2009IADC, Regulation, and LegislationNovember/December

Annual General Meeting Special: Government affairs, operations push forward around the globe


5-year OCS plan

Throughout 2009, IADC has continued to work closely with other industry organizations to press for a wider and more flexible five-year Outer Continental Shelf (OCS) plan. The US Minerals Management Service (MMS) began soliciting comments on the 2010-2015 plan after the presidential and congressional OCS moratoria were lifted in 2008.

Late last year, IADC and eight major US oil producer and service associations applauded the MMS when it opened a small area offshore Virginia for leasing – a significant step considering that, for decades, OCS leasing had been limited to portions of the Gulf of Mexico and Alaska. But the groups also urged MMS to include the entire mid-Atlantic OCS Planning Area, if not all of the Atlantic OCS Planning Areas.

In January this year, IADC participated in a US ocean resources workshop held to set the framework for policy recommendations to the Obama Administration. Mr Petty attended and argued against recommending restoration of OCS moratoria. The workshop concluded with no mention of the moratoria issue in its final summary – a significant victory considering that most of the participants represented environmental organizations.

In late February, IADC and six other major trade associations submitted joint testimony to hearings by the US House Committee on Natural Resources on the status of the current OCS leasing system. The testimony cited the industry’s superlative operational and environmental records. It also pointed out that OCS oil and natural gas E&P have contributed over $200 billion since 1953 to federal and state treasuries.

The trades also emphasized that the OCS holds the best promise for significant new domestic discoveries.

Then, on 17 March, major offshore trade associations, including IADC, joined in testimony before a subcommittee of the House Natural Resources Committee to justify existing and expanded OCS leasing and development. NOIA president Tom Fry delivered the testimony and reiterated the industry’s superb environmental record and noted the intense regulatory regimes that industry complies with in OCS operations.

In September, industry groups sent a letter to the MMS urging the expansion of potential lease sale areas to include “all areas of the OCS where there is an interest in hydrocarbon development.” Leasing only 12 of the 26 total planning areas would be far too conservative, they said.

The OCS provides more than 25% of the oil and natural gas produced in the United States, making it vital to the nation’s energy security. It is therefore critical that the 5-year plan be made as broad as possible in order to provide flexibility in the way the OCS can be explored and developed.

In 2010, industry will continue to fight for a broader OCS plan even as it is challenged by a Congressional majority that tilts heavily against oil and gas interests.

Working Time Directive

In March this year, UK offshore employers claimed a major victory in its Working Time Directive (WTD) appeal. In a sweeping judgment issued by the Scottish Employment Appeal Tribunal (EAT) in Edinburgh, offshore employers prevailed on all major points involving application of the EU WTD on the UKCS.

Oil & Gas UK and IADC had long argued that the WTD requirement of four weeks’ annual leave is provided in the existing offshore rota system during field breaks. Offshore unions claimed that the WTD required an additional four weeks of holiday. The tribunal reversed the findings of a lower tribunal in Aberdeen, which held that the WTD requires two weeks of additional leave. In addition, the EAT dismissed all individual employees’ pending claims involving the decision.

UNITE, the successor union to the former Amicus offshore trade union, said it would appeal the EAT decision, but the employers group is confident that the EAT’s strong decision will carry great weight in the Court of Session.

At the EU, progress has also been made over the past year in revising the WTD. Last December, the European Parliament voted in plenary on the second reading of the proposed new EU Working Time Directive. Although media attention focused on the intra-community wrangle over the UK “opt out,” the offshore E&P industry is generally prevailing in its arguments.

Most importantly, Parliament agreed to afford Member States flexibility in establishing reference periods, even up to 12 months. This is critical to managing offshore rotas. Another key concern is what can be considered “on call” time in the calculation of average weekly working time. Industry takes the position that offshore workers aren’t “on call” while at home.

Next steps involve taking the proposed directive to a “conciliatory committee” to attempt to resolve differences between the Parliament and the European Council’s draft.

Law of the Sea treaty

The Law of the Sea treaty, long supported by IADC, continued to gather momentum in 2009. First, as the Obama Administration moved in early in the year, Secretary of State Hillary Clinton said that its US Senate accession would be one of her primary goals. This was seconded by Senate Foreign Relations Committee chairman Sen. John Kerry.

IADC’s Mr Petty also was invited to the Council on Foreign Relations to participate in an advisory committee to promote Senate passage. IADC was the only oilfield stakeholder represented on the panel.

The group took the position that the treaty is directly relevant to US foreign policy and that it is germane to a host of maritime challenges of strategic importance to the US, including commercial uses of oceans. The advisory committee provided guidance for a “Council Special Report” to advocate Senate action as soon as possible.

Later, IADC participated in the Oil, Gas and Mineral Resources of the Extended Continental Shelf (ECS) seminar, again urging US accession. Mr Petty represented IADC and offshore E&P interests, while other speakers on the panel represented the US government, academia and a major environmental organization. Oil and gas companies are excited by the possibility of the US becoming a party to the Law of the Sea treaty because the ECS holds significant potential for exploration and extraction. The $2.6 billion that was submitted for a MMS lease in the Chukchi Sea was a signal of high interest.

‘BRIEF’ established

Facing an unfriendly leadership in Washington and a hostile “Clean Energy” bill, the US E&P industry this year established a campaign called “BRIEF,” Bringing Real Information on Energy Forward. The goal is to have a rapid-response mechanism to rebut inaccurate information in the press and on Capitol Hill. As part of the campaign, a website was launched at www.energyindepth.org, supported by IADC and independent producer associations.

Under the “Clean Energy” bill, many incentives for domestic onshore E&P in the 2005 Energy Security Act would be reversed. Many incentives that pre-dated the Act would also be eliminated, including the expensing of intangible drilling costs. The legislation would also penalize offshore E&P by raising royalty rates and imposing an excise tax on existing OCS production.

