporate income tax rate.

However, raising the deemed profit rate would take away from the tax relief that was intended by reducing the corporate income tax, IADC pointed out. The deemed profits-based taxpayer should enjoy the same tax relief as the net profits-based taxpayer and should not bear a disproportionate level of taxation.

The letter was sent following a presentation IADC made to the DGT on current tax regulations. At the meeting, association members were able to bring up specific taxation issues with key DGT leaders.

IADC also continues to fight against draconian requirements for local content in E&P activities imposed by BPMIGAS, the Indonesian regulatory agency for oil and gas, in late 2009. Although current local content is at most 20%, BPMIGAS has insisted that all contracts held by agencies or joint ventures representing foreign drilling companies have a minimum of 35% local content. This essentially forces a JV equity stake in their drilling rigs. Failure to achieve 35% means immediate disqualification to participate in operators’ tenders. The regulation has wreaked havoc for operators and drilling contractors. A majority of tenders offered in December 2009 failed because the 35% threshold couldn’t be met.

An industry effort has been made to alert foreign embassies of the threat to their home country drilling companies.

As Indonesia is in violation of its World Trade Organization (WTO) commitments with this regulation, this issue has been raised with the United States Trade Representative (USTR), which is concerned about this and similar oil industry “local content” initiatives in Brazil and Nigeria.

Shell Beaufort, Chukchi leases

IADC and other industry groups filed an extended amicus curiae brief in April 2010 in the US Ninth Circuit supporting plans for OCS leasing in the Beaufort and Chukchi Seas. Three Beaufort Sea leases that were granted to Shell under MMS’ 2002-2007 5-Year OCS Leasing Plan and two Chukchi leases under the 2007-2012 plan had been under dispute. Native Alaskan and whaling communities had claimed that plans for OCS leasing in the Beaufort and Chukchi Seas are illegal.

The Native communities claim that inadequate environmental studies were conducted, notwithstanding the fact the Beaufort sales were promulgated pursuant to a 121-page Secretarial decisional document, backed by a 1,001-page environmental impact statement (EIS), and the Chukchi sales were promulgated under a 146-page Secretarial decisional document, backed by a 1,400-page EIS.

Amici point out that, among other facts, no one ­– including the petitioners in this case seeking to halt the sales – filed a lawsuit regarding any aspect of the 2002-2007 plan when they previously had the opportunity to do so.

The allied associations emphasized in their brief that this litigation could delay significantly, if not thwart, a meaningful step toward the development of substantial and badly needed domestic oil and gas resources. This comes at a time when the US has begun to turn the corner on domestic production, with 2009 exhibiting the first increase in over 18 years.

The US Ninth Circuit later ruled in favor of Shell, the state of Alaska and the DOI and rejected challenges on the legality of DOI’s approval of Shell’s exploration plans.

Law of the Sea

Mr Petty participated on a panel at a conference held by the University of Virginia’s Center on Oceans Law and Policy in Washington, DC, in May 2010, to promote US Senate accession to the international Law of the Sea Convention. The two-day meeting also featured presentations by representatives of the US Navy, Federal Reserve Board, Department of State and Congressional staff.

WTD victory

The Inner House of the Court of Session, the Scottish equivalent of the English Court of Appeal, gave the drilling industry a significant victory in October 2010 when it refused the unions’ appeal on the Employment Appeal Tribunal decision that the equal time rota was lawful. The opinion was unanimous, a clear vindication of the position that the employers have adopted throughout the trial. It is not yet known whether the unions will appeal to the Supreme Court.

ITAC 2

Mr Petty was re-elected to a four-year term as chairman of the US federal Industry Trade Advisory Committee for Automotive Equipment and Capital Goods (ITAC 2). The committee is established jointly by the US Secretary of Commerce and the USTR to provide detailed policy and technical advice, information and recommendations to the Secretary and USTR regarding trade barriers, negotiation of trade agreements, and implementation of trade agreements affecting the US automotive and machinery industries.

Nigerian local content

IADC and other industry advocates continued its efforts to convince the Nigerian government that its local content bill sets unattainable thresholds, considering the lack of engineering and manufacturing capacity in the country. The bill could also drive foreign oilfield service contractors out of the country, threatening the future of local E&P.

The government is under intense pressure from local companies to mandate a piece of the action for oilfield projects in the country, despite a lack of engineering or manufacturing capacity. Similarly, the government is supporting legislation (“PIB”) that would deprive non-Nigerian oil companies of existing offshore licenses and change the tax regime.

IADC and its allies have brought these issues to the US government because of the potential geopolitical consequences of further damage to the Nigerian economy and its severely declining oil and natural gas production.

Earlier this year, Mr Petty joined a briefing of the US Department of State’s International Energy Coordinator David Goldwyn to emphasize the dire consequences of the local content and PIB legislations.

Industry cause was taken up in March 2010 by US ambassador to Nigeria Robin Sanders at a diplomatic meeting in Lagos. She cautioned the Nigerian government against an “unrealistic time line,” saying it would establish impossible indigenous quotas for equipment and hiring for the oil industry.

