Offshore oil sector anxious as rules added
Top regulator says he understands industry’s worries
Brian Salerno, the federal government’s top cop for offshore drilling, did not go unnoticed as he navigated his way past the diamond-coated drill bits and towering cranes at the Offshore Technology Conference last week.
Just weeks after his agency, the Bureau of Safety and Environmental Enforcement, announced a suite of new rules to reduce the risk of another oil spill like BP’s Deepwater Horizon, dealers eagerly explained the latest technology to Salerno.
“I’m sure you’re getting all kinds of feedback, but we’re listening and want to be at the forefront of the discussion,” said Chuck Chauviere, president of drilling systems at GE Oil and Gas.
Between the fallout from Deepwater Horizon and rising concerns about climate change, oil and gas companies operating in the Gulf of Mexico face a flood of new federal rules in the years ahead. Even as equipment and service providers rush to develop advanced equipment to meet new rules and get it into the field, the prospect of greater government scrutiny is causing anxiety
in the struggling industry.
Martijn Dekker, a vice president with the global energy company Royal Dutch Shell, said new U.S. regulation was unlikely to shut down deep-water projects, but it presented another financial challenge to an industry grappling with the high costs of drilling in deeper waters when oil and natural gas prices are low.
“When you have a big headwind, the last thing you need is an anchor around your neck,” he said.
In the years ahead, the Bureau of Safety and Environmental Enforcement will roll out new rules on everything from data collection to drilling pressure margins to how blowout preventers cut pipes.
At the same time, another agency, the Bureau of Ocean Energy Management, is working on limiting methane released from offshore operations, part of a larger campaign by the Obama administration to cut greenhouse gas emissions by 45 percent by 2025.
For the equipment manufacturers and service companies that were at NRG Park last week, tighter restrictions could mean the development of new technologies and greater demand for their products.
At a booth run by Cameron, the equipment company recently purchased by international services giant Schlumberger, sales reps played a video of a new blowout preventer blade that can cut pipe even when it is off-center — one of the problems that contributed to massive spill from the Deepwater Horizon accident.
They also promoted a real-time monitoring service that would tell drilling operators when equipment was in need of maintenance or replacement.
“Real-time monitoring has been voluntary up until now, but it’s moving towards regulation,” said Matthew Givens, marine systems product manager at Cameron.
Since announcing draft safety rules last year, Salerno, a former rear admiral in the U.S. Coast Guard, has watched his agency endure a steady stream of criticisms from industry lobbyists and politicians along the Gulf. As he toured the floor of OTC last week, looking over the latest in drilling casings and robots designed to work in the oceans’ depths, he noted that much of the new regulations could be met by existing technology.
Salerno said he understands the pressure oil and gas companies are under and the restraints they face.
“I would argue those major incidents are harmful to the industry overall, and we work to ensure the rules are achievable and realistic,” he said.
The first offshore oil platform in the Gulf was built a mile off Louisiana in 1938, according to the American Oil and Gas Historical Society. It was made of wood and stood in 14 feet of water. Today, oil and gas companies employ floating platforms that cost billions of dollars and can pull oil and natural gas from more than 10,000 feet below the surface of the ocean.
But with these advances have come multiplying regulations, said Joe Savoy, director of asset management at Wild Well Control, which responds to drilling accidents and advises companies on safety.
“In the dim dark past when I first started 40 years ago, the oil companies would know the rules,” he said. “But there were a lot less rules. So it’s almost impossible for one person to keep up everything that’s going on.”
Oil and gas lobbyists have pressed the government to simplify its rules and cut down on the number of agencies with which companies must consult on a project.
But that appears unlikely for now. Speaking on an OTC panel Thursday, Salerno said there was more to be done — and more regulation needed — to get the offshore drilling industry to the level of safety it needs.
“A lot of good work has been done, but, and I know it’s a cliché, it’s a journey, not a destination,” he said.
“A lot of good work has been done, but, and I know it’s a cliché, it’s a journey, not a destination.” Brian Salerno, Bureau of Safety and Environmental Enforcement