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Archive for the ‘Regulation’ Category

More on 2021 compliance (US offshore oil and gas operations)

Posted in Alaska, California, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , , , , , , , , , , on January 20, 2022| Leave a Comment »

While the Fieldwood Energy violations drove up the number of Incidents of Non-Compliance (INCs) in the Gulf of Mexico in 2021, most operating companies appear to have had good compliance records. Among companies that were subjected to at least 10 facility inspection and drilled at least one well, BHP Billiton, Eni US, and Murphy (listed alphabetically) had the most impressive compliance records. These three operators were cited for 7 or fewer INCs, none of which required a facility to be shut-in. Other operators that exceeded those activity thresholds and had excellent compliance records were (listed alphabetically) Anadarko, ANKOR Energy, Chevron, EnVen, Shell, and Walter Oil and Gas.

In the Pacific Region, Beta Operating Co., Chevron (now overseeing the former Signal Hill properties), and Exxon had excellent compliance records, although none of these facilities produced for the full year. In Alaska, Hillcorp had an excellent record at the Northstar Unit. (This is a gravel island facility in the State waters of the Beaufort Sea, but some of the wells produce from portions of the reservoir that are in the Federal sector).

Unfortunately, only summary inspection data are posted online. Without knowing the specific violations and circumstances, it’s not possible to fully assess the risk exposure. These oil and gas operations are conducted on public lands and are monitored by Federal employees. Inspection data and reports should be publicly accessible without having to submit Freedom of Information Act requests.

As has previously been discussed, incident updates should also be posted in a timely manner. Reference is made to this important recommendation in the 2016 National Academies report entitled Strengthening the Safety Culture of the Offshore Oil and Gas Industry:

Recommendation 4.2.2: Because accident, incident, and inspection data all are needed to identify and understand safety risks and corrective actions, the committee recommends full transparency such that regulators make all these data readily available to the public in a timely way, taking into consideration applicable confidentiality requirements.

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Gulf of Mexico violations surged in 2021; one company is largely responsible

Posted in accidents, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , on January 20, 2022| Leave a Comment »

Per BSEE’s Incidents of Non-Compliance (INC) data base, the number of violations surged in 2021, both in terms of the total number of INCs and the INCs/inspection ratio (see chart below). Remarkably, a single company – Fieldwood Energy – was responsible for 845 INCs or 44% of the total number issued. Normalizing for the number of inspections, Fieldwood facilities were cited for 1.46 INCs/inspection versus 0.46 INCs/inspection for all other companies. An unprecedented 61 of Fieldwood’s 2021 INCs called for facility shut-ins, many times more than any other operator. Through the first 17 days of 2022, Fieldwood has already been cited for 21 INCs, 5 of which required facilities to be shut-in.

Fieldwood and its affiliates have experienced multiple bankruptcies and the company has once again been reorganized with the blessing of the courts. Chevron’s comprehensive objection to the reorganization plan asserted that Fieldwood has $9 billion in current and anticipated decommissioning obligations. These enormous decommissioning liabilities and their implications for predecessor lessees (former facility owners) and the Federal government were the main issue in these proceedings, and the bankruptcy plan includes settlements with predecessor companies and the government.

Even more significant than the financial matters and INCs are the following:

While BSEE regulations provide for the removal of operating rights for poor safety performance, companies can reorganize and problem managers can reappear elsewhere. As a result, marginally financed and ineffective operating companies are a major challenge for BSEE as evidenced by the INCs, civil penalties, and investigations. (See the related saga of Platforms Hogan and Houchin in the Pacific Region.)

Poor safety performers drag down the entire industry. The costs of mega-disasters like the Santa Barbara and Macondo blowouts have been widely discussed. However, chronic poor performance and the associated incidents also weaken the industry and damage the integrity of the offshore oil and gas program. These performance issues can’t be left entirely to BSEE and the Coast Guard to resolve. The industry needs to do a better job of self-evaluation, calling out poor performers, and exercising judgement in the assignment of offshore properties.

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Supreme Court nixes OSHA vax “work-around”

Posted in energy policy, Health, Offshore Energy - General, Regulation, tagged , , , on January 13, 2022| Leave a Comment »

This should not surprise experienced OSHA regulators given the absence of clear legislative authority.

Offshore regulators in the US have used “work-arounds” in the form of Notices to Lessees, Conditions of Approval, and other types of guidance documents. However, there was a general understanding that requirements imposed by these methods would not survive legal challenges unless they were clearly authorized by legislation or regulations. Most work-arounds aren’t challenged because the regulatory authority is reasonably clear, their issuance is at least minimally acceptable to the regulated industry, or the perceived cost of challenges exceeds the cost of compliance.

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While we await the Supreme Court decision on the US (OSHA) vaccine mandate…

Posted in energy, Health, Norway, Regulation, Uncategorized, tagged , , , on January 13, 2022| Leave a Comment »

A Norwegian union representing offshore oil and gas workers has criticized Aker BP’s process to introduce a Covid-19 vaccine mandate for its offshore employees.

offshore-energy.biz

“We agree that we must protect our employees and our suppliers in the best possible way, but it also requires that we are involved in how it should happen and how our employees and suppliers are taken care of in this process.”

Ingard Haugeberg, Industri Energi

Seems like a reasonable position on the part of the workers. As previously reported, many US oilfield workers are skeptical of the vaccine mandate and have warned that they will quit.