Marine spatial planning

IADC and other major oil and gas industry associations expressed reservations about the “Interim Framework” released by the White House Ocean Policy Task Force (OPTF) on managing coastal and marine spatial planning (CMSP). Industry warned that the framework may conflict with existing laws and discourage adequate offshore oil and natural gas stakeholder consultation. The historical role of the traditional offshore energy industry was emphasized.

They also argued that a comprehensive CMSP should enhance access to offshore areas and promote E&P development of new resources. Above all, CMSP shouldn’t become an exercise in prescriptive mapping or zoning.

In particular, they warned against using the “precautionary principle” as a rationale for policy decisions, which are often not based on sound scientific data and don’t require demonstrated adverse impacts. Setting the precautionary principle in regulation would violate congressional intent, which clearly instructs federal agencies to consider both the benefits and costs of regulation and “multiple use,” rather than predetermine outcomes assumed solely to have direct environmental benefits.

The industry comment was submitted to the chief of the Council on Environmental Quality, which held national public hearings in 2009 on the way forward for developing a comprehensive offshore management plan.

Chinese drill pipe

The United Steelworkers Union, joined by several US domestic producers of drill pipe, filed an anti-dumping and countervailing duty case against imported Chinese drill pipe at the US International Trade Commission (ITC) in late 2009. A few days after that, another decision was made against Chinese OCTG in an action also brought by the union and USX.

By some estimates, Chinese drill pipe accounts for 50% of available pipe used in US onshore E&P. If the ITC agrees with the petitioners, that source of supply could effectively be excluded from the US, causing sharply increased prices and shortages. If the ITC agrees that the Chinese have been “dumping” drill pipe in the US market, the Department of Commerce would make a preliminary decision on the penalties to be levied on Chinese imports.

A final determination is scheduled for the ITC for early 2011.

Drill ’em or drop ’em

In late 2009, the then-Minerals Management Service announced more rigorous “drill ’em or drop ’em” terms for Gulf of Mexico deepwater E&P. The agency revised lease terms for water depths between 400 m and 1,600 m.  Five-year lease terms were proposed for water depths from 400 m to 800 m, a change from previous eight-year terms. Between 800 m and 1,600 m, the initial lease term was reduced from 10 years to seven years, with an extension to 10 years upon commencement of an exploratory well.

IADC has long advocated that operators unwilling or unable to diligently develop their leases should be required to return them to the leasing pool for re-offer, rather than be given general lease extensions.

EU energy ‘vision’

In late 2009, the International Association of Oil & Gas Producers (OGP) formally replied to an invitation for input on the EU Commission’s draft of a “vision” statement. The statement provides a framework for where the EU’s energy base and production should be by 2050. IADC contributed to the OGP reply.

References in the commission’s review were clearly biased against hydrocarbons. OGP’s response noted that oil and gas are likely to continue playing major roles in meeting energy demand for many decades, citing statistics from the International Energy Agency indicating that 52% of the world’s primary energy supply will come from oil and gas in 2030. Thus, OGP warned against precipitous legislative and regulatory actions that would hinder investment in these resources in the EU.

The response also highlighted technological advancements in E&P and in the mitigation of emissions to the environment. It noted the emergence of new sources of oil and gas, such as deep ocean, Arctic and shale. Of particular importance is the potential for natural gas as a preferred fuel because of its lower carbon content.

OGP argued that oil and particularly natural gas will be essential to the EU’s energy base for decades to come. The commission was also reminded that oil and gas are essential feedstocks for the petrochemical industry.

Taxing foreign-earned income

IADC continues to monitor the Obama Administration’s proposals for taxing foreign-earned income, which could cost US drillers working abroad. In 2009, the Wall Street Journal published an article saying that the administration had backed away from the international provisions. Several publications then ran articles about that article.

The US Government Accountability Office later issued a report on international tax systems (“Study: Countries That Exempt Foreign-Source Income Face Compliance Risks and Burdens Similar to Those in the United States,” GAO-09-934). Sen. Max Baucus, D-Mont., and Chuck Grassley, R-Iowa, who are chairman and ranking member of the Senate Finance Committee, respectively, responded that caution must be used when looking to reform the US international tax system and that the system should not be reformed on a piecemeal basis.

Sen. Baucus said the report “makes clear there are significant inherent challenges in international tax policy reform, and the complexity of the issues requires us to move carefully and thoughtfully.”  No one in Washington thinks it’s time to relax or that the press reports can be relied on to accurately predict that the fight is over. However, this was encouraging news. IADC’s Tax Committee is closely following the legislation.

Hydraulic fracturing

IADC and its allies continue to closely monitor the Environmental Protection Agency’s (EPA) study of hydraulic fracturing in shale drilling. Industry has so far successfully fought attempts to create new federal oversight of hydraulic fracturing. However, in the wake of the Gulf spill, new proposals to create federal regulation are being considered. Last year, Congress called on the EPA to initiate a study on hydraulic fracturing and drinking water. Industry groups are working to ensure this study is fair; however, federal efforts to require chemical disclosure of fracturing fluids continue to be a recurring challenge.

