Regulations
Offshore Engineer | 13 May 2015

The Demand for Standardization, Part 1

In the first installment of a two-part series, Elaine Maslin takes a look at what all the clamor is about on standardization, what the industry is planning to do about it, and what the results have been to date.


If I got £1 for every time someone said “standardization,” I’d be a rich woman. The word has become part of the offshore industry common parlance in Europe, not least in Norway and particularly within the subsea industry.

It’s easy to think the push for standardization was created in response to the oil price collapse. But it wasn’t. A need for greater standardization—be it around interfaces, components, documentation, tenders—has been discussed at industry events for some time.

Standardization was debated in 2013 at the Underwater Technology Conference (UTC) in Bergen, where questions were asked about what was standardization, what should be standardized, and was industrialization a better goal.

It was also on the agenda at last year’s UTC, then ONS 2014 in Stavanger and again at Subsea Valley in Oslo earlier this year. Visit Norwegian companies and each has its own spin on standardization.

Slowly, some results are starting to be seen. But, those with experience in other sectors that have gone through the same process, such as shipping, warn that for the full impact to be felt, initiatives will need to be adopted across the industry and will take time.

Why Standardization?
Subsea industry costs offshore Norway have risen to such a level that projects were becoming no longer economic. Costs have been driven by increased specifications, long lead times, duplication and high wages.

Over the years, field-specific-driven challenges have resulted in field-specific specifications, which are layered on top of internal operator specification tool boxes, which, in turn, have been built up based on previous deployments and learnings, Michael Sequiera, principal consultant, deepwater practice lead, OTM Consulting, told the Subsea Valley conference.

Frequently now cited are examples of components, which in any other industry cost a few thousand dollars, cost hundreds of thousands in the subsea sector because of the documentation required, increasing man-hour requirements, costs and lead times.

The Hill | 13 May 2015

Industry Files Suit To Stop New Oil Train Rules

The oil industry is suing to stop a number of provisions in a suite of oil-train transportation rules issued by the Obama administration.

The American Petroleum Institute (API) said that it filed the lawsuit in federal court in an attempt to overturn those requirements it does not believe would improve the safety of crude oil transport by rail.

“Improving on a 99.997% safety record requires data-driven efforts to prevent derailments with enhanced inspections and maintenance, upgrade the tank car fleet, and educate first responders,” API spokesman Brian Straessle said.“Our safety goal is zero incidents, so retrofit timelines, braking systems, and other actions must all be based on facts and science to maximize the safety impact of this rule,” he said.

The Department of Transportation developed the rules to try to stem the tide of high-profile crude-by-rail disasters that have accompanied the domestic oil production renaissance.

While the end result was a suite of rules that were not as strong as environmentalists and safety advocates had hoped for, the oil and freight rail industries said they still went too far.

The API’s lawsuit aims to secure longer timelines to retrofit old tank cars, overturn the mandates for enhanced braking systems, and loosen the operational restrictions on certain trains.

DNV GL | 7 May 2015

Study Projects Regulatory Future, Suggests More Be Done To Reduce Major Accidents

A study conducted by DNV GL analyzes current regulatory regimes and outlines possible future developments and DNV GL’s recommendations to reduce the risk of major accidents.

Frameworks for regulation vary considerably worldwide and may evolve in different directions, requiring oil and gas companies to align their global operating standards toward unique local regulations. They also need clear oversight where requirements are less developed. DNV GL’s study “Regulatory Outlook: The Way Forward for Offshore Regulatory Safety Regimes” outlines what DNV GL believes an effective offshore safety regime should look like, including greater sharing of lessons learned between regulators and operators, larger fines for major accident hazards, and more harmonization of HSE regimes.

“Occupational safety has improved greatly in recent years,” said Graham Bennett, business development manager for UK and Sub-Saharan Africa, DNV GL—Oil and Gas. “However, major accidents and near misses still happen, and new ways to reduce major accident hazards need to be identified.”

Statistical trends on occupational safety, based on DNV GL’s analysis of data extracted from companies’ annual reports and sustainability reports.

Statistical trends on occupational safety, based on DNV GL’s analysis of data extracted from companies’ annual reports and sustainability reports.

“We cannot say with certainty how national or regional regimes will develop, but we have been able to present a range of possible future developments and our views on what an effective offshore safety regime should look like,” Bennett added.

The study includes high-level case studies for the offshore regulatory frameworks in Mexico, Brazil, the EU, Angola, and Australia. It also covers the Arctic from an international regulatory perspective, as well as for Alaska, Canada, Greenland, Norway, and Russia.

“DNV GL’s contribution as a risk-management expert is to assist the industry, which is facing increasingly complex and demanding environments, to understand the risks of major accidents. We would like to see learning from both incidents and major accidents implemented in regulation as well as in business practice,” said Elisabeth Tørstad, chief executive officer for DNV GL—Oil and Gas.

