San Antonio Express-News

New Offshore Safety Rules Would Make Drilling Some Wells Too Difficult, Industry Lobbyists Tell White House

The oil industry is blasting an Obama administration plan to better safeguard offshore exploration, arguing that the Deepwater Horizon-inspired proposal imposes costly and “ill-advised” mandates that could make some wells impossible to drill.

The Interior Department’s Bureau of Safety and Environmental Enforcement rule, unveiled in April, aims to prevent a repeat of the 2010 Gulf of Mexico disaster by codifying a number of voluntary steps that companies have already taken to better keep offshore wells in check.

But it goes further in laying out specific mandates for the design of wells and the emergency devices known as blowout preventers that are meant to serve as a final protection against uncontrolled surges of oil and gas.

A coalition of oil trade groups insists that the proposed rule goes too far by establishing “prescriptive new requirements that would impose unjustified economic burdens, discouraging economic growth (and) innovation” often without a clear rationale.”

And the groups—including the American Petroleum Institute, Independent Petroleum Association of America, and International Association of Drilling Contractors—insist that some of the proposed mandates “would introduce new risk rather than reduce (it).”

Reuters | 21 July 2015

Oklahoma Broadens Oil and Gas Drilling Regulations To Stem Quakes

Oklahoma is expanding restrictions on drilling activities to stem a sharp increase in earthquakes that has damaged homes and raised concerns about the future of the energy industry in the state.

But the action, announced on 17 July, fell short of more drastic measures expected after a further increase in the rate of significant quakes last month prompted the state’s regulator to say the situation was a “game changer.”

Oklahoma and several other states in the central US have experienced a sharp increase in earthquakes since 2009, which scientists say is linked to underground injection of briny wastewater, a byproduct of booming oil and gas production.

Noticeable quakes—above magnitude 3.0—now strike the state at a rate of two per day or more, compared with two or so per year prior to 2009.

The earthquakes are not related to hydraulic fracturing, a widely used drilling technique. Instead, researchers say, the quakes stem from the reinjection of saltwater that occurs naturally in oil and gas formations.

On 17 July, the Oklahoma Corporation Commission, the state’s oil and gas regulator, released a directive that expands “Areas of Interest”—parts of the state that have been worst-hit by the quakes—and adds restrictions for 211 disposal wells.

Rigzone | 21 July 2015

Canada Provinces Agree to Strategy on Pipelines, Climate Change

Canada’s provinces reached a long-sought deal on 17 July over an energy plan for the country, agreeing broadly to curb greenhouse gas emissions while also promoting the use of pipelines.

The oil-producing province of Alberta originally conceived the strategy as a way to ensure that it could move its fuel to market. The plan was changed at the insistence of some of the provinces to reflect their desire to fight climate change.

Alberta and Saskatchewan have limited markets for their land-locked oil, with environmentalists opposing pipelines that have to go through other provinces to reach the Pacific or Atlantic oceans. These include the Energy East pipeline proposed by TransCanada, which is also trying to build the controversial Keystone XL pipeline through the United States.

Canada’s provinces agreed to ensure that regional, Canadian, and international infrastructure exists for sending energy products to domestic and international markets. The agreement was announced following the premiers’ annual summer conference, which was held this year in St. John’s, Newfoundland.

Saskatchewan Premier Brad Wall said he was more comfortable with the stronger language in the document on ensuring there is infrastructure in place to get energy to market. Quebec Premier Philippe Couillard, whose government has said Energy East must meet seven conditions before being allowed through the province, sounded conciliatory and mindful of the Lac-Megantic oil-by-rail disaster in his province in 2013.

“The bottom (line) is, oil will have to move,” he told reporters. “If it’s not moving by pipeline, it’s moving by rail. Is it really better by rail or safer by rail? I can tell you that in Quebec we have a different perspective on this.”

The energy plan includes goals and efforts for reducing greenhouse gas emissions, but did not lay out specifics.

The Hill | 6 July 2015

Regulators Seek Faster Pipeline Spill Notifications

Federal regulators want operators of pipelines for oil and other materials to notify federal officials within an hour after breaches and leaks.

The 1 July proposal came weeks after an oil pipeline was breached along the Pacific Ocean coast in Santa Barbara County, California, leaking more than 100,000 gallons into the ocean and coating beaches.