Testimony on ITAC representation

In July, Mr Petty testified before the US House Ways and Means Subcommittee on Trade in his capacity as chairman of the federal advisory committee on automotive equipment and capital goods (ITAC 2). The subcommittee was examining the federal advisory system, with emphasis on those representing industry. Organized labor, environmental groups and “consumer advocates” had been agitating to join the industry committees.

Mr Petty pointed out that the advisory system was designed to get input from a variety of sources and that organized labor and the environmentalists already have their own trade advisory committees. He warned that if labor and other non-business interests were forced on ITAC 2 or other ITAC committees, it would chill free and frank discussion and would be a major disincentive to recruiting new members and retaining existing members.

India budget, service tax

In India’s budget for the tax year ending 31 March 2010, the government allocated tax incentives for natural gas production in new fields where oil production had been favored under the previous tax regime. The benefits will equally cover both oil and natural gas production under licences awarded in the NELP VIII round of bids.

The service tax, which is the subject of litigation by IADC in the Mumbai High Court, was kept at a 10% rate. However, the definition of “India” was changed, extending the service tax jurisdiction to the 200-mile offshore limit.

Offshore drilling contractors’ services had been classified as “survey and exploration of mineral oil” and “site formation and clearance,” exposing them to significant new taxes. Operators refuse to pay the taxes as a pass-through part of their contracts, even though they acknowledge the correctness of IADC’s position. That suit is still pending.

The India government has also decided that the Central Board of Direct Taxes will be empowered to establish “safe harbor” rules to reduce transfer pricing disputes between industry and the government. The board will also establish a dispute resolution mechanism to expedite settlements outside the judicial system. Both changes are welcome and may ease drilling contractors’ burden in resolving often-lengthy wrangles with tax authorities.

Defense of hydraulic fracturing

The E&P industry has been pushing back on multiple fronts in response to congressional assaults on existing state hydraulic fracturing regulations. IADC and other industry groups have offered testimony to the House Natural Resources Subcommittee on Energy and Mineral Resources to defend the practice, emphasizing the importance of the technique in building US natural gas supply. Shale gas is the most promising new frontier for new natural gas, and hydraulic fracturing is a critical tool for its development.

Advocates for federal regulation point to the tiny fraction (less than half a percent) of chemicals used in the technique, citing potential pollution of drinking water supplies – despite the fact that the Environmental Protection Agency has found no evidence of it with thousands of wells “frac’ed” over 50 years. Industry continues to fight this battle in Congress.

Meeting with Ghanaian, Cambodian delegations

In 2009, IADC, represented by Mr Petty, met separately with delegations from Ghana and Cambodia, two countries with plans to amp up offshore E&P activities. In August he made a presentation to a delegation led by Ghana’s Minister of Energy, Dr Oteng-Adjei, on the opportunities and challenges of drilling offshore Ghana. Ghana has attracted increasing interest in recent years due to good seismic results and is poised to begin an aggressive round of licensing for offshore tracts.

Mr Petty outlined the association’s history, particularly in West Africa, citing IADC-negotiated deemed profits tax systems, anti-corruption initiatives, personnel training and HSE industry conferences with a regional West African focus.

Minister Oteng-Adjei and his entourage, including the acting CEO of the Ghana National Petroleum Corp, expressed interest in becoming involved with IADC conferences and in establishing a reliable and transparent tax system to encourage drilling contractors to come to Ghana.

In March, Mr Petty met with the Cambodian National Petroleum Authority (CNPA), Prime Minister’s office, Supreme National Economic Council, Ministry of Economy and Finance, and Ministry of Environment to discuss offshore drilling and related issues.

Cambodia has begun exploiting offshore resources in the Gulf of Siam, and CNPA was in the US to meet with US government officials, key organizations and companies to learn more about the operational, regulatory and contractual systems of the international offshore industry.

Deepwater data for Energy Council

IADC presented data on worldwide supply and demand for deepwater drilling units for the Energy Council at its Global Energy and Environmental Issues Conference in Vancouver, Canada, late last year. Mr Petty noted the strength of the deepwater drilling market despite falling oil prices.

Other presenters at the conference emphasized energy efficiency and renewables. However, Mr Petty reminded the audience that whatever is achieved in those areas, most competent studies indicate the world’s industrial economies will continue to rely on hydrocarbons for at least 85% of their energy needs for many more decades. Additionally, deepwater holds great promise for the largest new offshore fields throughout the world.

Offshore EU wind farms

In response to the European Commission’s Communications on Offshore Wind Energy and Maritime Spatial Planning, IADC provided comments to the OGP’s draft position paper on offshore wind energy. Offshore wind farms pose significant impediments to E&P. For example, they put pressure on access to already-problematic marine space. They also could restrict seismic and drilling activities. Considering the overwhelming importance of offshore oil and natural gas resources over wind energy in the foreseeable EU energy supply, the EU should not reserve offshore areas exclusively for wind energy in its marine spatial planning.


ART, Well Services committees developing new tools

The IADC Drilling and Well Services Division’s two newest committees are forging ahead with strong programs to enhance training, set guidelines and provide the industry with a better understanding available technology.

The Well Servicing Committee has conducted an aggressive industry-awareness campaign. First, the committee targeted the potential issue of aging well-service derricks. In a guest editorial in the January/February 2009 issue of DC, committee chairman Joe Eustace, Pioneer Production Services, warned of the potential for catastrophe should a derrick fail “in terms of equipment damage, lost revenues and, far more importantly, human life.”

Mr Eustace outlined the requirements of API RP-4G, which provides guidance on mast inspection for well servicing rigs.

“Our industry needs to  pay much closer attention to maintaining and inspecting our masts and load-bearing structures before it’s too late,” he said.

The editorial was also published electronically through eNews from DrillingContractor.org and is available at www.DrillingContractor.org.

