EPA Proposes First Federal Air Standards for 'Fracked' Wells

- EPA Proposes First Federal Air Standards for 'Fracked' Wells

Thursday, July 28, 2011
Dow Jones Newswires
WASHINGTON
by Tennille Tracy

The Obama administration has proposed the first national air standards for wells that are drilled using a controversial practice known as hydraulic fracturing.

The Environmental Protection Agency announced Thursday it was proposing new rules to reduce the amount of air toxins and smog-forming gases that are released into the air when oil and natural gas is produced.

The rules are expected to reduce cancer risks and help reduce ozone levels in areas where oil and natural-gas production occurs, the EPA said. The standards should also lead to lower emissions of methane, a greenhouse gas that is more than 20 times as potent as carbon dioxide.

A lot of the emissions the EPA has targeted escape into the air when natural-gas wells, drilled using hydraulic fracturing, or fracking, are being prepared for production.

The EPA is proposing to reduce the emissions by requiring the use of special equipment to separate oil and gas from a mix of fracking fluids and water that flows to the surface during one stage of well completion.

Certain states, such as Wyoming and Colorado, already require the use of this equipment.

The EPA says these proposed standards will eventually save the oil and gas industry about $30 million a year. That's because the standards will force companies to collect the hydrocarbons, which they can then sell.

Hydraulic fracturing already receives a lot of scrutiny from lawmakers, regulators and environmental groups because of its possible impacts on drinking water.

The proposed rules announced Thursday would apply to more than 25,000 wells a year, as well as to storage tanks and other pieces of equipment used by the oil and gas industry.

The EPA estimates the proposed rules will reduce smog-forming volatile organic compounds emitted by the oil and gas industry by 25%. They should also reduce methane emissions by 26% and air toxins by nearly 30%.

The EPA undertook this new rule-making after a pair of environmental groups successfully sued the agency to update clean-air standards for the oil and natural-gas industry. The agency is under a court-ordered deadline to finalize the rule by February.

"We are seeing oil and gas development take a tremendous toll on clean air," said Jeremy Nichols, director of the climate and energy program for Wild Earth Guardians. "Our health and environmental safeguards are woefully outdated."

The American Petroleum Institute, a group representing the oil and gas industry, asked the EPA to postpone the finalization of the rules by six months.

"API will review these proposed rules to ensure that they don't inadvertently create unsafe operating conditions, are cost effective and truly provide additional public health benefits," said Howard Feldman, API's director of scientific and regulatory policy.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Oil Cos Could Adopt BP's New Safety Standards - US Official

- Oil Cos Could Adopt BP's New Safety Standards - US Official

Friday, July 15, 2011
Dow Jones Newswires
WASHINGTON
by Tennille Tracy

The nation's top offshore drilling regulator welcomed a plan by BP Friday to voluntarily beef up safety standards and said ExxonMobil, Shell and other major oil companies are equipped to follow suit.

Speaking at a congressional hearing, the director of the Bureau of Ocean Energy Management, Regulation and Enforcement said BP knows it has to prove it can operate safely following last year's Deepwater Horizon oil spill in the Gulf of Mexico.

"BP has clearly been through a lot," said bureau Director Michael Bromwich. The company is going to have to "win back not only regulators' confidence, but the public's confidence as well."

BP disclosed Friday it was adopting drilling standards that go beyond existing federal requirements. Specifically, BP said it will require drillers to use more robust equipment, mandating subsea blowout preventers to be equipped with at least two blind shear rams.

BP also said it will use third parties to verify maintenance procedures and oversee testing, and enhance certain measures for responding to an oil spill.

Bromwich said he suspected that Exxon Mobil, Shell and other major oil operators could adopt similar measures, adding that the standards were technologically and economically viable for large companies.

Bromwich also said the measures that BP was undertaking could be folded into a set of new drilling regulations on which his agency is working. He said those new rules would be "broad" and "far-reaching," but he acknowledged the oil and natural-gas industry is wary of the agency adopting new requirements too often and too quickly.

Copyright (c) 2011 Dow Jones & Company, Inc.

