AmericasOffshoreRegulatory

Oil industry claims new US safety rules financially crippling

Six days before the sixth anniversary of the Deepwater Horizon disaster the US Department of the Interior released much-heralded new safety regulations for offshore exploration and production and drew a wail of consternation from the oil industry.

While Thursday’s big reveal had been mostly prefigured by the announcement of proposed rules this time last year the final confirmation still elicited a chorus of anxiety from the E&P side.

The general view from industry players is that implementing stricter well-control requirements will be too big a financial imposition, with ExxonMobil saying it could amount to $25bn over the next 10 years.

That is a cost which, in this time of plunging oil prices, could be devastating for the business, driving some firms to the wall and leading to lower output, they say. Energy and minerals consultancy Wood Mackenzie says it could lower Gulf of Mexico spending by 70 %.

The Bureau of Safety and Environmental Enforcement (BSEE) – the agency of Interior which announced the new rules – disputed those claims, saying the extra costs would be more like $1bn over 10 years.

One major focus of the regulations is stricter standards and testing for blowout preventers, the piece of equipment which failed catastrophically in the case of BP’s Deepwater Horizon rig on 20 April 2010.

The subsequent explosion and fire on the rig cost 11 lives and led to a three-month oil gusher from the uncapped Macondo well into the US Gulf of Mexico. It is America’s worst ever oil spill.

The new rules mandate more tests for blowout preventers and the provision of redundant safety devices as well as calling for drillers to balance the injection of drilling fluids with well pressure, a measure meant to keep pressure from rising too high.

Among other prescriptions are tighter standards for well-control casing, cementing and sub-sea containment as well as calls for real-time monitoring, third party reviews of equipment and more regular inspections.

This final version of the rules is tempered somewhat from the proposal of last year, Interior having taken on board some concerns expressed by oil industry lobbyists.

There was a much happier reaction from the green side with environmentalists and conservationists generally praising the administration of President Barack Obama for taking steps towards preventing any further Deepwater Horizon-like calamities.

But some felt more could be done and others bemoaned that it has taken six years to happen.

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Donal Scully

With 28 years experience writing and editing for newspapers in the UK and Hong Kong, Donal is now based in California from where he covers the Americas for Splash as well as ensuring the site is loaded through the Western Hemisphere timezone.
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