Subsequent issues of DC have focused on well control in well servicing and JSAs. Rich DeBuys, Wild Well Control, contributed a committee-sanctioned article, “Workover/Well Servicing Well Control Commands Special Consideration,” (March/April 2009). In the September/October 2009 edition, Steve Olson, Nabors Well Services, contributed another article heartily endorsed by the committee – “JSAs a Proven HSE Management Icon.”

Well Servicing accreditation

A major effort is under way, led by Kenny Jordan, Association of Energy Servicing Companies, to work with the IADC Well Control Committee to review and revamp the WellCAP program for well servicing and wireline. This ad hoc subcommittee comprises well service providers and well control training companies.

Their mission statement is to provide the best possible curriculum concerning well control competency training for well servicing and wireline personnel so that best practices can be incorporated into daily practice.

The group will work to review current relevant documents, make recommendations to the Well Control Committee and work with that committee to incorporated recommended changes.

The first step is to distribute a survey to determine current levels of training and satisfaction with the existing accreditation program.

Rig technology is an ‘ART’

The IADC Advanced Rig Technology (ART) Committee has undertaken numerous challenges and initiatives under the leadership of committee chairman David Reid, National Oilwell Varco. Mr Reid also serves as Drilling & Well Services Division vice president.

Led by Frank Springett, NOV, the Future Technology Subcommittee has completed a major survey to assess the effectiveness of current drilling and completion technologies and to determine which need further development. The effort was submitted as an abstract to the 2010 IADC/SPE Drilling Conference (2-4 February, New Orleans) and was the second-highest rated of the 400-odd abstracts received.

The paper is “Advanced Rig Technology – Future Technology Subcommittee Report of Activities and Industry Survey Results.” Mr Springett’s co-authors are Jeff A Swain, Chevron; Norman Wong, BP; Rolf Gullaksen, TTS-Sense; Hugo Valdez, Pride International; and Christopher Goetz, consultant.

Next, the subcommittee is cooperating with SPE’s Drilling Systems Automation Technical Section to develop an IADC/DSATS Automation Matrix.

The Reliability & Guidelines Subcommittee, led by Logan Puckett, Pride International, and assisted by Robert Urbanowski, Precision Drilling Oilfield Services, are working on two projects. The first is development of an industry survey on top drive reliability, expected to be released soon. The survey is designed to identify key elements of top drive failure modes so that NPT can be reduced. The plan is to develop additional surveys on pipe handling, well-control equipment and other items.

The second project is the IADC Technology Value Guide. This work-in-progress identifies for a variety of drilling tools and operations (i.e., top drive, power slips, etc) the positive and negative features. Examples of positive features include “hands free,” “improved ergonomics” and “weight reduction” while negatives are “additional space required,” “additional weight,” “OEM startup required,” “additional personnel,” and so on.

To further enhance the Technology Value Guide, each tool will be hyperlinked to a web location featuring photos of the equipment, definitions and links to training providers. The subcommittee is using existing PETEX definitions and working with PETEX to develop new ones.

Finally, the Drilling Control Systems Subcommittee, led by Terry Loftis, Transocean, is tackling man-machine and machine-machine interfaces.

For the man-machine interface, the subcommittee is developing a list for drillers of critical safety interfaces, i.e., how various manufacturers differ in control motions for opening or closing slips, raising pipe, etc. Confusion through inexperience or reverting to habit when at the controls of a different manufacturer’s equipment could potentially have catastrophic results. This list aims at educating drillers to such differences.

The next two phases are to collect data for each supplier vs current field populations, and, based on those findings, consider creating an industry guideline for future safety-critical applications.

On the machine-machine front, the subcommittee is identifying the myriad of methods of integrating and communicating between machines on rigs. From this, the committee is developing a matrix of the software interface issues drilling companies face. Finally, the subcommittee plans to publish guidelines advising on methods that have proven successful for integrating and communicating between systems.

In addition to the ambitious work program the ART Committee has embraced, its members also found time to organize and execute the successful 2009 IADC Advanced Rig Technology Conference, held 29 September in Houston that drew 228 people. Registrants were able to directly participate and answer questions on drilling technology through an automated response system. A PDF of the polling results is available on the committee website, available through a link at www.iadc.org.


In addition to supporting a number of long-standing technical and accreditation activities within committees and other work groups, IADC’s operations group this year tackled a number of new efforts focused on the environment, drilling rig HSE issues and regulatory affairs. The Environmental Policy Advisory Panel (EPAP) began work on a groundbreaking system to benchmark contractor performance. IADC’s offshore division maintained its own focus on environmental practices, including guidance on new MARPOL and EPA regulations. IADC also continued its work with industry groups dedicated to solving the mismatched hammer union issue.

The opening of the IADC Asia Operations office in Bangkok also signaled a significant step forward in our ability to support and respond to members’ needs in yet another important area for drilling activity. Asia Operations now supplements existing staff presence around the world. Our new Asia Operations Forum will build on previous efforts of similar forums in Europe and the Middle East to provide a vehicle to explore items of regional importance and to stay current with ongoing activities of IADC.

EPAP benchmarking project

Under the leadership of 2009 chairman Claus Hemmingsen, the Environmental Policy Advisory Panel (EPAP) pushed ahead this year with initiatives to support the improvement of environmental performance within the drilling industry.

In May, EPAP’s working committee began developing a benchmark template for annual offshore contractor reporting of air emissions, loss of containment and waste control. As the first step, the working committee is developing and distributing a survey to ascertain current methods used for data collection and reporting. This effort was coordinated by Anne Otten, IADC lead staff on environment initiatives.

Results of the benchmarking survey were reviewed at the September EPAP meeting in Amsterdam. The working group is developing the reporting instrument to be used to gather contractor data on a quarterly basis. An update will be presented at the Annual General Meeting in Miami in November.

European Operations Forum

The IADC European Operations Forum (EOF) met twice in 2009, in Dublin in June and in Amsterdam in September. The September meeting featured an update on pending European Union legislation, provided by Beate Raabe, EU director of the International Association of Oil & Gas Producers (OGP).