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BP Sets New Voluntary Standards in GOM Drilling

- BP Sets New Voluntary Standards in GOM Drilling

Friday, July 15, 2011
BP plc

BP Exploration & Production (BPXP) will implement a new set of deepwater oil and gas drilling standards for its operations in the US Gulf of Mexico, demonstrating the company's commitment to safe and reliable operations.

The announcement was made in a letter to the director of the U.S. Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), Michael Bromwich.

The voluntary performance standards go beyond existing regulatory obligations and reflect the company's determination to apply lessons it learned from the Deepwater Horizon accident and subsequent oil spill.

"BP's commitment in the wake of the Deepwater Horizon incident is not only to restore the economic and environmental conditions among the affected areas of the Gulf Coast, but also to apply what we have learned to improve the way we operate," said BP group chief executive Bob Dudley. "We believe the commitments we have outlined today will promote greater levels of safety and preparedness in deepwater drilling."

The foundations for these new voluntary standards for BP's Gulf of Mexico deepwater drilling operations have been developed since the Deepwater Horizon incident and through the lessons learned. BP is now making these standards public and will begin to implement them into its operations in the Gulf of Mexico.

The new voluntary standards are:

• BPXP will use, and will require its contractors involved in drilling operations to use, subsea blowout preventers (BOPs) equipped with no fewer than two blind shear rams and a casing shear ram on all drilling rigs under contract to BPXP for deepwater service operating in dynamic position mode. With respect to moored drilling rigs under contract to BPXP for deepwater drilling service using subsea BOPs, the subsea BOP will be equipped with two shear rams, which will include at least one blind shear ram and either an additional blind shear ram or a casing shear ram.
• Each time a subsea BOP from a moored or dynamically-positioned drilling rig is brought to the surface and testing and maintenance on the BOP are conducted, BPXP will require that a third party verify that the testing and maintenance of the BOP were performed in accordance with manufacturer recommendations and industry recommended practice (API RP 53).
• BPXP will require that laboratory testing of cement slurries for primary cementing of casing and exposed hydrocarbon-bearing zones relating to drilling operations of deepwater wells be conducted or witnessed by a BPXP engineer competent to evaluate such laboratory testing, or a competent third party independent of the cement provider. BPXP will provide laboratory results to the applicable BOEMRE field office within a reasonable period of time.
• BPXP's Oil Spill Response Plan (OSRP) will include information about enhanced measures for responding to a spill in open water, near-shore response and shoreline spill response based on lessons learned from the Deepwater Horizon oil spill.

"BP is adopting these voluntary actions as part of its commitment to safe and reliable operations, and to help rebuild trust in the company following last year's accident and oil spill," said James Dupree, BP regional president, Gulf of Mexico. "BP is the largest lease holder in the deepwater Gulf of Mexico and we intend to be a significant business presence here for a long time to come. We look forward to implementing these best practices and sharing what we've learned."

In addition to these four voluntary performance standards, BP has also implemented several actions that demonstrate commitment to excellence within its operations. These include:

• Establishing a real-time drilling operations center in Houston.
• Assessing and increasing well control competencies.
• Collaboration with groups like Clean Gulf Associates and Marine Spill Response Corporation to augment and enhance industry response technology and capabilities.
• Support of the Marine Well Containment Company with containment knowledge, equipment and staff.
• Sharing the company's experience in simultaneous operations, which incorporated the unprecedented use of remotely operated vehicles and close quarters management of marine response vessels and activities.
• Collaboration with BOEMRE, the Ocean Energy Safety Advisory Committee, the Center for Offshore Safety and others in a joint technology program focusing on BOP systems.

BP is focused on implementing these new voluntary standards in the Gulf of Mexico and expects to share information on these standards with regulators and operators in other countries as part of its ongoing sharing of lessons learned.

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ABS Unveils New Standards for MODU Operators

ABS Unveils New Standards for MODU Operators

American Bureau of Shipping

The increased technical sophistication of drill ships and other mobile drilling units, coupled with the greater regulatory oversight of offshore drilling, has spurred ABS to develop a new suite of classification standards and notations intended to provide MODU operators with increased confidence that their operations are being conducted to the highest demonstrable standards.

