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US Interior Department proposes reducing offshore-drilling safety regs

Houston (Platts)--29 Dec 2017 610 pm EST/2310 GMT


The Trump administration's Interior Department proposed Friday regulations that would scale back some of the safety regulations for offshore drilling put into place by the previous administration in the wake of the 2010 Deepwater Horizon disaster.

The Bureau of Safety and Environmental Enforcement, which regulates offshore drilling, published in the Federal Register a revision of the rule addressing production safety systems, subsurface safety devices and safety device testing.

Among other things, the proposed new rule would rescind the provision that would require operators to submit safety devices such as blowout protectors for certification to third parties before installation.

The proposed change is part of the Interior Department's efforts to roll back Obama-era safety and environmental regulations on the oil and gas industry as part of the Trump administration goal of achieving "energy dominance without sacrificing safety," BSEE Director Scott Angelle said in a statement.

Earlier in the week Interior's Bureau of Land Management had rescinded a rule promulgated under President Barack Obama to regulate hydraulic fracturing on onshore federal and Indian lands.

In another federal action favorable to oil and gas development unveiled between Christmas and New Year's, BLM released new guidelines affecting management of sage grouse habitat Friday.

OFFSHORE DRILLING REGULATIONS CONTROVERSIAL

Under Obama, the Interior Department had instituted the offshore Production Safety Systems Rule as part of an overhaul of the offshore safety regulations the department launched in the wake of the offshore explosion and sinking of the Deepwater Horizon oil production platform in April 2010.

Eleven workers died and millions of gallons of oil were spilled in the Gulf of Mexico as a result of that disaster.

In its filing in the Federal Register, the Interior Department stated that since the original rule took effect in November 2016, "BSEE has become aware that certain provisions in that rulemaking created potentially unduly burdensome requirement to operators ... without significantly increasing safety of the workers or protection of the environment."

According to BSEE's initial regulatory impact analysis, the revision of the rule would save the offshore industry about $228 million in compliance costs over 10 years.

Under the proposed revision, rather than submitting safety devices to third-party inspectors, offshore operations instead would be required to ensure that the devices complied with industry standards established by the American Petroleum Institute.

Energy industry groups reacted favorably to the proposed revision.

In an interview, National Ocean Industries Association President Randall Luthi said by ensuring that safety equipment has to meet API standards, the rule revision will save the industry the cost of hiring third-party inspectors, while not sacrificing safety.

He said that in revising the safety equipment rule, BSEE simply was taking "a second crack" at tweaking the regulations proposed under the Obama administration.

The revision to the safety device regulations is expected to the first in a series of revisions that BSEE is expected to propose to Obama-era offshore regulations.

The agency is expected to unveil a proposed revision to regulations regarding blowout preventers sometime in the first quarter of 2028, Luthi said. The blowout preventer rule is currently under review by the White House Office of Management and Budget.

A faulty blowout preventer was identified as the proximate cause of the Deepwater Horizon explosion.

BSEE is also working to revise safety and environmental rules regarding offshore exploration in the Arctic region, Luthi said.

Environmental groups reacted to the proposed offshore safety regulations with alarm.

"We do think the proposed changes will have a negative impact on the environment and worker safety," Kristen Monsell of the Center for Biological Diversity, said in an interview Friday.

She said the rule revision would return the offshore production industry to the era of "lax regulatory oversight" that preceded the Deepwater Horizon disaster.

By removing the provision that safety equipment should be inspected by third parties, the rule revision would reverse a recommendation made by a commission Obama had established "to prevent future spills to try to make offshore drilling safe," Monsell said.

"It's the fox guarding the henhouse," she said.

The offshore industry has long contended that regulations promulgated in the wake of the Deepwater Horizon disaster have had the impact of discouraging offshore oil and gas production. Production data from BSEE shows that production has declined in the wake of new regulations, but the connection is still debated. Other factors may be at play, such as the rise of more economical onshore shale plays.

BSEE said it would accept comments on the proposed changes to the safety devices rule until January 29.

--Jim Magill, jim.magill@spglobal.com

--Edited by Derek Sands, derek.sands@spglobal.com




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