The EOF pushed forward with its work on the Offshore Competency Training Programme (OCTP) as well, despite difficulties in obtaining acceptance in the UK and Norway due to political and commercial issues. The association will maintain its efforts to seek the support of European regulators in 2010.

A revised version of the OCTP was released early in 2009, including changes to class size, exercise groups and the height of water entry for practice drills.

HSE Case Guidelines

IADC issued new versions of our HSE Case Guidelines for offshore rigs and for land rigs in 2009. These versions reflected minor changes to the guidelines, made primarily for administrative reasons.

In September, the HSE Case Guidelines Users Group met in Amsterdam. Companies attending included Maersk, Diamond Offshore, Transocean, Seadrill, KCA DEUTAG, Pacific Drilling and Noble. The general consensus was that the HSE Case guidelines are satisfactory in their current form.  The only suggested revision was to include reference to risk assessments performed previously during rig design.  There was a need identified to update the legislative indexes for Norway and Australia. The group agreed to meet annually and to include a session for discussion with regulators in the future.

Asia Pacific operations

In April 2009, IADC opened a regional operations office in Bangkok, Thailand, staffed by operations assistant Chit Hlaing. Mr Hlaing has begun to serve IADC members and support association activities throughout Asia. He is coordinating operational functions, promoting IADC accreditation programs and membership, and supporting conferences and chapters in the region.

Asia Operations Forum

The first meeting of the IADC Asia Operations Forum is currently planned for 17 November in Bangkok, preceding the IADC Well Control Asia Pacific 2009 Conference. The format will include a business meeting and a VIP reception and dinner at the Shangri-La Hotel.

The business meeting will discuss issues of importance to contractors in the Asia Pacific region. It will also feature a regional industry outlook provided by Archie Dudgeon of RS Platou Offshore. Two meetings of the Asia Operations Forum are planned for 2010.


UBO & MPD Committee

Late in 2008, the underbalanced operations guidelines developed by the IADC Underbalanced Operations & Managed Pressure Drilling (UBO & MPD) Committee were formally adopted as API Recommended Practice 92U (“Underbalanced Operations, First Edition”). The effort was led by John Ramalho, Shell, who chairs the committee’s Standards & Nomenclature Subcommittee.

RP 92U was the culminating piece of the committee’s work that started with the GAP analysis of standards, and Mr Ramalho said he believes it can positively impact the safety of UBD operations worldwide.

Early on, the committee recognized a need for a manufacturing standard for rotating control devices and non-return valves. Guidelines were also required to standardize practices and equipment deployed in UBD operations globally. The committee recognised that before deploying equipment in an appropriate application, there must be assurance that such equipment can be safely deployed.

In 2004 and 2005, the committee’s work on manufacturing standards were adopted and published as API Spec 16RCD and API Spec 7NRV.

RP 92U includes chapters on planning, equipment, well control, circulating media, wellbore integrity, site safety and supervision. Underbalanced drilling operations are described in detail for various levels of UBD wells as defined by the IADC Well Classification System for Underbalanced Operations and Managed Pressure Drilling.

“RP 92U will provide both experienced and non-experienced operators and service companies a consistent approach to planning and executing underbalanced drilling operations, irrespective of geographical location, environment or operational complexity,” Mr Ramalho said. This will ensure personnel safety, public safety, integrity of the underbalanced drilling equipment, and preservation of the environment for land and offshore underbalanced drilling operations.

The committee recently completed a reorganization of its subcommittee structure to better reflect current priorities and work objectives. Subcommittees target UBO, MPD, HSE and training, standards and nomenclature, and committee outreach.

“This new structure will streamline the committee’s various activities and projects and will better utilize the group’s technical expertise,” remarked committee chairman Don Reitsma, At Balance Americas. “It will also focus on recruiting additional participation from companies utilizing these important technologies.”

During 2009, the group turned its attention to drafting a “best practice” document for managed pressure drilling to complement RP 92U. The MPD document is targeted for completion in late 2009 or early 2010. In a related effort, members are developing a “selection tool” that will help users evaluate various MPD techniques to determine the best options for their particular well characteristics.

Finally, a review of accreditation standards for UBO Rig Pass and UBO WellCAP is being undertaken. With the advances in UBO and MPD techniques, training standards must also be updated and expanded. The growth of these technologies continues to demand qualified technicians that have a broad understanding of the dynamics and characteristics of underbalanced and managed pressure operations.

Middle East Operations Forum

Following the first IADC Middle East Operations Forum meeting held in Doha, Qatar, last October, the group met again in early 2009 and again in October this year to discuss technical issues and to learn about new IADC activities and initiatives. IADC’s Mr Fischer led a discussion of current issues, emphasizing those that will or could impact drilling operations in the Arabian Gulf region. These include environmental issues, technical and engineering challenges and the status of training and accreditation.

The October meeting featured a guest presentation by David Lorello, Steptoe & Johnson LLP, on “A Global Anti-Corruption Strategy: Risks and Compliance Approaches For Multinational Companies.” Compliance with the US Foreign Corrupt Practices Act and other anti-bribery laws has become a key challenge for many in our industry. Mr Lorello’s presentation gave contractors an opportunity to learn the status of compliance and enforcement efforts around the world.

Regional initiatives have been discussed at the Operations Forum meetings as well, such as the Behaviour-Based Safety Workshop held in Abu Dhabi in April this year. The event involved interactive training to reinforce the importance of getting the right safety attitudes in place. Another initiative in the works is the inaugural meeting of the IADC Middle East HSE Roundtable. Its purpose will be to share common concerns, seek solutions and plan for the 2011 IADC Drilling HSE Middle East Conference.

SCA Chapter 10-year anniversary

The South Central Asia Chapter marked its 10th anniversary this year with a celebration in March at Aamby Valley’s Sahara Lake City. IADC president Dr Lee Hunt sent a congratulatory message commending chapter members for their hard work and a decade of stellar success.