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Important reading for offshore safety leaders

Posted in accidents, California, Gulf of Mexico, Regulation, tagged , , , , , on January 11, 2022| Leave a Comment »

Yesterday, BSEE issued investigation reports for 2 of the fatal 2020 incidents. Both of these incidents involved falls, a chronic and preventable cause of offshore worker casualties. Not enough industry and trade association attention is given to such incidents, which have been trivialized in the past by categorizing them as “slips, trips, and falls.” The reports are linked below:

The reports describe how the incidents occurred and what we can do better to prevent similar events in the future. Despite the advance in safety management programs over the past 30 years, there has been no discernible improvement in preventing these incidents. We need to rethink training programs, planning, and methods. Deadly falls are not inevitable.

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Dept. of Transportation seemingly expands Integrity Management Program requirements to all offshore liquids pipelines

Posted in energy policy, pipelines, Regulation, tagged , , , on December 21, 2021| Leave a Comment »

New PHMSA (DOT) regulation

At the behest of Congress, coastal areas and beaches are now designated as Unusually Sensitive Areas (USAs). Given that any offshore liquids pipeline has the potential to affect coastal waters or beaches, the rule would seem to require that all such pipelines be included in Integrity Management Programs, which are mandatory for pipelines that could affect USAs. (The IMP requirements would almost certainly apply to all DOT regulated offshore pipelines. Their applicability to DOI/producer pipelines is less certain. Of course, very little is clear and consistent in US offshore pipeline regulation.)

As one would expect, the recent Huntington Beach pipeline spill is among the incidents cited in the justification for this regulation. More surprisingly, the Santa Barbara well blowout was also cited. This incident occurred 53 years ago, was the result of a reckless drilling program, and had nothing to do with production operations or pipelines.

As noted in a recent BOE post, the regulatory regime for offshore pipelines is badly in need of overhaul. DOT and DOI, with inconsistent jurisdictional boundaries, regulations, and approaches, have primary responsibility and multiple regulatory entities have roles.

Lastly, PHMSA seems to have inadvertently posted a highlighted copy of the new regulation. Nothing at all scandalous (looks like someone was highlighting potential talking points), but possibly amusing to other regulation nerds. 😃

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Appeals court reinstates vaccine mandate. Supreme Court next. Will the mandate cause oilfield workers to quit?

Posted in energy, Health, Regulation, tagged , , on December 18, 2021| Leave a Comment »

Vaccine mandate revived.

WSJ story on oilfield workers. Highlights:

  • Many oil workers are skeptical of the mandate and have warned they will quit
  • Ann Fox, chief executive of Nine Energy Service estimates that <15% of the company’s field workers are vaccinated.
  • Justin Clark, a field services manager understands why workers resist:

“I don’t like to be forced to do anything. I almost want to just do the opposite when someone tells me, in that manner, you’ve got to do this.”

WSJ

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New York City and other cities ban natural gas in new buildings while 20+ states now bar such bans

Posted in climate, energy policy, natural gas, Regulation, tagged , on December 17, 2021| Leave a Comment »

It’s a great country! 😃

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What did OSHA do when the 5th Circuit stayed implementation of their mandatory vaccine standard?

Posted in Health, Regulation, tagged , on December 10, 2021| Leave a Comment »

They extended the comment period. (Only an old regulator would find this amusing. Love OSHA’s panache 😃)

The ETS on Vaccination and Testing was published in the Federal Register on November 5, 2021. The ETS also acts as a proposal for a permanent standard and OSHA has decided to extend the comment period for that rule by 45 days. Written comments on any aspect of the ETS must now be submitted by January 19, 2022

OSHA

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DOI Report on the Federal Oil and Gas Leasing Program (11/26/2021)

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , on November 29, 2021| Leave a Comment »

Observations and comments on the offshore findings and recommendations in the Dept. of the Interior’s report:

  • From an offshore perspective, this report is more moderate than expected. No major complaints.
  • The report was issued the Friday after Thanksgiving. Was there a desire to minimize attention?
  • The report does not include a recommendation on raising royalty rates. DOI will continue to study such actions (prudent decision).
  • BSEE estimates current liability for “orphaned infrastructure” at only $65 million. They must be using a very narrow definition of orphaned infrastructure.
  • “Financial assurance coverage should be strengthened.” (Few would argue with that statement.)
  • “BSEE and BOEM will carefully consider comments on the 2020 proposed financial assurance rule.” (Deja vu? Expect a long, slow process.)
  • BOEM will establish a “fitness to operate standard.” Comments: (1) This is an old concept that has proven to be difficult to execute. Hold companies accountable, make them demonstrate financial assurance, and don’t pander to bad actors (see the case of Hogan and Houchin) (2) Why is BOEM establishing this standard and not BSEE, the safety bureau? (The division of responsibilities between BOEM and BSEE has created serious overlap, inefficiency, and confusion and needs to be addressed.)
  • “BOEM should consider advancing alternatives to the practice of area-wide leasing.” Tract selection makes sense in frontier areas with little operational history. It would have been perfect for the Mid- or South Atlantic or the EGoM, all of which were cynically removed from future leasing consideration by the previous President just before the 2020 election. The Central and Western Gulf of Mexico is too mature for a return to tract selection; employing that approach after 40 years of area-wide leasing is likely to generate less revenue and production.

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