MIKE KILLALEA, GROUP VICE PRESIDENT/PUBLISHER

Well Servicing Committee

The IADC Well Servicing Committee, under chairman Joe Eustace, Pioneer Production Services, is working with the IADC Well Control Committee to enhance WellCAP training for well servicing. In conjunction with the Association of Energy Service Companies (AESC), the committee conducted a survey of IADC and AESC well-servicing contractors of well control training practices.

Responses came in from around the world and showed that six of 10 well-servicing companies require well control training. Of those that conduct well control training, nearly two in three use WellCAP. Contractors rated themselves generally “very satisfied” with WellCAP, particularly for wireline, snubbing and coiled tubing. Contractors were “satisfied” or “very satisfied” with WellCAP for workover and well servicing.

The committee developed a working group to build on results of the study to develop recommendations for enhancements to the Well Control Committee. Kenny Jordan of AESC took a leadership role in pursuing this goal.

Advanced Rig Technology Committee

The IADC Advanced Rig Technology Committee (ART), chaired by David Reid, National Oilwell Varco, continued to develop tools for enhancing use of automated and highly mechanized drilling equipment.

The ART Reliability & Guidelines (R&G) Subcommittee, led by Robert Urbanowski, Precision Drilling, continued to refine the IADC Technology Value Guide, which defines an array of advanced drilling equipment, as well as pointing to pros and cons of each.

In late 2009, the R&G Subcommittee launched the IADC Top Drive Reliability Statistics Program to collect and analyze downtime data for top drives. The group hopes to develop data that will help manufacturers improve top drive products and suggested maintenance and training. Results may also help top drive users reduce nonproductive time. IADC is ensuring confidentiality of information submitted.

The ART Drilling Control Systems (DCS) Subcommittee, chaired by Terry Loftis, Transocean, completed work on the Rig Communication Protocol List, which matches hardware and available communication protocols for an array of applications and systems for drilling control, subsea, DP and power. The spreadsheet is available on the ART Deliverables webpage via www.iadc.org.

The group conducted a survey on perceptions regarding integration of different pieces of equipment and the incorporation of automation aspects into the drilling process, which found that 78% of respondents see value in open-published interfaces to downhole tools and drilling control systems that allow integration of a downhole tool with a drilling control system. A total of 54% rated this as having “moderate” or “great” value.

Additionally, 42% rated vendor-developed integrated systems cooperating to provide downhole tools already integrated to drilling control systems as having no value. Only 8% said such solutions were of “great” value.

On the other hand, control systems in which downhole tools such as rotary steerable systems are directly controlled by surface-based control and advisory systems were considered of “moderate” or “great” value by 61% of respondents. Similarly, 64% found “moderate” or “great” value in control systems where the drilling process is optimized through use of downhole instruments. 25% found no value in such a solution.

Additionally, 77% favored an oilfield industry standard for drilling communications protocols specific to downhole integration. Nonetheless, several individuals warned of “reinventing the wheel” and pointed out that standards already exist that the industry could adopt. Other comments indicated that an industry association such as IADC should move the process forward

The DCS Subcommittee is now cooperating with the SPE Drilling Systems Automation Technical Section (DSATS) to identify common communication protocols and language allowing multiple third-party firms to connect to and control drilling equipment. (See article in the Sept/Oct 2010 issue of DC, p 24.)

The Future Technology (FT) Subcommittee, under then-chairman Frank Springett, NOV, presented a paper, IADC/SPE 128953, “Advanced Rig Technology: Future Technology Subcommittee Report of Activities and Industry Survey,” at the 2010 IADC/SPE Drilling Conference in New Orleans. The paper reported on a survey regarding industry needs for technological development and how they are valued. The group has studied a wide range of technologies that have been introduced to the industry, some well accepted and others never growing beyond a niche market. The paper highlighted common factors that may have contributed to the success of certain technologies.

In July 2010, the FT Subcommittee, now led by Dustin Torkay, Seawell, held an IADC Stick-Slip Mitigation Workshop in Houston. The agenda included value and business case for stick-slip mitigation; ID of stick-slip and standard responses; roundtable on available technologies; and discussion of technology needs.

Both the FT and R&G subcommittees plan additional workshops for early 2011.

STEVE KROPLA, GROUP VICE PRESIDENT – OPERATIONS & ACCREDITATION

NSOAF meeting

IADC met with a group of regulators from the North Sea Offshore Authorities Forum (NSOAF) in September 2010 in Amsterdam to discuss industry and IADC efforts following the Macondo and Montara blowouts in the Gulf of Mexico and Australia. Mr Kropla provided the briefing with assistance from Alan Spackman, IADC VP – offshore technical and regulatory affairs, following an introduction by IADC president Dr Lee Hunt.

Regulators attending hailed from Norway, the Netherlands, the Faroe Islands, Germany and the United Kingdom. Drilling contractor CEOs present were IADC 2010 chairman Louis Raspino of Pride International; Claus Hemmingsen of Maersk Drilling; Dan Rabun of Ensco; and Matt Ralls of Rowan Drilling.