Dr Hunt emphasized the support of ONGC’s leaders, commenting, “Without their patronage and sponsorship, it would have been difficult to assemble the lineup of distinguished guests and speakers who have brought such high levels of learning and information to these assemblies.”

He also noted the chapter’s achievements in 2008 under chairman U.N. Bose, ONGC director, with continued involvement in practical issues confronting the promotion of health, safety and efficiency in operating environments in the region.

Mr Bose was in attendance at the celebration, as was S. Sundareshan of India’s Ministry of Petroleum & Natural Gas. Both congratulated the chapter on its milestone and encouraged further cooperation in the future among IADC and drilling contractors, the Indian government, and oil and gas companies.

DGS rules

Early this year, the SCA Chapter formed a SPL/DGS work group to coordinate a response plan to challenge requirements issued last year by India’s Directorate General of Shipping (DGS).

Under those regulations, jackups older than 25 years and not classed with the Indian Register of Shipping (IRS) must undergo extensive inspections and take any required corrective actions before beginning operations in Indian waters. Additionally, the DGS would require payment of an “appropriate fee” for obtaining the inspection.

Chapter members have assessed the relevant issues and the operational and compliance challenges involved. They raised questions pertaining to applicability of the Merchant Shipping Act to MODUs, the authority of the DGS to levy fees associated with the enforcement of the regulations, and the necessity of obtaining Specified Period Licenses (SPL) for certain offshore drilling operations.

The work group – chaired by Ranajit Chakraverti of Transocean – was formed to pursue two courses of action: “representation” to the DGS of issues related to applicability, and filing of a writ petition in the courts challenging DGS authority to apply the regulations to MODUs, including a request for a stay of enforcement.

The chapter is awaiting a response to the representation documents submitted to the DGS.

Offshore safety regulations

In June, the SCA Chapter’s Safety Committee met to discuss implementation of offshore safety regulations issued last year by the Oil Industry Safety Directorate (OISD). The safety directorate was represented by Anup Walia, director (E&P), and his staff.

The meeting established direct communication links between the offshore safety regulator and drilling contractors operating in India. This means that contractors can now go directly to OISD with any questions of interpretation or implementation of the regulations. Likewise, OISD has a direct avenue for conveying information via the committee.

OISD is preparing interpretive guidance documents to accompany the regulations. The Safety Committee will participate in the identification of issues requiring clarification. It will also coordinate dissemination of OISD documents online.

Contracts Committee

The IADC Contracts Committee, under the leadership of new chairman Scott Gordon, Unit Texas Drilling, and vice chairman Ernie Nelson, Nabors Drilling USA, has begun reviewing model contracts forms used in US land drilling operations.

As a first step in this process, meetings have been held in Midland, Texas, Oklahoma City, Okla., and Denver, Colo., to hear members’ comments on how the forms are used in various regions and to discuss their recommendations. Drafting meetings are tentatively scheduled for November 2009. The committee expects to have the new forms drafted and adopted by the IADC Board of Directors by the end of Q1 2010.



The International Maritime Organization (IMO) is expected to soon adopt an updated version of the IMO MODU Code, an effort IADC has been part of since the beginning. Almost every section of the Code has been affected.

To see a highlight of the major changes found in the revised Code, please see Page 118.

Next year, IADC will offer a “Companion to the Code for the Construction and Equipment of Mobile Offshore Drilling Units” to provide a comparison between the 2009 and 1989 versions. The association also will continue to work with flag States and recognized organizations to interpret non-mandatory language within the new MODU Code.

CBP Jones Act reprieve

After protests by industry groups, on 1 October 2009 the US Customs and Border Protection (CBP) agreed to withdraw its 17 July 2009 proposal to revoke and modify rulings that determined whether certain articles transported are merchandise or vessel equipment, and thus subject to the cabotage restrictions of the Jones Act.

A new notice that will set forth CBP’s proposed action relating to its interpretation of prior decisions on this issue will be published in the Customs Bulletin in the near future.

NOPSA cooperation

In 2009, IADC and its Australasia Chapter continued to work with Australia’s National Offshore Petroleum Safety Authority (NOPSA) to ensure that the agency is providing efficient and effective oversight for the offshore industry. Early in the year, IADC sent a letter to the Australian government urging that, as a coastal State, it clearly establish and articulate its limits of jurisdiction. Moreover, IADC argued that those limits must be applied in a consistent manner.

Commenting on the roles of NOPSA and the Australian Maritime Safety Authority (AMSA), as related to MODUs, IADC stated that the evolution of the industry makes it necessary to continually re-examine the respective roles of safety and maritime regulators and their relationship with the industry, and care must be taken to avoid redundant and wasteful regulation.

A Memorandum of Understanding and related documents between the US Coast Guard and the MMS were provided as an example of guidance that can be provided on the division of authority between agencies having overlapping jurisdiction. Other agencies – such as those with labor/immigration, aviation, environmental authority – can greatly influence safety as well, IADC pointed out.

In Australia, NOPSA’s objective-based regulatory regime contrasts sharply with the prescriptive regulations approach of regulators like AMSA. The former regime, based on a Safety Case, allows NOPSA to extend influence beyond traditional jurisdictional limits of a regulator. This means that arrangements accepted under the prescriptive requirements of one regulator can be questioned for adequacy by another.

“The potential dichotomy of views between regulatory bodies having concurrent jurisdiction regarding acceptable levels of risk remains perplexing to IADC and its members,” the letter said.

NOSAC Subcommittee

IADC continues to represent drilling contractors on a subcommittee of the National Offshore Safety Advisory Committee (NOSAC) that will examine the process by which the US Coast Guard authorizes foreigners to work on the US OCS.

The committee was asked by the Coast Guard to provide advice to streamline its policies and procedures for determining when, in accordance with existing law and regulations, foreign workers may be authorized employment on the OCS. Current practices are generally viewed as too cumbersome by all involved. The subcommittee, headed by Warren Weaver, Transocean, and Eric Roan, Pride International, is comprised of representatives of OCS leaseholders, shipyards, vessel operators and others with interest in the determination process. It is expected to finalize a recommendation to the Coast Guard for consideration by NOSAC when it meets in early November 2009.