"ABS is the leading provider of classification services to the offshore sector," said ABS President and CEO Christopher J. Wiernicki. "We have been talking with the industry, regulators and others with related interests. This has helped us to clearly define existing standards that can be improved, and to also identify those new areas that would benefit from having an independent, third party set of standards that properly address the new technologies that are being incorporated into the latest designs of drillships, semis and jackups."

That research has indicated a broad range of both design and operational aspects that warrant additional guidance, according to Ken Richardson, ABS Vice President, Energy Development. "Obviously enhanced standards for the classification of drilling systems are key components," he noted, "but operators are also looking for a more holistic approach to the maintenance of their assets and we have developed new notations that can be used by an operator to demonstrate the effectiveness of their maintenance programs."

Richardson also emphasized the need, expressed by many of the ABS MODU operators for an effective independent standard that addresses the integration of the ubiquitous, and increasingly complex, software programs that are essential for the operation of the unit as a whole. "The offshore sector has always been a leader in developing and adopting new technologies and novel concepts," Richardson added. "There is a lot of innovative thinking that goes into the development of the individual components that are brought together in the modern drillship. The key to the safe and seamless operation of the unit is the ability of all these components to function together in a manner that can be controlled by the operational team on board. That is the basis of a lot of our research and the development of our new software notations."

New notations that have been developed by ABS for the drilling sector include Integrated Software Quality Management (ISQM), Systems Verification (SV), DRILLSHIP, Asset Integrity Management (AIM) and Rapid Response Damage Assessment (RRDA). Existing notations that have been enhanced include Classification of Drilling Systems (CDS), Hull Inspection and Maintenance Program (HIMP), Reliability Centered Maintenance (RCM), and Environmental Protection (ENVIRO-OS).

ISQM is a risk-based software development and maintenance process built on internationally recognized standards. The ISQM process validates the software installation on the unit and then monitors for consistency when there are software updates or a change in hardware. ISQM provides a process to manage software over the offshore unit's life.

"There is growing recognition within industry that organizations will need to institute a change management process for software," says Bret Montaruli, ABS Vice President, Offshore Technology. "Industry has traditionally focused on structures and equipment. However, software has become such an important component in the operational phase particularly since control systems for offshore installations and units become more complex. Successful implementation relies heavily on the integration of software developed by multiple vendors." The ABS ISQM Guide places emphasis on the verification and validation of the multiple software packages. The benefit to owners and operators is an increased level of confidence in software reliability with the goal of decreasing downtime and reducing the risk of software related incidents."

The SV notation allows operators to benefit from verifying that the software has been developed in a recognized process that meets the operator's needs and performs as expected. Upgrades and new releases that are routinely made by vendors and which may introduce errors into the system and increase downtime or cause other operating problems are also subject to verification prior to installation.

Award of the DRILLSHIP notation indicates that the vessel has been designed and constructed to the standards contained in the Guide for Drillships. As the principal class society for drillships, ABS is taking the lessons learned and is clarifying the criteria for these specialized vessels.

Asset Integrity Management is a concept that is well established within the offshore sector and has received renewed attention. "Operators are looking for third party confirmation that the day to day maintenance and management of their units conforms to a clear, industry accepted standard and the new ABS AIM notation provides them with such verification," says Richardson. "It builds on the existing Hull Inspection and maintenance Program (HIMP) requirements that several operators have adopted, taking a more holistic approach to the overall management of the MODU." A key element of this is the addition of a state-of-the-art loads and configuration approach that provides the operator with a tool to better understand the operational loads to which the unit is subject.

While HIMP is directed at the inspection and maintenance of the unit's structure, the companion Reliability Centered Maintenance (RCM) notation addresses the manner in which the machinery and equipment on board the unit is maintained, including replacement and repair strategies that are pre-emptive in their approach.

The ABS RRDA program and notation is a well established offering within the shipping industry and has now been enhanced and made available to offshore operators. "The technical assessment of an offshore structure can be much more complex than for a ship such as a tanker," explains ABS Chief Technology Officer Todd Grove. "Many offshore units are unique in their architecture so that the necessary modeling of the unit is similarly complex and the programs must be specifically tailored to the unit. Incidents affecting offshore units over the recent past have highlighted the importance of having the ability to quickly evaluate the unit in the damaged condition so that pro-active response strategies can be implemented that may be able to stabilize the situation preventing or minimizing the possibility of loss of life or ensuing pollution."