Well Control Committee

The IADC Well Control Committee held a well control workshop in Aberdeen in April 2010. Mr Kropla discussed new WellCAP instructor requirements that have been put in place for new instructors. These requirements are being phased in for previously approved instructors.

A panel discussion was presented on using simulators to improve well control training, including representatives of drilling contractors and simulator manufacturers.

Among the ideas voiced by participants were: more focus on tripping, gas migration and the volumetric method in simulator exercises; improving the ability of well control instructors to program simulators; and the use of archived simulation exercises to avoid constant re-use of basic exercises. Participants also earned CEU credits toward satisfying their new instructor requirements for continuing education.

Another well control workshop is planned following the IADC Middle East Well Control Conference & Exhibition in Bahrain in December 2010. In November, the Well Control Committee is expected to vote on a number of curriculum changes affecting combination courses. The committee will also consider enhanced training on cementing practices and a supplemental WellCAP course focusing on deepwater drilling topics.

Environmental Policy Advisory Panel

Meeting in Amsterdam in September 2010, the IADC Environmental Policy Advisory Panel (EPAP) discussed results of the benchmarking reporting system and appointed a subcommittee, including technical experts, to fine-tune the guidelines and determine a standard data calculation method. So far, 11 drilling contractors have submitted their 2009 environmental data on emissions and spills. The first questionnaire for environmental reporting was sent out to offshore contractor members in late 2009 to collect data that will help the industry to track its environmental performance.

The next EPAP meeting is scheduled for 11 May in conjunction with the 2011 IADC Environmental Conference, 12-13 May in Trinidad.

ALAN SPACKMAN, VICE PRESIDENT – OFFSHORE TECHNICAL & REGULATORY AFFAIRS

Although a significant portion of 2010 has been spent dealing with Macondo and the regulatory aftermath, IADC continued to monitor a wide range of issues impacting offshore activities.

Anti-Fouling Systems Convention

The AFS Convention, already in force internationally, entered into force for Canada in July 2010 and the United Kingdom in September 2010. Denmark’s accession to the AFS Convention was extended to the Faroe Islands in June 2010.

MARPOL Annex V (Garbage)

The International Maritime Organization announced that the Wider Caribbean Region Special Area under regulation 5 of MARPOL Annex V will take effect on 1 May 2011. Member governments and industry groups have been requested to comply immediately on a voluntary basis with the Special Area requirements, which restrict the discharge of garbage in the Wider Caribbean Region. IADC is encouraging its members operating in the region, which includes the Gulf of Mexico and the Caribbean Sea, to honor this request. Companies should review internal instructions to assure compliance with both flag State and coastal State regulations.

Inland Navigation Rules

In May 2010, the US Coast Guard moved its Inland Navigation Rules from Title 33 of the United States Code (Sections 2001-2038) to the Code of Federal Regulations (33 CFR 83). This means that revisions and updates to these rules can now be accomplished through rulemaking rather than legislation, and interested persons will be able to participate through the notice and comment process. There were no substantive changes made to the rules, only changes to maintain clarity and format in the CFR.

ISO jackup site assessment standard

The proposed ISO standard for jackup site assessment (19905-1) passed balloting at the Draft International Standard stage, with no negative votes submitted. A large number of comments were submitted by the standards organizations of Canada, France, Germany, the Netherlands, Norway and Singapore, which will need to be resolved before the standard is balloted at the next (FDIS) stage.

Ballast water

IADC joined a coalition of 22 organizations urging Congress to pass legislation eliminating the patchwork of regulation of ballast water discharges in the US. The coalition represents vessel owners and operators, transportation-dependent industries and labor unions.

Currently, both the Coast Guard and EPA regulate ballast water discharges under separate legislative mandates, and nearly two dozen states have established their own standards for ballast water and other vessel discharges. The coalition supports the development of strong, bipartisan legislation to solve this untenable situation.

In late 2009, the Republic of the Marshall Islands deposited its instrument of accession to the International Convention for the Control and Management of Ships’ Ballast Water and Sediments, 2004. Brazil, Canada, and the Netherlands joined in early 2010. The Convention will enter into force 12 months after it receives acceptance by not fewer than 30 states representing not less than 35% of the world’s merchant tonnage. There are 25 contracting states representing approximately 25% of the tonnage.

OSHA Hazard Communications Standard

OSHA issued a proposed rule in late 2009 revising the Hazard Communications Standard (HCS) to align it with the United Nation’s Global Harmonization Standard (GHS) for the classification and labeling of hazardous chemicals. Proposed modifications to the hazcom standard include revised criteria for classification of chemical hazards and revised labeling provisions that include requirements for the use of standardized signal words, pictograms, hazard statements and precautionary statements.

It also contains a specified format for safety data sheets and revisions to definitions of terms used in the standard, and requirements for employee training on labels and safety data sheets.

The phase-in period for the proposed rule will be three years after the final rule is published, with phase-in for the implementation of training and education programs expected within two years of the final rule being published. Until the implementation date, employers will be expected to comply with either OSHA’s existing hazcom standard or the proposed rule.

OSHA is also proposing to modify provisions of several other standards, including standards for flammable and combustible liquids, process safety management and most substance-specific health standards, to ensure consistency with the modified hazcom standard requirements.

