Regulations | 6 April 2016

Colorado Governor, Industry Urge Cautious Hand in Regulating Oil and Gas

Collaboration and negotiation allowed Colorado to draw up oil and gas regulations that protect the public and the environment while encouraging a lucrative state industry, the governor and the president of an industry group say.

Gov. John Hickenlooper and American Petroleum Institute President Jack Gerard talked on 31 March about regulation, the future of the industry, and the possibility of limits on hydraulic fracturing.

Hickenlooper—a Democrat and a former petroleum geologist—and Gerard appeared together at an industry forum in Denver. Gerard discussed the industry later in an interview.

EHS Journal | 31 March 2016

Column: The Problems With Many Corporate Audits

Many companies have policies in place that specify the frequency of their internal environmental audits. Once a year or every other year, a company does an internal audit or hires external auditors to do it.

When a company has a major chemical accident, investigative bodies such as the US Chemical Safety Board looks into the causes of the accident. More often than not, these investigative bodies discover that internal audits had identified the root cause of these accidents.

And, yet, the facility still blew up and killed hundreds of workers. Why is that? Why didn’t senior management pay heed to the warning signs highlighted in the audit reports?

There are basically several underlying reasons.

The first reason is that many corporate auditors look for “consistent” audits. They want to see consistency year after year. Yet, good audits are never consistent. At a recent conference of auditors, many environmental managers said they wanted the same old external auditors to do their audits every year in order to get “consistent” results. They didn’t want to spend time explaining their manufacturing process to a new external auditor. They wanted someone who is very familiar with their operation.

Fuelfix | 17 March 2016

Obama Tightens Air Standards on Offshore Drilling

The Obama administration continued its crack down on air pollution from oil and gas operations on 17 March, this time targeting offshore drilling.

The Bureau of Ocean Energy Management (BOEM) announced it was developing new air standards for the first time in more than three decades. Looking at operations in the Gulf of Mexico and Arctic Ocean, the proposed rules are designed to rein in emissions on everything from offshore platforms to the ice breakers that clear the way off the coast of Alaska.

With proposals already pending on natural gas leaks and the practice of flaring gas at oil wells, the administration is seeking to clean up an industry that had largely avoided the tough air pollution standards placed on power plants and other large industrial operations.

“This proposal incorporates key aspects of today’s practices into our regulations, while also bringing our regulations up to speed with the best available science,” BOEM Director Abigail Hopper said in a statement.

Fuelfix | 3 March 2016

Top US Official Says Adjustments Made on Offshore Drilling Rule Following “Alarmist” Industry Response

A new federal rule designed to reduce the chance of another offshore drilling accident off the Gulf coast like Deepwater Horizon has undergone some “adjustments” in response to intense industry criticism, a top US energy official told a House subcommittee on 2 March.

In this April 2010 file photo, oil can be seen in the Gulf of Mexico, more than 50 miles southeast of Venice on Louisiana’s tip, as a large plume of smoke rises from fires on BP’s Deepwater Horizon offshore oil rig. (AP Photo/Gerald Herbert, File)

Brian Salerno, director of the Bureau of Safety and Environmental Enforcement, said changes to the new offshore drilling standards had merely codified what was standard practice at his agency—that inspectors did not rigidly follow the letter of the law but worked with operators on offshore drilling rigs to find safe and reasonable solutions.

“There’s been a lot of alarmist language associated with this,” Salerno said, following a hearing before the House Subcommittee on Energy and Mineral Resources. “To believe it you would have to ignore the way this agency has historically operated.”

Salerno declined to go into specific changes, citing the fact that what is known as the well control rule is still under review at the Office of Management and Budget.

Osler, Hoskin & Harcourt via Mondaq | 25 February 2016

New Canadian Offshore Liability Regime Becomes Effective 26 February

The Energy Safety and Security Act (ESSA), passed in 2014 by the Harper government, introduced changes to the liability regimes governing Canada’s offshore oil and gas industries. These changes are slated to be effective on 26 February and include increasing the amount of security required to be provided to CAD 100 million, raising the cap on absolute, or no-fault, liability from CAD 30 million (CAD 40 million in the Arctic) to CAD 1 billion and empowering offshore regulators to issue administrative monetary penalties.

In their current form, the guidelines and regulations indicate that participants in Canada’s offshore oil and gas industries will be required to post CAD 100 million security in respect of each operations authorization for the drilling for or development or production of petroleum. While not perhaps initially appreciated, this change in regulatory practice may be one of the most significant changes implemented by ESSA. However, ESSA provides relief from this financial responsibility requirement where participants demonstrate their participation in a pooled fund that is maintained at a minimum of CAD 250 million.

The Washington Times | 15 February 2016

Alaska Adopts New Rules for Dispersant Use in Oil Spills

Alaska oil spill responders have adopted new rules for the rapid use of chemical dispersant but say dispersant will continue to be considered only rarely when mechanical cleanup is not practical.

