In the first of two posts, he discusses how his organisation balances safety concerns with political ones, what technological improvements have been made since the BP oil spill and whether new regulations on blowout preventers (BOPs) will delay the issue of new permits.
Next week, Steve Cunningham, chief executive of Landis+Gyr, the world’s biggest smart meter maker, will be in the hotseat. Email your questions to email@example.com by the end of Sunday, April 17th.
But for now, over to Michael:
Safety vs politics
How do you weigh the need to provide for safety in the Gulf of Mexico with the political reality that an oil price spike and recession coupled with a collapse of GoM production might savage the Democrats’ electoral chances next November?
Steven Kopits, managing director, Douglas-Westwood LLC
When I was asked last summer to take over responsibility for this agency, I received a broad and urgent mandate from President Obama and [interior] Secretary [Ken] Salazar. That mandate was to reform offshore energy development and the agency responsible for overseeing it. The emphasis was then – and is now – on enhancing safety and environmental protection and restoring the public’s confidence that offshore oil and gas drilling and production will be conducted safely.
Production has been unaffected by the new safety and environmental protection measures we have taken
There has been no collapse of Gulf of Mexico production – in fact, production has been unaffected by the new safety and environmental protection measures we have taken. I cannot control or substantially affect larger factors in the economy, including price spikes and my decisions are based on the merits and not on political pressure.
What progress has been made in improving oil spill cleanup and remediation techniques, technology and response capacity?
In response to Deepwater Horizon, we have conducted a searching re-examination of every aspect of our oversight responsibilities, including drilling safety, spill containment, and spill response. We have already made major strides in drilling safety, including putting in place tough new standards for well design, casing and cementing, and well control equipment, including BOPs.
Although drilling and workplace safety – in other words prevention – have been the most urgent tasks we have addressed, containment and spill response are close behind. Because Deepwater Horizon exposed significant weaknesses in industry’s ability to contain a subsea blowout and deal with an oil spill, we have also devoted significant energy and effort to those issues.
Federal regulations require operators to be prepared to address a loss of well control in deepwater, and the Deepwater Horizon event quite dramatically demonstrated the need to have viable subsea containment measures on hand for every deepwater operation. Through a notice sent to lease holders, we instructed offshore operators to specifically describe the equipment and systems they can deploy to shut in a well if necessary.
The industry has formed two subsea containment groups – the Marine Well Containment Company (MWCC) and a program sponsored by Helix Energy Solutions Group – to provide operators with access to source control and flow management systems in the event of a loss of well control in deepwater. It took longer than we anticipated for these industry groups to make these systems available to individual companies. In fact, the testing of key components of each of these groups’ containment systems, including their capping stacks, was not completed until the middle of February.
Deepwater Horizon exposed significant weaknesses in industry’s ability to contain a subsea blowout and deal with an oil spill
This testing was witnessed and reviewed by BOEMRE engineers, and both capping stacks performed according to their specifications. Then – and only then – could operators and the public rely on these subsea containment systems to demonstrate their ability to respond promptly and effectively to a loss of well control in deepwater. That is what has allowed us to approve permits for deepwater drilling in the past few weeks.
We are involved in a government-wide effort to upgrade existing spill response regulations and ensure that industry’s spill response capabilities are updated and upgraded. The unfortunate fact is that there had been very few advances over the last several decades – going all the way back to Exxon Valdez. This is a longer-term project than the efforts to enhance drilling and workplace safety and ensure containment capabilities, but it is one that it in progress and we think will make a difference in greater readiness than we saw last April.
New BOP regulations
Will the new BOP requirements now delay the approval of new permits?
You may be referring to two different sets of requirements. One is the set of requirements that became effective last October when we issued our drilling safety rule. These requirements related specifically to BOPs and required the following:
- Independent third-party verification that the BOP’s blind-shear rams can shear any pipe used in an operation;
- Independent third-party verification that the subsea BOP is designed for and compatible with the specific rig and well design of the operation;
- That the operation have a remotely operated vehicle with intervention capability necessary to close the blind-shear rams and release the riser package;
- Minimum requirements for personnel authorized to operate critical BOP equipment;
- Documentation of BOP inspections and maintenance; and
- Function testing of BOP autoshear and deadman activation systems.
You may also be referring to the fact that we also will be developing new regulations to require additional BOP features, such as blind shear rams and acoustic activation. The findings from our investigation of the failure of the Deepwater Horizon BOP will also be considered in evaluating potential new requirements relating to the design and testing of BOPs.
Although the new BOP requirements already in effect require additional efforts both by offshore operators and by my agency, permitting continues at a steady pace. Permit approval for shallow water permits has been consistent for months, averaging at six per month since October 2010. In the eight weeks since industry was first able to demonstrate viable subsea containment, 10 deepwater wells have been permitted.