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June 8, 2010

Interior issues new offshore drilling safety directive

The Department of the Interior today issued a directive to oil and gas lessees and operators on the Outer Continental Shelf. It implements stronger safety requirements that Secretary of the Interior Ken Salazar recommended in a 30-day safety report to the President, following the Deepwater Horizon disaster.

The Notice to Lessees ("Safety NTL") issued today applies to both deepwater and shallow water operations. However drilling operations in water deeper than 500 feet remain under a six-month moratorium.

"Shallow water drilling operations and production activity in both deep and shallow waters are not under a moratorium and will continue, provided they are in compliance with the new safety requirements," says the Depart of the Interior.

The moratorium has been roundly criticized as devastating to the Gulf coast economy and likely to cause the loss of thousands of jobs. Today the American Petroleum Institute said:

"We fully support the Minerals Management Service's goal of making offshore energy production as safe and environmentally sensitive as possible. We vow to work with the government to reach that goal.

"We have not been able to fully analyze MMS' notice to lessees (NTL), which was released late today, but we are pleased that a framework is beginning to take shape to allow shallow water drilling activity to resume. However, we urge MMS to be mindful that actions taken today could impair the nation's production of much-needed oil and natural gas in the future, threatening jobs, government revenues and America's energy security. We encourage reconsideration of the deepwater drilling moratorium.

"Independent analyses have indicated the six-month moratorium on new drilling in the deep waters of the Gulf could result in a production loss of between 80,000 and 130,000 barrels per day and idle nearly 50,000 workers in the already hard-hit Gulf states.

"Domestic oil and natural gas production will continue to be an integral part of our nation's energy future. Producing that oil and natural gas is our job. Producing it safely and responsibly is, and will continue to be, our most important obligation."

"Oil and gas from the Outer Continental Shelf remains an important component of our energy security as we transition to the clean energy economy, but we must ensure that offshore drilling is conducted safely and in compliance with the law," said Secretary of the Interior Ken Salazar. "The deepwater drilling moratorium that is in place will provide time for the Presidential Commission to complete its work, but production and shallow water drilling may continue under the stronger safety requirements that we are implementing today."

The Safety NTL issued today implements the seven safety requirements that Secretary Salazar's 30 day safety report to the President determined could be implemented immediately. Under the NTL, lessees and operators are required to:

Show certification by the operator's Chief Executive Officer that they are conducting their operations in compliance with all operating regulations and that they have tested their drilling equipment, ensured that personnel are properly trained, and reviewed their procedures to ensure the safety of personnel and protection of the environment;

Provide certification from a Professional Engineer - before beginning any new drilling operations using either a surface or subsea blowout preventer (BOP) stack - of all well casing and cement design requirements, including that there are at least two independent tested barriers for the well, and adhere to new casing installation procedures;

Provide independent third-party verification, before drilling any new well, that the BOP will operate properly with the drilling rig equipment and is compatible with the specific well location, borehole design and drilling plan;

Provide independent third-party verification that shows that the blind-shear rams installed on the surface or subsea BOP stack are capable of shearing the drill pipe in the hole under maximum anticipated surface pressures;

Adhere to new inspection and reporting requirements for BOP and well control system configuration, BOP and well control test results, BOP and loss of well control events, and BOP and loss of well control system downtime;

Receive independent third-party verification, before spudding a new well, of re-certification of BOP equipment used on all floating drilling rigs to ensure that the devices will operate as originally designed, and that any modifications or upgrades conducted after delivery have not compromised the design or operation of the BOP;

Have a secondary control system for subsea BOP stacks with remote operated vehicle (ROV) intervention capabilities, including the ability to close one set of blind-shear rams and one set of pipe rams. The subsea BOP system must have an emergency shut-in system in the event of lost power, as well as a deadman system and an autoshear system;

Conduct ROV Hot Stab Function Testing of the ROV Intervention Panel on subsurface BOP stacks; and

Provide documentation that the BOP has been maintained according to the regulations.

Drilling operations that are not subject to the deepwater drilling moratorium must fulfill their BOP reporting requirements by June 17 and submit the required safety certifications by June 28. Failure to provide required certifications will result in the issuance of an incident of non-compliance and may result in a shut-in order.

In the coming days, the Department of the Interior will be also be issuing expanded requirements for exploration plans and development plans on the Outer Continental Shelf, said Bob Abbey, who is the Director of the Bureau of Land Management and who has been called upon to serve as Director of the Minerals Management Service, following the abrupt departure of Liz Birnbaum from that position. The Department of the Interior and the Council on Environmental Quality are also conducting a review of MMS' procedures under the National Environmental Policy Act.

"We are following an orderly, responsible process for implementing stronger safety and environmental requirements of offshore drilling," said Abbey. "We need to make sure that drilling is done right, that it is done safely, and that oil and gas operators are following the law."

You can download the Safety NTL HERE

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