FEMA

The US Federal Emergency Management Agency (FEMA) issued a notice in late 2009 to establish a voluntary private-sector accreditation and certification preparedness program that would assess whether a private-sector company complies with one or more of the three prospective management standards adopted by the US Department of Homeland Security (DHS).

The program’s intent is to allow companies to develop an internal management plan to deal with disasters, emergency situations and business continuity.

FEMA is finalizing the criteria used in selecting the standards and analyzing each standard’s approach for collaboration with the critical infrastructure and key resources sectors, including considerations for adoption by small businesses.

Once the preparedness program is finalized, a company may utilize one or more of these standards for DHS accreditation of their plan, which would be accomplished via evaluation by a DHS-certified entity.

CO2 fire suppression systems

In February 2010, the US Coast Guard proposed changes to the regulations for fire suppression systems on several classes of commercial vessels. The amendments clarify approved alternatives to using CO2 systems, as well as requiring lockout valves and olfactory additives when new or existing CO2 systems are used in accessible spaces. Of particular note is the addition of the scent of “wintergreen” (olfactory additive) to the CO2 gas. When this rulemaking is finalized, it is likely that other countries will follow suit in order to provide mariners with a standard, easily recognizable indication of the possibly hazardous presence of this fire suppression agent.

STCW 2009 Convention and Code

An IMO Conference of Parties, held in June 2010 in Manila, adopted major revisions to the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW Convention), and its associated Code.  Known as the “Manila Amendments,” this updated STCW Convention and Code enters into force on 1 January 2012.

It includes: improved measures to reduce fraudulent certificates; revised requirements on rest hours; new training requirements for modern technology; additional training requirements on marine environmental awareness, leadership and teamwork; updated competency requirements for tanker personnel; new security training requirements regarding piracy, introduction of new training methodologies; training guidance for personnel operating in polar waters and personnel operating dynamic positioning systems.

Scrapping or transferring a vessel

The transfer of a US vessel to another registry or to a non-US citizen requires MARAD (Maritime Administration) approval under current regulations. Recently, MARAD has advised that it and the EPA are negotiating a Memorandum of Understanding governing EPA’s review of any proposed transfers of ownership of US-flagged vessels, including those being sold for scrap to foreign buyers.

The premise of these agencies is that the vessel may contain polychlorinated biphenyls (PCBs) or other regulated substances that must be controlled prior to the transfer. Specific details of this MOU are not yet available, but MARAD is already applying requirements on an ad hoc basis and will likely be updating its regulations.

KEN FISCHER, REGIONAL VICE PRESIDENT – MIDDLE EAST & AFRICA

UBO & MPD Committee

The IADC Underbalanced Operations & Managed Pressure Drilling Committee is undertaking a major revision to established UBO training programs. Both UBO Rig Pass and the supervisory-level UBO curriculum, which is part of the WellCAP accreditation program, will be affected.

The new training scheme will add topics covering MPD to the curriculum elements of UBO Rig Pass, resulting in a one-day introductory-level course under the WellCAP banner. This introductory curriculum can be taught as a standalone course or can augment conventional well control courses. UBO Rig Pass will be eliminated.

The UBO supervisory curriculum will be reworked as a more comprehensive standalone course designed for rig site personnel who are involved in managing underbalanced operations. Additional modules may be added to cover specialized underbalanced situations and techniques.

The UBO & MPD Committee continues work on a “best practice” document for MPD that is expected to be adopted by API as a Recommended Practice. It will complement API RP92U, which covers underbalanced operations. The committee’s MPD selection tool, which guides drilling engineers through a series of queries and provides MPD options based on specific drilling objectives and downhole challenges, is undergoing beta testing. That is expected to be available on the IADC website in early 2011.

Middle East Operations Forum

The IADC Middle East Operations Forum (MEOF) met in Dubai on 27 September. The meeting was hosted by Weatherford Drilling International and opened by Niels Espeland, Weatherford group VP and IADC Executive Committee member. Mr Espeland focused on the need for more competent crews and encouraged members to share training resources within the region. Mr Fischer reported on IADC activities and programs and gave a presentation summarizing IADC’s Macondo-related initiatives.

The next MEOF meeting is scheduled for 9 May 2011 in Dubai and will be hosted by Nabors International.

The IADC Southern Arabian Peninsula Chapter held its 2010 golf event on 24-25 March at the Emirates Golf Course in Dubai. More than 400 players participated. The event was capped off with an evening of entertainment.

The IADC Southern Arabian Peninsula Chapter held its 2010 golf event on 24-25 March at the Emirates Golf Course in Dubai. More than 400 players participated. The event was capped off with an evening of entertainment.

South Central Asia Chapter

The IADC South Central Asia (SCA) Chapter continues its efforts around the IADC South Central Asia Drilling Technology Conference & Exhibition, to be held 17-18 January 2011 in Mumbai, India. The event will include technical presentations on deepwater challenges, unconventional energy sources, well construction challenges, and safety and the environment.