The owner of that pipeline, Plains All American Pipeline, did not notify the federal government until at least 90 minutes after it discovered the leak, according to The Associated Press. The Pipeline and Hazardous Material Safety Administration is proposing to require operators to notify its National Response Center at the “earliest practicable moment” after a leak, but not within more than an hour.

The requirement is part of an overhaul of the rules regarding how pipeline operators respond to incidents like leaks, including personnel training, drug and alcohol testing, and assessing pipeline cracks.

Rigzone | 1 July 2015

EU Offshore Safety Regulations: Guidance on New Rules

After the Deepwater Horizon accident occurred in the Gulf of Mexico in April 2010, the European Commission reviewed the existing regulatory framework around Europe. It concluded that the divergent and fragmentary nature of the requirements in place applying to the safety of offshore oil and gas operations did not provide adequate assurance that risks from offshore accidents were minimized.

As a result, the European Commission published the Offshore Directive on 28 June 2013. This aims to “help prevent accidents, as well as respond promptly and efficiently should one occur. The directive, broadly based on the UK’s current offshore safety regime according to the UK’s Health and Safety Executive, includes requirements relating to licensing, environmental protection, emergency response, and liability, as well as safety. And it will come into effect in just a few weeks’ time, 19 July.

Under the new regulations, companies must prepare a major hazard report for their offshore installation before exploration or production begins. This report must contain a risk assessment as well as an emergency response plan and be updated whenever appropriate.

Washington Examiner | 1 July 2015

Twenty-Two States Sue EPA Over Water Rule

Litigation against the US Environmental Protection Agency’s clean water rules reached a fevered pitch on 30 June.

Nine states added to a frenzy of lawsuits being leveled against the EPA and the Army Corps of Engineers after the Waters of the United States rule was published in the Federal Register on 29 June.

The publishing of the rule marks the day a regulation officially becomes law and, thus, ripe for litigation.

North Dakota led a group of 13 states on 29 June in a lawsuit filed in the US District Court in Bismarck, challenging the EPA over the rule. The states include Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, South Dakota, and Wyoming, and the New Mexico Environment Department and State Engineer.

Officials say the goal is to delay or defeat the regulations before they take effect at the end of August.

West Virginia led the charge with eight other states in a separate court filing against the EPA on 30 June. The states argue that the rules undermine the constitutional rights of states to manage their own waterways.

BSEE | 18 June 2015

BSEE Proposes Regulations To Improve Safety of Offshore Cranes

The Bureau of Safety and Environmental Enforcement (BSEE) on 12 June announced another key step in reducing risk offshore. The proposed rule, published in the Federal Register, would implement best practices and update regulations regarding the safety of cranes mounted on fixed platforms on the outer continental shelf.

“Over the past 7 years, 16% of fatalities offshore have been associated with lifting incidents,” said BSEE Director Brian Salerno. “We are focused on reducing risk offshore and are proposing this rule to improve the safety of cranes for offshore workers.”

The proposed rule, which will be open for public comment, addresses safety issues for cranes mounted on fixed platforms including the loading of cranes, their service life, braking systems, and personnel safety. It would include the incorporation of accepted industry best practices and update ​​current BSEE regulations.

The Wall Street Journal | 10 June 2015

Obama Administration Readies Big Push on Climate Change

The Obama administration is planning a series of actions this summer to rein in greenhouse-gas emissions from wide swaths of the economy, including trucks, airplanes, and power plants, kicking into high gear an ambitious climate agenda that the president sees as key to his legacy.

The Environmental Protection Agency (EPA) is expected to announce as soon as 10 June plans to regulate carbon emissions from airlines, and soon after that, draft rules to cut carbon emissions from big trucks, according to people familiar with the proposals. In the coming weeks, the EPA is also expected to unveil rules aimed at reducing emissions of methane—a potent greenhouse gas—from oil and natural-gas operations.

And in August, the agency will complete a suite of three regulations lowering carbon from the nation’s power plants—the centerpiece of President Barack Obama’s climate-change agenda.

The proposals represent the biggest climate push by the administration since 2009, when the House passed a national cap-and-trade system proposed by the White House aimed at reducing carbon emissions.