Chemical dispersant has been used on an oil spill just once in Alaska in the last 40 years—in tests during the 11-million-gallon crude oil spill that followed the 1989 grounding of the Exxon Valdez oil tanker. The preferred method of cleanup is mechanical, usually using boom to corral oil and skimmers to lift it from the water.

The plan sets up one “preauthorization zone” that would allow a federal on-scene coordinator to authorize mobilization of dispersant and the elaborate gear needed to spread it. A final decision on actually using dispersant would be made after consultation with wildlife experts, tests of the dispersant and other steps.

Offshore Energy Today | 11 February 2016

US To Enlarge Funds for Oil and Gas Regulatory Bodies

US President Barack Obama’s fiscal year 2017 budget, announced on 9 February, includes a request of USD 175.1 million to fund the Bureau of Ocean Energy Management’s (BOEM) mission to manage offshore energy and mineral resources and a request of USD 204.87 million for the Bureau of Safety and Environmental Enforcement (BSEE).

According to BOEM, the request would provide BOEM with resources needed to effectively manage oil and gas development, renewable energy, and mineral resources on the US outer continental shelf (OCS) in a way that promotes efficient and environmentally responsible development.

“The president’s budget request for BOEM will support ongoing efforts and important initiatives that are vital to our mission and critical to advancing Administration priorities,” said BOEM Director Abigail Ross Hopper.

“This request reflects the resources and personnel needed to develop our capacity and to carry out our mission carefully, responsibly, and efficiently.”

Wyoming Tribune Eagle | 11 February 2016

Wyoming Regulators Approve Tougher Well Flaring Rules

Wyoming oil and gas regulators approved new rules on 9 February to limit how much and for how long natural gas petroleum developers may vent or burn off gas from newly drilled wells.

Companies would need approval to vent or flare longer than 6 months under the rules approved by the Wyoming Oil and Gas Conservation Commission in Casper.

Lower volumes of gas could be vented, or released without burning. Higher volumes would need to be burned off for safety and to limit air pollution.

Gas vented or flared from a well couldn’t exceed 45 million cubic feet, or 600 times more gas than an average US household uses in a year, without commission approval. | 4 February 2016

Pennsylvania Board Approves New Rules for Gas and Oil Drillers

The Pennsylvania Environmental Quality Board (EQB), which promulgates the state’s environmental regulations, on 3 February approved controversial new rules intended to reduce the surface effects of oil and gas drilling.

The EQB approved the new rules by a 15–4 vote. The rules will likely face a legal challenge from the industry.

The last revision of the rules came in 2001, 3 years before the first Marcellus shale well was drilled, launching a boom that has turned Pennsylvania into the nation’s second-largest gas-producing state.

“Work on this package began almost 5 years ago,” said John Quigley, secretary of the Department of Environmental Protection. “It’s time to finish the job and put these reasonable, balanced, and incremental protections for public health and the environment into effect.”


The Hill | 27 January 2016

Obama Targets Methane Emissions on Federal Land

The Obama administration is targeting oil and natural gas drillers on federal land in its latest regulatory push to cut down on methane emissions.

In a set of standards proposed 22 January by the Interior Department, regulators want to restrict the rates at which drillers deliberately or accidentally release natural gas.

The standards are also intended to restrict the deliberate burning of gas that is not captured.

It’s the latest climate-change-related push from the Obama administration and comes after several organizations pronounced 2015 as the warmest year on record.The administration has vowed to crack down not only on carbon dioxide but also on methane. Methane is the main component of natural gas, and, though it doesn’t stay in the atmosphere very long, it has more than 25 times the global warming power of carbon.

Read the full story here.

Borden Ladner Gervais via Mondaq | 15 January 2016

Year in Review: Legislative, Regulatory, and Policy Changes of Import to the Canadian Oil and Gas Industry

In 2015, politics drove policy. With new federal and Alberta governments, last year ushered in unprecedented changes for the Canadian oil and gas industry. There is more to come. Greenhouse gas regulation and a revised royalty regime are poised to be two of the sector’s leading business challenges in 2016—along with stubbornly low price—as energy companies determine the impact to their bottom lines.

There are significant transitions happening to Canada’s energy economy. Pipelines remain elusive. Mergers-and-acquisitions activity is nascent and waiting for further price and policy clarity. International oil supply, buoyed by an end-of-year US policy shift to permit crude exports, continues to be robust. Green energy and renewable sources will play a larger role in the country’s energy mix. As the year progresses, companies with strong balance sheets and a low cost of capital are likely to be some of the biggest winners in 2016.

Canada’s oil and gas sector looks ahead to not only the implementation of provincial carbon initiatives, but also the federal government pursuing its own climate change agenda. This involves new international obligations arising from the 2015 United Nations Climate Change Conference as well as a commitment to set national emissions targets—and coordinate with existing provincial ones. 2016, therefore, will be a watershed year for energy companies navigating the shoals of carbon policy and economic transition. Changes are expected to be rapid and multidimensional, effects complicated.