The SCA Chapter also has worked closely with India’s Oil Industry Safety Directorate (OISD) to promote a clearer understanding and effective compliance with offshore safety regulations by drilling contractors. In a late 2009 meeting with the chapter, OISD presented an overview of the development of regulations and the designation of OISD as the “competent authority” for implementation and enforcement. The group’s “goal-based approach” to regulations was described. It was also noted that OISD had been accepted into the International Regulators Forum.

Key provisions of regulations pertaining to drilling operations were also discussed, followed by a question-and-answer session chaired by Mr Fischer. One key topic was identification of the “operator.” OISD representatives clearly stated that the “operator” is the oil and gas company holding the exploration license, not the drilling contractor, integrated service contractor or any other third party.

In February 2010, IADC participated in an OISD workshop, held in association with the then-US Minerals Management Service, to foster cooperative activities between the two regulatory agencies.

In July, the chapter again met in Delhi with representatives of the OISD to discuss the implementation of offshore safety regulations promulgated by MoPNG in 2008. Cdr. Dhami, chairman of the chapter’s Safety Committee, called it “a very productive interaction.”

In conjunction with the 2010 Offshore Technology Conference in Houston, the chapter also held its annual meeting with their US-based counterparts. Participants discussed critical issues confronting drilling contractors in India, and reports were made on offshore safety regulations, current and pending tax rules and employment visa restrictions.

Further, in October 2010, the chapter held its 24th technology meet, attended by more than 400 drilling professionals and industry leaders. ONGC director and SCA Chapter chairman UN Bose presided over the meeting, hosted by ITC. Technical presentations were complemented by a rousing cultural program and dinner.

Qatar Drilling

Mr Fischer addressed the 25th meeting of the Qatar Drilling Operations Incident Review Committee in late 2009 in Doha. More than 75 representatives of companies operating in Qatar’s upstream industry reported on their HSE performance. Mr Fischer described the use of IADC tools and programs in a company’s competence development scheme. He demonstrated how these programs can be used individually or in combination to define job descriptions, deliver effective training and assess personnel as they progress through various rig positions.

IADC accreditation programs have experienced unprecedented growth in the Middle East in recent years, with numerous contractors and training providers achieving accreditation.

Oman HSE Case workshop

In late 2009, IADC conducted a three-day HSE Case workshop in Muscat, Oman, to teach participants how to develop HSE case documents in compliance with the IADC HSE Case Guidelines. Participants were reminded of the importance of an effective HSE management system and the key role of the IADC guidelines in the implementation of that system.

Contracts Committee

The IADC Contracts Committee is has been engaged in the revision of IADC model form contracts for use in US land operations. The effort, led by committee chairman and vice chairman – Scott Gordon, Unit Texas Drilling, and Ernie Nelson, Nabors USA, respectively – has resulted in important changes to the daywork contract form. Similar revisions will be made to the footage and turnkey forms in due course.

China membership

In early 2010, the membership of various drilling subsidiaries of China National Petroleum Corp were consolidated into six contractor members. These new member companies are Great Wall Drilling Co, Daqing Drilling & Exploration, Xibu Drilling Engineering Co, China Petroleum Technology & Development Corp, Chuanqing Drilling Co and Bohai Drilling Engineering Co. Representing nearly 250 onshore and offshore rigs in the global market, these companies are positioned to adopt and implement many IADC activities and programs.

JOE HURT, REGIONAL VICE PRESIDENT – NORTH AMERICAN AND LEAD STAFF LAND HSE ISSUES

Flame-resistant clothing

IADC and other industry groups met with representatives from the Washington, DC, OSHA Directorate of Enforcement Programs in August to seek clarification on the Enforcement Policy for Flame-Resistant Clothing (FRC) in Oil and Gas Drilling, Well Servicing and Production-Related Operations, issued in March 2010.

The associations, concerned that OSHA bypassed the rulemaking process in announcing the policy, asked the agency to withdraw the policy announcement, but the request was denied. It was promised that industry concerns would be shared with Dr David Michaels, assistant secretary of labor for occupational safety and health, although no time frame for a response was given. OSHA expressed concern that the normal rulemaking process will take to long to address this issue.

In late 2009, industry groups, along with contractors and operators, held a roundtable discussion on the need for FRC in the upstream industry. Most attendees agreed that it would be difficult to make one rule fit all types of upstream operations and that the decision should be based on a risk assessment for the type of operation being conducted.

Fall protection

OSHA made sweeping changes in fall protection regulations by requiring improved worker protection from tripping, slipping and falling hazards on walking and working surfaces. The revisions require fall protection devices, such as self-retracting lanyards and ladder safety and rope descent systems for general industry workers. OSHA inspectors can now fine employers who allow workers to climb permanent and portable ladders without proper fall protection.

The revision also fixes inconsistencies among the general industry, construction and marine standards, which create difficulties for employers attempting to develop appropriate work practices for their employees.

OSHA-required training

As part of several major OSHA enforcement initiatives, OSHA now requires compliance officers to check and verify that the training has been provided and in a format that the workers can understand. Previously, the agency required its compliance officers to check and verify that workers have received the training mandated by OSHA standards.

