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GCREAG Regulatory Update March 2014 Jodie Connor J. Connor Consulting, Inc.

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Presentation on theme: "GCREAG Regulatory Update March 2014 Jodie Connor J. Connor Consulting, Inc."— Presentation transcript:

1 GCREAG Regulatory Update March 2014 Jodie Connor J. Connor Consulting, Inc.

2 Key Topics Status of Agency changes Lease Sales Proposed Rules Offshore Safety Institute Update Incident Data Update Civil Penalties Paid

3 Reorganization Sec. of the Interior Sally Jewel BSEE Brian Salerno Permits Inspections Spill Response BOEM Tommy Beaudreau (Open) Leasing NEPA Analysis Resource Evaluation IRU Investigate Allegations of Misconduct ONRR Gregory Gould Revenue Collections Asst. Secretary Policy, Management & Budget Rhea S. Suh (Tommy Beaudreau – nominated) Asst. Secretary Land & Minerals Management Tommy Beaudreau (Janice Schneider - nominated)

4 BOEM CPA/EPA Lease Sale BOEM Final Notice of Sale Central Planning Area Sale 231 Eastern Planning Area Sale 225 9:00 a.m., Wednesday, March 19, 2014 Mercedes-Benz Superdome – New Orleans

5 Oil Spill Limit of Liability BOEM Proposed Regulation – 2/24/14 Comment Period ends – 3/26/14 Add a new subpart to 30 CFR 553 regarding Limits of Liability for Offshore Facilities – Designed to increase the limit of liability for damages applicable to offshore facilities under OPA 90, from $75 million to $133.65 million, to reflect significant increases in the Consumer Price Index since 1990 This increase reflects a 78.2 percent increase in the Consumer Price Index from 1990 through 2013. – Establish a methodology BOEM would use to periodically adjust limits of liability for inflation

6 Oil Spill Limit of Liability Future CPI adjustments to the offshore facility limit of liability in § 553.702 will be published in the Federal Register Not later than every three years from the year the limit of liability was last adjusted for inflation, BOEM will evaluate whether the cumulative percent change in the Annual CPI-U since that year has reached a significance threshold of three percent or greater.

7 Oil Spill Financial Responsibility OSFR is not increased by the proposed rule BOEM may propose various changes to the Oil Spill Financial Responsibility regulations in a separate rulemaking Stats provided in Federal Register * Most companies self insure or use guarantor Companies Required to Provide OSFR Total $70 MM or Less $105 MM$150 MM* 170110555

8 BSEE Proposed Rulemaking Published proposed rulemaking Oil and Gas Production Safety Systems – Subpart H – Published August 22, 2013, comment period was extended and closed December 5, 2013 – Includes: Safety and pollution prevention equipment lifecycle analysis, production safety systems, subsurface safety devices, and safety device testing In preparation, due out mid-2014 Blowout Prevention Systems Arctic (joint with BOEM)

9 BSEE Proposed Rulemaking Upcoming rulemaking – Suspensions of Production and Operations – Natural Gas Fluids Measurement – Oil Spill Mechanical Recovery

10 BSEE/USCG Quarterly Meeting 2/19/14 First 2014 Quarterly Meeting at Headquarters – GOM operations updates from both BSEE and USCG – Developing and capturing offshore facility data and creating a system to share that information – BSEE and USCG inspection requirements for offshore rigs and fixed facilities – Creation of joint training opportunities for personnel

11 BSEE INCIDENT REPORT OCS Incidents/Spills by Category: CY 2007 – 2013 TYPE 2007200820092010201120122013 FATALITIES 511412343 INJURIES 423318285273213253226 LOSS OF WELL CONTROL 7864349 FIRES/EXPLOSIONS 11013913312610313497 COLLISIONS 202229814919 SPILLS ≥ 50 bbls 43311538^ OTHER 268278308155186236272 INCIDENT TOTAL FOR THE YEAR 837809776583525648626

12 BSEE INCIDENT REPORT (OTHER) OTHER2007200820092010201120122013 Crane1271641708194120137 Personnel/Material Handling2526311273731 Gas Release81517121589 Structural Damage613100865 Damaged Disabled Safety System 3146242 H 2 S Release2343016 Incident >$25K103465412 M uster for Evacuation 18375125354152 Pipeline611 6638 Miscellaneous Other63564141210 OTHER (TOTALS)268278308155186236272

13 Year No. of INCs with Civil Penalties Pd Total Civil Penalty $ Highest Penalty $ 2013422,814,000270,000 2012312,022,500480,000 2011301,866,250460,000 2010262,073,000435,000 2009221,093,000440,000 2008312,210,250505,000 2007363,106,000697,500 2006411,480,000165,000 200526796,600140,000 200421885,750190,000 BSEE Oversight 10 Yr Comparison of Civil Penalties Prepared by JCC using data from

14 BSEE Unannounced Exercise 2/19/14 – BSEE Unannounced SMT TTX – Freeport McMoRan Oil & Gas – Actual deployment of skimmers at three separate locations – Simulated dispersant use – Simulated well containment and on-water spill response. – Participants included USCG, EPA, USFWL, NOAA, State of Louisiana, State of Texas

15 Offshore Energy Safety Institute Accepting applications for Director Planning for a series of forums, to be hosted by the Institute in 2014, covering topics: – Risk, research, failure data reporting – Best available and safest technologies – Human factors of risk

16 Forms Update - APD / APM Application for Permit to Drill and Application for Permit to Modify updates will include a certification statement to state that false submissions are subject to criminal penalties Minor APD modifications Comments on each are due by Feb. 3, 2014

17 Deepwater Initial EP Approval Times Time Period EP Avg. Approval Time (Days) Pre DWH52 2010 (Post DWH)234 2011144 2012121 2013118

18 Analysis of Data – from BSEE’s website Data analyzed for period since mandatory reporting for OCS operators was required (2010 thru 2012). Most of the results were a mixed bag. Just a handful of measures showed significant trending (those dealing with drilling). OCS Performance Measures Program 2004-2012

19 “Drilling, Workover, & Allied Services” hours showed significant growth (up 76%). – Drilling Recordables are down 34%. – Drilling DARTs are down (37%). – Combined (Production, Drilling, Construction) Recordables and DARTs were down too, but that is a result of the Drilling numbers driving the overall numbers. OCS Performance Measures Program 2004-2012

20 Likewise, in the same period, BSEE’s oversight of Drilling is up: – Total OCS INCs are up 174% – Total OCS Rigs inspected are up 76% OCS Performance Measures Program 2004-2012

21 Observations BSEE targeting high risk drilling operations BSEE’s INCs are outpacing industry’s growth in hours; they are tightening up on what constitutes an INC OCS Performance Measures Program 2004-2012

22 Conclusions If you conduct drilling or workovers, expect BSEE to show up more frequently. If you conduct drilling or workovers, expect BSEE to “INC” you more often. Contractors can expect to be INC’d too. BSEE needs to show the public they are having a positive impact on safety on the OCS. OCS Performance Measures Program 2004-2012

23 Down the Road March 10-12 Decommissioning & Abandonment - Houston March 19 – Central GOM Lease Sale 231 – N.O. March 19 – Eastern GOM Lease Sale 225 – N.O. (following CGOM sale) April 9-10 – Center for Offshore Safety 2 nd Annual Forum May 5-8 International Oil Spill Conference – Savannah, GA June 4 - SEMS II Implementation Date

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