US implementation of MARPOL Annex VI

MARPOL Annex VI, titled Regulations for Prevention of Air Pollution from Ships, entered into force in the US on 8 January 2009. In advance of issuing implementing regulations, the USCG published Policy Letter 09-01 to provide guidance for the enforcement of its provisions for all US-flag vessels and for foreign-flag vessels in US waters, including MODUs.

Unfortunately, in crafting the enforcement guidance, the Coast Guard failed to consider that a shipowner’s ability to comply with the new Annex VI requirements is in part predicated on the USCG and the EPA issuing implementing regulations. In particular, while the guidance instructs USCG inspectors to enforce requirements for Bunker Delivery Notes (BDNs) on vessels in international service, absent implanting regulations, US fuel suppliers are under no regulatory obligation to supply such documentation. This matter becomes particularly acute for operators of foreign-flag MODUs, as fuel for these units are normally supplied by their clients.

The guidance also fails to address certain obligations of MARPOL Annex VI that would apply to: (1) US vessels wholly engaged in domestic trade; and (2) fixed and floating platforms.

On 28 August 2009, the EPA proposed domestic regulations addressing the BDN, but failing to define “fuel supplier,” leaving the enforceability of the regulations in question. In response to the EPA proposal, IADC submitted comments suggesting that EPA define the term “fuel supplier.” IADC also suggested that, as all US-supplied fuel will meet the standards for sulphur content established by IMO, it should not be necessary to burden the industry with the detailed sampling and recordkeeping requirements of Annex VI and a less burdensome approach should be developed.

Helicopter landing guidance

Earlier this year, the UK Civil Aviation Authority (CAA) issued the 6th edition of CAP 437 Offshore Helicopter Landing Areas – Guidance on Standards. It incorporates further results of experience gained from CAA-funded research projects on improved helideck lighting, as well as results from projects jointly funded by the UK Health and Safety Executive relating to offshore helideck environmental issues.

Amendments included: a detailed specification for stage 2 lighting systems (addressing illumination of the heliport identification “H” marking and the touchdown/positioning marking circle);  more stringent obstacle limitations; revision to the guidance on offsetting the touchdown/position marking circle; a new reference to the final specification for helideck status lights systems; and a new turbulence criterion (with concomitant removal of the vertical flow criterion).

The edition also incorporated recent International Civil Aviation Organization (ICAO) standards and recommended practices (SARPs) relating to offshore helidecks and shipboard heliports, which generally became applicable in November 2009. The changes also anticipate changes to the amended ICAO Annex 14, Volume II, on Heliports, which was published in July 2009.

MMS hurricane season guidance

Three Notice to Lessees and Operators (NTL) were released in 2009 to provide guidance for the hurricane season. In the first, the MMS noted that it would use API RP 95J, Gulf of Mexico Jackup Operations for Hurricane Season, to guide its review and evaluation of information submitted to demonstrate the jackup’s capability to perform at the proposed location. Recommendations from 95J were strongly advised.

In the second, the MMS endorsed API Bulletin 2TD, Guidelines for Tie-downs on Offshore Production Facilities for Hurricane Season, First Edition. These guidelines were to be followed in reviewing and evaluating information that demonstrate the ability of the tie-downs, such as used with platform drilling rigs, to perform during a hurricane.

The third NTL provided guidance and requirements for global positioning systems for MODUs, which had to be outfitted with multiple GPS transponders by 1 July. The tracking system equipment had to be capable of transmitting data for at least seven days after a storm passes.

SEMS requirements

In June 2009, the MMS proposed requiring operators to develop and implement a safety and environmental management system (SEMS) to address oil and gas operations on the OCS. Under the proposal, four parts of a normal SEMS would be made mandatory: hazards analysis, management of change, operating procedures and mechanical integrity.

Though not directly addressed in this rulemaking, offshore drilling contractors will likely feel its effect via the operator’s accountability for contractors and subcontractors.

In addition to a significant increase in injury and illness recordkeeping requirements, under the proposal, offshore drilling contractors will need to work with the operator to:

  1. Conduct a job hazard analysis to identify and evaluate hazards of all tasks for their drilling operations.
  2. Have a system in place to document and analyze all proposed changes on their unit for adverse environmental and safety impact.
  3. Review all operating procedures to ensure they reflect current practices.
  4. Verify that procedures are in place to ensure that the equipment used in their drilling operations are designed, fabricated, installed and tested in an appropriate manner consistent with their service requirements, manufacturer’s recommendations and industry standards to promote safe and environmentally sound operations.

IADC submitted comments to MMS indicating that, by not considering these impacts on contractors, MMS has significantly underestimated the administrative burdens of the proposal.

VGP guidelines

The IADC HSE Committee sponsored a work group to develop guidelines for owners and operators of MODUs, including inland barge units, regarding the implementation of and compliance with the EPA National Pollutant Discharge Elimination System (NPDES) General Permit for Discharges Incidental to the Normal Operation of a Vessel (referred to as the VGP).

The completed guidelines, which include best management practices for each of the waste streams (discharges) listed in the permit, are available on the IADC website.

The VGP is applicable to all MODUs operating in a transportation mode on the navigable waters of the United States (out to three nautical miles), except when covered under an oil and gas permit.

Jackup site assessment

The International Organization for Standardization (ISO) has balloted a new Draft International Standard for Site-specific Assessment of Mobile Offshore Units – Part 1: Jackups in September 2009. The voting period closes on 10 February 2010. The 288-page draft international standard provides general principles and basic requirements for the site-specific assessment of jackups.

The purpose is to demonstrate the adequacy of the jackup and its foundations for the assessment situations and defined limit states, taking into account the consequences of failure. The results of a site-specific assessment are intended to be appropriately recorded and communicated to those persons required to know or act on the conclusions and recommendations. Alternative approaches to the site-specific assessment may be used provided that they have been shown to give a level of structural reliability equivalent or superior to that implicit in this document.