DNV GL’s study discusses possible scenarios for regulatory developments in different jurisdictions. DNV GL mapped these scenarios to its safety model to identify key factors that could help reduce major accident hazards in each region.

Download the study here (PDF).

Rigzone | 5 May 2015

US, Canada Unveil New Crude-By-Rail Rule

With an emphasis on enhanced tank car construction and braking standards, US and Canadian transportation officials have released a new rule to boost the safety of crude by rail in North America.

“Our close collaboration with Canada on new tank car standards is recognition that the trains moving unprecedented amounts of crude by rail are not US or Canadian tank cars—they are part of a North American fleet and a shared safety challenge,” said US Transportation Secretary Anthony Foxx.

The rule is a protracted reaction to an increase in crude oil incidents. Two years ago, an oil train explosion in Quebec killed 47 people and significantly increased the issue’s profile. In 2014, federal US data showed the highest number of crude by rail incidents at 141 unintentional releases, the highest since the agency began gathering data 40 years ago.

The rule applies specifically to “high hazard flammable trains,” or HHFTs, which includes a “continuous block of 20 or more tank cars loaded with a flammable liquid or 35 or more tank cars loaded with a flammable liquid dispersed through a train.”

Among the new guidelines:

  • The speed for all HHFTs is reduced to 50 mph, and those tank cars that don’t meet the enhanced standards are restricted to 40 mph in urban areas
  • New cars stipulate a 9/16-in. shell and top-fitting protection, and a 7/16-in. shell without top-fittings for those currently in circulation
  • Implementation of electronically controlled pneumatic (ECP) brakes

Reuters | 6 April 2015

North Dakota Oil Producers Complying With New Treatment Rules

North Dakota’s oil producers are complying with new safety standards that went into effect on 1 April to remove as many volatile gases from crude as possible, state officials said.

The new rules require the more than 1.2 million bbl of oil extracted each day from the state’s Bakken shale formation be run through machines that remove ethane, propane, and other volatile gases linked to recent crude-by-rail disasters in Quebec, Illinois, and West Virginia.

Producers are now required to operate field equipment at oil wells at specific temperatures and pressures to remove those gases. Well sites are shut down if they are not compliant, according to the standards approved in December.

Late March field checks of equipment operated by all of the state’s producers, ranging from the largest with Whiting Petroleum to one of the smallest with Triangle Petroleum, are compliant, the state’s Department of Mineral Resources said.

Bloomberg | 2 April 2015

Hydraulic Fracturing Operators Ran Up 2.5 Violations a Day, Study Shows

Oil and gas drillers ran afoul of regulators on average 2.5 times a day in three energy-intensive states for mistakes such as wastewater spills, well leaks, or pipeline ruptures during the boom in hydraulic fracturing.

Online records in West Virginia, Pennsylvania, and Colorado showed regulators issued 4,600 citations from 2009 to 2013, the Natural Resources Defense Council said on 2 April in a report. The report excluded violations in 33 other states with drilling because such records aren’t available on the Internet.

“It’s extremely difficult for the public to get this kind of information,” said Amy Mall, an author of the report for the New York-based environmental advocate. “The companies are violating the law too often, and we need policy solutions to increase transparency and to change the consequences for not complying” with the rules, she said.

Rigzone | 23 March 2015

Interior Department Issues Final Rule on Federal Hydraulic Fracturing Standards

The US Department of the Interior released on 20 March its final rule through which the Bureau of Land Management (BLM) would implement new regulations for hydraulic fracturing activity on US and federal and Indian lands.

The new rule, which will take effect in 90 days, would require oil and gas companies to validate the integrity of well construction and require companies to disclose the chemicals used in hydraulic fracturing to BLM through the website FracFocus within 30 days of completing fracturing operations on a well. It also would ban the use of wastewater pits at drilling sites, requiring companies to use above ground tanks instead, to mitigate the impact of recovered waste fluids on air, water, and wildlife.

Additionally, companies would have to submit more detailed information on geology, depth, and location of pre-existing wells to allow BLM to better evaluate and manage the risks of cross-well contamination with chemicals and fluids used in a fracturing operation that could result in a spill or blowout.

The Hill | 19 March 2015

Industry Assails Obama’s Ozone Regulations

Business groups are waging war on the Obama administration’s proposal to reduce ozone pollution, arguing the regulations would cripple the US economy.

In order to comply with the proposed rule, many areas of the country would have to all but shut down land development and oil and natural gas drilling, industry groups charged on the final day for comments.

The Environmental Protection Agency (EPA) is being spurred on by environmental and health groups, who argue that lower ozone emissions would benefit public health. The agency, they contend, is obligated to adopt the stricter standards.

But the rules would translate to higher electric bills for American families, the American Coalition for Clean Coal Electricity said.

“At the same time, declining real household incomes coupled with increasing energy costs are harming the 60 million American families with low and middle incomes.”

The American Petroleum Institute (API) said it is too soon to change the standard of 75 parts per billion, the current standard set in 2008. The EPA is proposing a cut to between 65 and 70 ppb, but many states and localities have not yet begun to implement the 2008 regulation, the group notes.

