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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 $ 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 – 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 § 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*

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


12 BSEE INCIDENT REPORT (OTHER) OTHER Crane Personnel/Material Handling Gas Release Structural Damage Damaged Disabled Safety System H 2 S Release Incident >$25K M uster for Evacuation Pipeline Miscellaneous Other OTHER (TOTALS)

13 Year No. of INCs with Civil Penalties Pd Total Civil Penalty $ Highest Penalty $ ,814,000270, ,022,500480, ,866,250460, ,073,000435, ,093,000440, ,210,250505, ,106,000697, ,480,000165, ,600140, ,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 DWH (Post DWH)

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

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

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

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

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

23 Down the Road March 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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