Copies of the draft standard have been made available to members of IADC’s Jackup Rig Committee, which has been intimately involved with the development of the standard for more than a decade.

As an organization that liaises with ISO’s subcommittee on offshore structures, IADC has the opportunity to comment on the draft standard. IADC members may comment through IADC or through their national standards body.

Maritime Labor Convention, 2006

The International Labour Organization’s Maritime Labor Convention of 2006 (MLC 2006) will enter into force 12 months after ratification by 30 countries representing 33% of the world gross tonnage. Having been ratified by the Bahamas, Liberia, the Marshall Islands, Norway and Panama, it has met the tonnage threshold; thus, if all 27 countries of the EU ratify the convention, it will have met the conditions for entry into force.

The Convention sets standards for: minimum age, medical certification, qualification for seafarers, employment agreements, use of placement services, hours of work or rest, manning levels, accommodations, recreational facilities, food and catering, health and safety and accident prevention, onboard medical care, onboard complaint procedures and payment of wages.

The Convention presents particular challenges for MODU owners. It is a flag-State instrument, and unless exemptions are provided, MODU owners (as MODUs are “ships” under the Convention) will be required to obtain flag-State certification to the MLC’s standards. The Convention also has a very broad definition of “seafarer,” which includes “any person who is employed or engaged or works in any capacity onboard a ship” – thus, absent exemption, the rig owner will be responsible for the compliance of the client’s employees and third-party contractors, vendors and others whose presence might be considered “work.”

The Convention makes no direct provision for primacy of coastal State labor laws, thus potentially presenting a jurisdictional nightmare where the MLC’s provisions conflict with the national requirements of the host coastal State.  The Convention’s standards for work or rest are based on traditional merchant shipping standards, not the employment standards of the offshore oil and gas industry. In specifying manning levels, it is unclear if the flag State is obligated to address the industrial activities (i.e., drilling) which are conducted onboard “ship.”

Of the countries that have ratified the Convention, IADC is aware of only Norway and Liberia having taken a clear stance with regard to the status of MODUs under the Convention. The others, which comprise the nations in which most MODUs are registered, have yet to articulate a position. IADC will continue to seek clarification of governmental policies and positions regarding the status of MODUs under this Convention and to influence their development.


OSHA sets up new STEPS, issues PPE final rule

STEPS Network: A Houston-based STEPS Network is the latest in a series of alliances formed between OSHA and industry with the goal of improving the safety of oil and gas workers, as well as environmental stewardship. This follows the successes of previously created STEPS networks.

STEPS is an opportunity for OSHA and industry to come together through forums, roundtable discussions, meetings and conferences to discuss safety and health issues associated with production, drilling and transportation operations.

Cranes, derricks rule: In October 2008, OSHA proposed a rule on cranes and derricks. Due to confusion regarding the applicability of US OSHA rules in 29 CFR 1926 to oil and gas well drilling sites, IADC sought confirmation. In response, OSHA said that the only aspect of oil and gas well drilling operations covered by 29 CFR 1926 is site preparation. With this clarification, it became apparent that the new crane and derrick standards will not apply to rig-up and rig-down operations.

PPE rule revision: OSHA in September 2009 issued a final rule revising the personal protective equipment (PPE) sections of its general industry, shipyard employment, longshoring and marine terminals standards to reflect recent editions of applicable national consensus standards that incorporate advances in technology.

The final rule affects PPE standards concerning requirements for eye and face, head, and foot protection. It is part of OSHA’s efforts to remove references to outdated national consensus and industry standards.

This final rule does not make obsolete PPE currently in use that are referenced in older consensus standards.

Harmonization of Hazard Communications signage: In the 30 September 2009 Federal Register, OSHA issued a proposed rule revising the Hazard Communications Standard to bring them in line with the United Nation’s Global Harmonization Standard for the classification and labeling of hazardous chemicals. This will also modify the contents of material safety data sheets and symbols used to depict hazards present in various chemicals.

FRC use in US drilling industry: OSHA has been attempting to require the use of flash fire-resistant clothing for all personnel in the upstream industry. There has been research on the effectiveness of FRC in the upstream industry, but, to date, this research has not been conducted under established laboratory controls. IADC participated in an OSHA hearing in Denver, Colo., on 2 October 2009. The purpose was to develop an understanding of the implementation of the employer’s risk assessment as required in the PPE rules. OSHA agreed to look at industry documents in order to come up with a clarification of the PPE issue.

EPA sets SPCC date

The EPA issued the Final Rule on Spill Prevention, Control and Countermeasure (SPCC) Plans in June. It established 10 November 2010 as the date by which all facilities must prepare or amend their SPCC Plans. Under this final rule, the owner or operator of an existing mobile onshore or offshore facility, including a drilling rig, is required to maintain an SPCC Plan but must make any necessary amendments and implement them on or before the set date. The owner or operator of a mobile onshore or offshore facility that begins operations after 10 November 2010 must prepare and implement a plan prior to beginning operations.


Drilling contractors actively participated in the IADC Incident Statistics Program (ISP) over the past year, helping the association to gather statistics that show the industry where it’s doing well and where improvements are needed.

The ISP summary for 2008 data showed that the global drilling industry pushed its lost-time incident (LTI) rate to a record low of 0.49 while the number of fatalities increased from 23 in 2007 to 32 in 2008. A total of 105 contractors, representing approximately 78% of the worldwide rig fleet, participated in the program.

For more information about the ISP findings, please see the September/October 2009 issue of Drilling Contractor.

FMCSA hours-of-service regulations

Late last year, the Federal Motor Carrier Safety Administration (FMCSA) crafted an hours-of-service regulation that leaves all current requirements intact. The final rule continued to allow property-carrying commercial motor vehicle drivers to drive up to 11 hours within a 14-hour, non-extendable window, following at least 10 consecutive hours off-duty. The rule also allows motor carriers and drivers to continue to restart calculations of the weekly on-duty limits after the driver has at least 34 consecutive hours off-duty.