“If President Obama is serious about lifting up the middle class and closing the income inequality gap, the last thing his administration should do is threaten jobs and our energy and manufacturing renaissance with unnecessary new regulations,” said Howard Feldman, API’s director of regulatory affairs.

The Wichita Eagle | 17 March 2015

Court: Chemical Safety Board Can Investigate Offshore Spills

In a case with potentially far-reaching consequences, a federal appeals court has again found that the US Chemical Safety Board has the authority to investigate the causes of offshore oil spills.

The board has been looking into the catastrophic blowout of a BP well 5 years ago in the Gulf of Mexico that killed 11 people and caused the nation’s worst offshore oil spill. The ruling—unless it is overturned by the US Supreme Court—means that the Chemical Safety Board may also investigate other types of chemical spills in offshore waters in the future.

The drilling company, Transocean Deepwater Drilling, contends the safety board does not have the authority to investigate.

Last September, a three-judge panel of the 5th US Circuit of Appeals disagreed. On 12 March, the full court rejected by a vote of 9-6 Transocean’s request to reconsider the panel’s finding.

“It has some significant ramifications for offshore operators,” said David Baay, a lawyer for Transocean. He said the board “will now be emboldened” to investigate offshore rig spills and “that means that any offshore incident of significance is likely to face one more federal agency among an already crowded field.”

The ruling could increase costs for drilling companies and add confusion about which agency has the authority to investigate spills, he said.

Reuters | 16 March 2015

Regulator Says Oil Industry Must Join US Railroads To Boost Train Safety

Rail operators are going to great lengths to prevent oil train derailments but the energy sector must do more to prevent accidents from becoming fiery disasters, the leading US rail regulator said on 13 March.

Oil train tankers have jumped the tracks in a string of mishaps in recent months that resulted in explosions and fires.

Several of those shipments originated from North Dakota’s Bakken energy fields. Officials have warned that fuel from the region is particularly light and volatile.

Sarah Feinberg, acting head of the Federal Railroad Administration, said the energy industry must do more to control the volatility of its cargo.

“(We) are running out of things that we can put on the railroads to do,” she said. “There have to be other industries that have skin in the game.”

Read the full story here.

Fuel Fix | 10 March 2015

Derailment Set To Fuel Push for Crude Volatility Mandates

The fiery derailment of an oil train in Illinois on 5 March is likely to bolster a campaign for energy companies to strip combustible gases out of the crude they ship by rail.

Emergency workers were still working on 6 March to contain the blaze at the latest accident near Galena, Ill.— the third derailment of oil cars in as many weeks. BNSF Railway said 21 of the 105 cars on the train (all but two carrying oil) left the tracks.

Like a 16 February derailment in West Virginia, this accident involved newer-model tank cars designed to be more resilient in crashes.

It also was carrying the same kind of crude: oil extracted from the Bakken formation in North Dakota, that is believed to contain a relatively high amount of volatile gases. Federal regulators in 2014 called Bakken oil “more volatile than most other types of crude.”

North Dakota regulations, adopted in December and set to go into effect next month, would require oil producers to stabilize their crude, heating it to remove some of that excess gas and lower its vapor pressure to 13.7 psi.

But there is no national standard—and some lawmakers have questioned whether North Dakota’s 13.7 psi threshold is too high. It exceeds the top vapor pressure of gasoline (13.5 psi) as well as that of the crude involved in the lethal Lac-Megantic explosion in Quebec 2 years ago.

“Given the oil industry’s influence in North Dakota, their standard may not be good enough,” Sen. Chuck Schumer, D-N.Y., told reporters this week.

Schumer has called on the Energy and Transportation departments to collaborate on “new regulations that would require the stabilization of crude oil prior to shipment.”

Dentons via Mondaq | 25 February 2015

Hydraulic Fracturing in the UK: The Pursuit of Safety

Further changes to the Infrastructure Bill have now addressed the potential problems for the UK unconventionals industry introduced by a Labour amendment, but the approach of Scottish and possibly Welsh ministers is less encouraging for would-be shale developers.

Infrastructure Bill

At the last substantive debate on the Infrastructure Bill in the Commons, an amendment was inserted providing that “any hydraulic fracturing can not take place” unless 13 conditions are fulfilled. The drafting of this “safeguarding” provision left considerable scope for doubt as to when some of these conditions would be satisfied. Such uncertainty inevitably assists those who want to delay or obstruct hydraulic fracturing operations.

The House of Lords has now replaced the Commons’ amendment with drafted provisions that provide a clear and practicable route to satisfying each of the safeguarding requirements proposed by the Commons. Although the Labour spokesman, Lord Tunnicliffe, raised a number of points of detail that he suggested had been lost in translation from the Commons’ amendment to the Government’s version, it seems possible that there will be no further changes when the Bill returns to the Commons for the next stage of the so-called ping-pong process.