Injury and illness recordkeeping

OSHA proposed to revise its Occupational Injury and Illness Recording and Reporting (Recordkeeping) regulation to add a column to the OSHA 300 Log that employers would use to record work-related musculoskeletal disorders (MSD). The 2001 Recordkeeping final regulation included an MSD column, but the requirement was deleted before the regulation became effective. This rule requires employers to place a check mark in the MSD column instead of the column they currently mark if a case is an MSD that meets the recordkeeping regulation’s general recording requirements.

Injury and Illness Prevention Program (I2P2)

OSHA held a series of information-gathering workshops around the United States in 2010 to obtain industry input in a proposed new rule to require companies to develop a documented Injury and Illness Prevention Program. According to OSHA, it is an effort to create a mandatory program to replace the voluntary Safety Management Program that has been posted on the OSHA e-tool web page. IADC participated in the meeting held in June 2010 in Dallas.

Crane Standard

OSHA issued a new crane standard for construction cranes under CFR 1926. This standard should not apply to drilling operations since OSHA has issue two letters of interpretation that CFR 1926 does not apply to drilling locations once the well site is constructed. CFR 1926 does not apply to operations beginning with rig-up operations until the rig is removed from the location. IADC is seeking further interpretation from OSHA regarding OSHA comments about “construction activities.”

Rig Moving Committee

The IADC Rig Moving Committee issued voluntary Gin Pole Truck Guidelines in March 2010 intended to improve the safety of rig-moving operations and include information on inspections, operations and manufacture of gin pole trucks. They are posted on the IADC website.

JASON MCFARLAND, VICE PRESIDENT – MEMBERSHIP AND PUBLICATIONS

Ethics & Corporate Compliance Committee

The IADC Ethics & Corporate Compliance Committee sponsored a Foreign Corrupt Practices Act (FCPA) workshop in September 2010 in Houston, attended by approximately 80 people. Presentations were given by representatives of drilling contractors, as well as by Global Industries and TRACE International. The panel addressed topics related to FCPA compliance and received active participation from the audience.

Led by chairman Brady Long, Pride International, the committee meets on a quarterly basis and features presentations by some of the industry’s foremost authorities on anti-bribery and FCPA compliance.

Technical Publications Committee

The IADC Technical Publications Committee held its annual working meeting in South Padre in September 2010. The group concluded their work on a cementing book that will be published in 2011. They also continued writing efforts on other subjects, including underbalanced drilling, waste management and deepwater drilling. Gary Young, Occidental Petroleum, has been named co-vice chairman of the committee. The group continues to be led by chairman Leon Robinson.

JENS HOFFMARK, REGIONAL VICE PRESIDENT OF EUROPEAN OPERATIONS

Mr Hoffmark joined IADC at the start of 2010 as regional vice president of European operations, following a 42-year career with Maersk Drilling. He is responsible for overseeing IADC operations and activities across Europe, including regulatory affairs and involvement with activities such as the European Operations Forum (EOF) and the Offshore Competency Training Programme.

European Operations Forum

The EOF met in September 2010 in Amsterdam with regulators from the Faroe Islands, Denmark, Netherlands, UK and Norway. Members heard from Steve Kropla, IADC group VP – operations & accreditation, who offered a detailed presentation on the industry’s response to the Macondo incident, which was followed by active member discussions. The next EOF meeting is set for Copenhagen in June 2011.

OGP Safety Committee

At the invitation of the International Association of Oil and Gas Producers (OGP), IADC made a presentation on its Macondo-related efforts at an OGP meeting in Aberdeen in October 2010. OGP members were briefed on IADC initiatives in to get the Gulf of Mexico moratorium lifted and to prepare new regulations, including a possible Safety Case regime and a Well Construction Interface Document (WCID).

The members of the OGP Safety Committee consist of major oil companies and suppliers and is chaired by Hans Jørn Johansen, DONG Energy. Committee members expressed gratitude for the work IADC has done and found that the associations could work more closely in the future many topics, including HSE.

BRENDA KELLY, DIRECTOR – ACCREDITATION AND CERTIFICATION

WellCAP

IADC recently mobilized a team of independent auditors to conduct a special round of well control training provider audits for WellCAP. In view of events in the US Gulf of Mexico, IADC decided to go above and beyond the routinely scheduled audits to provide immediate verification that all US-based WellCAP training providers are compliant with WellCAP standards and criteria and to their individual accredited plans.

This goal was accomplished with the assistance of seven auditors, who completed 40 audits in a six-week period. The last of the US providers was audited in July 2010.

All training providers were found to be delivering the well control content, classroom activities, practical exercises and simulations as required. In addition, training was being delivered by appropriately qualified, WellCAP-approved instructors.

Comprehensive round of WellCAP audits are now being conducted in Mexico, where 17 providers are accredited.

HSE Rig Pass

In late 2009, the Rig Pass Course to Go was released to the public after two years in development, extensive internal and technical reviews and four pilot course offerings. The course delivers the Rig Pass curriculum in a student-centered, highly interactive style. A facilitator uses course materials to lead students through a series of activities that challenge them to say, do and demonstrate their knowledge of rig safety.