ABS has offered the voluntary CDS notation for many years. ABS has revisited the standards with industry and other interested parties to identify those areas that should be strengthened or clarified. The newly issued Guide for the Classification of Drilling Systems includes these enhanced standards and takes a more holistic approach to the entire drilling system from the drill floor to the wellhead including the blow out preventer.

The ENVIRO-OS or ENVIRO-OS+ denotes adherence to enhanced standards for environmental protection. The notation takes into account procedures and requirements for ballast water and sewage management, anti-fouling applications, airborne pollutant discharges, fuel oil and the use of exhaust gas cleaning systems, refrigerants and the Green Passport for ship recycling.

Founded in 1862, ABS is a leading international classification society devoted to promoting the security of life, property and the marine environment through the development and verification of standards for the design, construction and operational maintenance of marine-related facilities.

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Nations Going Global on Drilling Standards

Nations Going Global on Drilling Standards

Friday, April 15, 2011
Houston Chronicle
by Jennifer A. Dlouhy

Drilling regulators from a dozen countries on Thursday agreed to form a working group that could eventually develop global offshore drilling standards.

Interior Secretary Ken Salazar suggested the idea at the end of a daylong summit on offshore drilling safety that focused on learning lessons from last year's Deepwater Horizon disaster, including a need for better ways to rein in runaway underwater wells.

"The working group can help us figure what the best organization is" and "can help us develop global protocols for oil and gas development," Salazar said.

The current set-up -- a patchwork of standards that vary from ocean to ocean and country to country -- doesn't recognize the reality that the same companies drilling in the Gulf of Mexico are also drilling off Brazil, Angola and Norway, Salazar said.

"I feel confident in what we are doing with the Gulf of Mexico, but the oil and gas industry is a global industry," Salazar said. And, he added, "it's one ocean in this Earth."

"When we get to the second anniversary of the Macondo spill, hopefully we will be able to be working on global standards that go beyond just our own backyard," Salazar said.

The representatives at Thursday's summit -- including those from the United Kingdom, the European Union, Russian Federation and Australia -- tentatively agreed to meet again in Oslo, Norway, in 2012, on the Gulf spill's second anniversary.

Salazar tasked his offshore drilling chief, Michael Brom-wich, with developing the framework for the international working group within 90 days.

One notable absence in the planned collaboration -- at least initially -- and at Thursday's international summit is Cuba, which expects five wells to be drilled off its coast in the next two years. Salazar said the U.S. was concerned about the potential drilling 60 miles off Florida, within the loop current that travels up the East Coast.

The drilling regulators at Thursday's summit stressed that the blowout at BP's failed Macondo well is shaking up government oversight of coastal oil and gas exploration far beyond the Gulf of Mexico.

Geoffrey Podger, chief of the United Kingdom's health and safety executive, called the blowout of BP's Macondo well a seminal event, like the 1988 explosion on the Piper Alpha platform in the North Sea that killed 167 people.

"The accident was a watershed for the oil industry," said Mario Gabriel Budebo, Mexico's undersecretary of hydrocarbons, who has been meeting with U.S. officials to try to harmonize standards for drilling in the Gulf.

One of the biggest post-Macondo lessons, Budebo said, was "the need for drilling and development plans to include design of emergency procedures" for countering blowouts.

Jan de Jong, the Netherlands' inspector general of mines, stressed that "it is absolutely necessary to raise standards in industry."

"This accident is not unique for deep-sea drilling in general, nor BP, nor for the Gulf of Mexico," Jong said. "It could have happened anywhere."

Norway's top petroleum and energy minister, Per Rune Henriksen, said he was dismayed by the inability to cap blowouts as evidenced by the Gulf spill that took 85 days to contain and the Montara blowout near Australia that leaked for 74 days before it was finally killed in November 2009.

Those crude-containment failures are "highly unsatisfactory," Henriksen said. "This is an area where the industry must provide solutions."