Reuters | 3 June 2015

Alberta Pledges New Climate Regulations

Alberta, the Canadian province whose carbon-intensive oil sands are the largest source US oil imports, said on 2 June that it would have new climate change regulations in place by 30 June, when the current rules expire.

Shannon Phillips, the environment minister for the province’s newly elected left-wing government, said in a statement that her first steps would include energy-efficiency and renewable-energy strategies.

The New Democratic Party, which ended 44 years of government by the Conservative Party in Alberta in an election last month, has been pressed to have a new climate change strategy in place before late November’s United Nations Climate Change Conference in Paris.

“This government will take leadership on the issue of climate change and make sure Alberta is part of crafting solutions with stakeholders, other provinces, and the federal government,” Phillips said.

Eco Magazine | 3 June 2015

Proposed Regulations for Blowout Preventers and Well Control Would Bring US Up to North Sea Standards

Proposed regulations from the Bureau of Safety and Environmental Enforcement (BSEE) on blowout preventer (BOP) systems and well control should lead to a “convergence” between North Sea and US standards, according to well-integrity consultant Matteo Loizzo.

On 13 April 2015, Secretary of the Interior Sally Jewell announced the recommendations, which come after lengthy investigations into the 2010 Deepwater Horizon incident. The measures include more stringent design requirements and operational procedures for critical well control equipment used in offshore oil and gas operations, in particular the BOP, a safety-critical piece of equipment that failed on the BP-operated Macondo well in the Deepwater incident.

In the new regulations, “most major changes concern BOPs,” and “there is a certain number of regulations which will probably have a measurable impact”, Loizzo said.

One proposed change requires BOPs to use two blind rams instead of one, thus changing the “mechanical design” of the BOP, Loizzo said.

The BOP must be “more robust”, but the operator will also need to have more ways of controlling an incident, Loizzo said.

Loizzo estimates this will have a 10–20% increase in the cost of BOP equipment. “Any increase in functionality will bring cost increases … . But, if you have a full HPHT (high-pressure/high-temperature) BOP, the cost increase will be much higher, I would think.”

The equipment-related costs would represent a small increase on overall expenses, when rigs cost more than USD 500,000 per day to operate. Process changes such as longer decision times could also increase costs, Loizzo said.

Borden Ladner Gervais via Mondaq | 28 May 2015

US and Canada Announce New Joint Regulations for Rail Tank Car Safety Standards

In a joint Canada/US press confer​​ence, Canada’s Transport Minister Lisa Raitt and US Transportation Secretary Anthony Fox announced harmonized cross-border regulations aimed at strengthening safety standards for rail tank cars used to transport crude oil and other dangerous goods. The announcement comes after ongoing discussions between regulators and industry stakeholders in both countries and is in response to increasing public concern over the safety of transporting crude by rail.  ​

The New Regulations
The proposed new Canadian regulations introduce the following three changes to the existing framework:

New requirements for manufacturers to build rail tank cars with upgraded safety features, specifically to reduce the risks of puncture, derailment and leaks

New performance-based standards to retrofit older tanks

A schedule to phase out the use of some older tank cars

The US regulations mirror the Canadian regulations and include additional braking requirements for trains carrying large quantities of crude oil. After 2023, trains carrying large quantities of crude and other flammable goods will only be allowed to exceed 30 mph if they have electronically controlled pneumatic brakes installed. Raitt will look to find a Canadian solution to harmonize breaking requirements with the US but stopped short of making any statement about what the Canadian requirements would include.

Andrews Kurth via Mondaq | 20 May 2015

Texas Railroad Commission Heightens Scrutiny of Injection Wells Linked to Seismic Activity

On 8 May, the Railroad Commission of Texas swiftly responded to a recent 4.0 magnitude earthquake in Johnson County by dispatching inspectors to the area and directing four disposal well operators in the area to conduct well and reservoir testing. The operators have agreed to temporarily shut down activities to conduct the testing. The testing will be used to determine what, if any, regulatory action will follow.

This directive comes on the heels of the aggressive response undertaken by the commission in April to initiate show-cause proceedings to address a recent seismic study linking disposal well activity to recent earthquakes in the area of Azle, Texas. These formal show-cause proceedings, to be held in June, will require operators of two disposal wells to demonstrate that the wells should not be cancelled and shut down.