All instructional materials necessary for delivery of the course were designed to work together to enhance learning. A participant guide, facilitator guide, tests for all modules (including offshore and land endorsement modules) and other supporting materials are included. The MindManager software, included in the facilitator guide, provides a means of quickly navigating between course materials and activities from a single electronic window. Tips for enhancing the facilitator’s delivery are also provided.

IADC performs an audit of an HSE Rig Pass-accredited training class on 11 August 2010 at a Weatherford International facility in Lafayette, La.

IADC performs an audit of an HSE Rig Pass-accredited training class on 11 August 2010 at a Weatherford International facility in Lafayette, La.

The course and its materials are suitable for classroom, rig- or platform-based or “on the road” delivery.

“IADC’s Rig Pass Course to Go is a step-change in rig safety training,” said Joe Hurt, IADC regional vice president North America and lead staff for HSE issues.”

Keen Energy Services (then Goober Drilling) and New Tech Engineering conducted four pilot offerings of the course in 2009, with participation by more than 80 current and new employees. Facilitators reported that the organization and flow of the course made training easy.

In April 2010, the SafeLandUSA Advisory Group gave its endorsement of the IADC HSE Rig Pass program. All currently accredited HSE Rig Pass training providers may participate in SafeLandUSA once additional operational requirements are met. This also allows individuals holding HSE Rig Pass cards to convert their current card to a SafeLandUSA-recognized card. To help training providers become familiarized with SafeLandUSA requirements, IADC held two workshops in May 2010, in Houston and Lafayette, La.

In 2010, IADC also started an investigation in response to reports of training providers selling counterfeit HSE Rig Pass Cards in Mexico. IADC members were strongly urged to verify the validity of any suspicious HSE Rig Pass cards as there is no easy way of distinguishing between an official card and an altered one.

A full-scale audit effort is currently under way in Mexico, where all HSE Rig Pass- and WellCAP-accredited providers will undergo audits.

DIT & CAA

IADC established advisory panels for its two newest accreditation programs – the Drilling Industry Training Accreditation (DIT) system and the Competence Assurance Accreditation (CAA) program – in 2010. The panels monitor adherence to accreditation criteria, approve providers/companies for accreditation, guide IADC staff in program administrative processes, and serve as an appeals or advisory body for other issues relevant to the accreditation programs.

Each panel consists of five members, appointed for three-year terms. Members are selected for their expertise and experience in the industry. Three members represent IADC’s drilling contractor members and two represent associate members.

Offshore Competency Training Programme

IADC met with representatives of North Sea oil industry associations in Stavanger in January 2010 to further acceptance of its Offshore Competency Training Programme (OCTP). Dr Kelly, along with Jens Hoffmark, IADC regional vice president of European operations, met with members of the Norwegian Oil Industry Association (OLF), Oil & Gas UK, the Netherlands Oil & Gas Exploration & Production Association (NOGEPA), and producer groups from Denmark and Germany.

Full acceptance of the OCTP would allow drilling contractors to use the program’s two key components – Basic Introduction to Offshore Safety and Helicopter Underwater Escape Training. They would then be able to move personnel from location to location without having to repeat that training.

Danish and Dutch representatives confirmed their unofficial acceptance of the OCTP at the meeting.

OLF and Oil & Gas UK also accepted the program’s content since it mirrors the harmonized course requirements for their countries. Achieving their acceptance will still require implementation of an audit program that mirrors the audit program in place within each country, acceptability of auditors/auditor qualifications, modification of the program’s plan to accept STCW courses as equivalent training, and ongoing transparency of implementation, including tracking of training certificates. Group members indicated acceptance of IADC’s quality assurance plan, contingent on acceptable qualifications of specific program auditors.

IADC has submitted the OCTP documents and quality assurance plan to the work group for review. Group members have agreed to individually assist IADC in seeking national trade union acceptance once the program documentation is deemed satisfactory.

Quality control strengthened

IADC established a quality assurance-quality control coordinator position to strengthen management and oversight of its accreditation programs’ quality control. The coordinator oversees training provider and vendor audits, investigates customer complaint and conducts internal audits to ensure adherence to standard operating procedures. Elfriede Neidert, formerly quality assurance/process improvement manager for Weatherford International, assumed these duties in August 2010.

CHIT HLAING, OPERATIONS ASSISTANT – ASIA OPERATIONS

Asia Operations Forum

IADC kicked off the Asia Operations Forum (AOF) this year, holding its first meeting on 22 March in Singapore to discuss regional issues. Members heard from Brian Petty, IADC executive vice president – government affairs, who discussed Indonesian local content and taxation issues. Gavin Strachan, ODS-Petrodata, also gave a guest presentation on outlook for the offshore drilling industry. A second AOF meeting was scheduled for early November 2010 in Singapore.

Meeting with Myanmar

Mr Hlaing, together with IADC president Dr Hunt, hosted a meeting in January 2010 in Yangon, Myanmar, to meet with operators and service companies active in that country. Representatives of the Myanmar Oil & Gas Enterprise (MOGE) were present as well. Attendees were briefed on IADC’s mission in the global oil and gas drilling industry and its various operations worldwide.

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