Rig Moving Committee

The IADC Rig Moving Committee has completed guidelines on Gin Pole Trucks used in the upstream oil and gas industry, including topics on design, testing and use of gin pole trucks. The guidelines are expected to be reviewed by the IADC Executive Committee at its next meeting in November 2009.



WellCAP has made significant strides this year, first in adopting major improvements in instructor qualifications, and second in acquiring companywide acceptance by a major international oil company. More recently, the Facilitator Certification course was opened to all WellCAP instructors.

Instructor qualifications: In late 2008, after nearly two years of reviews, discussions and revisions, Well Control Committee members voted to accept changes to WellCAP instructor qualifications. They went into effect on 30 June this year. Highlights of the changes include:

  • New instructors. Applicants must:
  1. Hold a current WellCAP certificate at or above the course, level and stack qualifications for which the approval is requested.
  2. Complete 60 hours of well control classroom instruction at the requested level.
  3. Have 20 hours of simulator instruction experience.
  4. Provide evidence of academic, petroleum field, teaching or other technical experience.
  • Instructors upgrading approval status. Applicants must hold a WellCAP certificate at the requested level and have evidence of 24 hours of instructional time at the new course level.
  • Prior instructors seeking reinstatement. Applicants must:
  1. Hold a current WellCAP certificate at or above the course, level and stack qualifications for which the approval is requested.
  2. Complete 24 hours of well control classroom instruction at the requested level within the year prior to the application.
  3. Have 4 hours of simulator instruction time within the year prior to the application.
  • Instructors renewing approval. Instructor approval is for a two-year period only. In order to maintain approval status, instructors must submit evidence of maintaining well control competence and continuing professional development.

Shell acceptance: In late 2008, Shell International Exploration & Production certified the use of WellCAP as an acceptable form of well control training worldwide – a move that could greatly benefit drilling contractors.

Shell’s well control manual previously referenced only the IWCF standard, though some drilling contractors’ internal WellCAP programs were approved in some regions. In addition, Shell employees in the US have been trained to WellCAP standards as part of the company’s MMS Subpart O training plan.

Providing contractors the option of using WellCAP will prevent redundant and unnecessary training that has occasionally occurred in the past.

WellCAP has long been used as the internal training standard for several major operators, including Chevron, Occidental Petroleum, Petrobras and PEMEX. A number of major drilling contractors also use WellCAP for in-house well control training, and a far greater number have their employees trained to WellCAP standards by commercial training providers.

WellCAP instruction is currently given in 14 languages by 111 accredited providers, with training at more than 509 locations in 59 countries. Nearly 180,000 WellCAP certificates have been issued since the inception of the WellCAP program.

Facilitator certification: Beginning September 2009, IADC’s prestigious Facilitator Certification course – originally reserved for WellCAP Plus program instructors – was opened to all WellCAP instructors. This allows eligible WellCAP instructors to become WellCAP/WellCAP Plus certified facilitators.

To become a certified facilitator, WellCAP instructors must complete and pass the four-day Facilitator Certification course. It is intended to help instructors develop skills for establishing an interactive learning environment and assisting students to apply the skills learned. Facilitation skills to be taught include effective communication, presentation and questioning skills; how to introduce, manage and process classroom exercises; and how to synthesize learnings.

IADC WellCAP/WellCAP Plus certified facilitator certificates will be issued to instructors who obtain an 80% or better total score on daily exams and the final skills check exercise.

Additionally, all WellCAP instructors who attend the Facilitator Certification course will receive 40 hours of credit to satisfy the continuing education requirement for maintaining WellCAP instructor approval.


The Competence Assurance Accreditation program, launched in 2007 to ensure that personnel meet minimum standards for job competencies, reached significant milestones over the past year as several companies achieved accreditation status.

Rowan Drilling UK became the first drilling contractor company to achieve full accreditation status for CAA in late 2008. When conditional accreditation was granted in 2008, IADC documented minor program nonconformities. Program modifications were then made and verified by IADC. Full accreditation was issued on 10 November 2008. Rowan’s Competence Assurance accreditation applies to 16 rig positions and the personnel holding these positions who work in northern European waters.

Noble Drilling Europe also achieved full accreditation in late 2008, with 18 skilled rig positions accredited and rig personnel operating in UK and Europe included in the program.

Then, in 2009, four more companies achieved accreditation. Pride International received accreditation for seven positions in March, becoming the first company to receive accreditation for a worldwide competence program. The company is working to bring additional positions under the CAA accreditation umbrella.

Ensco International received accreditation for 31 offshore positions, the largest number of positions accredited for any company in the CAA program.

Saudi Aramco Drilling & Workover and Nabors Arabia Company were the first companies to receive CAA accreditation in the Middle East. Saudi Aramco is the first national oil company to receive CAA accreditation and has four positions accredited. Nabors Arabia was accredited for two positions, with accreditation pending for three other positions.


In 2009, the Rig Pass Review Panel revised the HSE Rig Pass Accreditation Program curriculum. Modules for general safety principles, materials handling and first aid were expanded, while a new wellsite environmental protection module was added. Additionally, an optional land endorsement module was created.

In order to ensure continued relevance to new-hires in the petroleum industry, the new curriculum puts strong emphasis on the employee’s responsibility for his/her own safety and the safety of co-workers.

Curriculum changes took effect immediately for all new Rig Pass applicants. Currently accredited training providers were required to implement the revised curriculum no later than 1 October 2009. They must incorporate the new topics into their training programs and notify IADC of an implementation date for the modifications.

In revamping the general safety principles module, panel members emphasized that today’s petroleum industry empowers employees to take a more proactive role in worksite safety. The concept of “stop work” is supported by most, if not all, companies. The revised curriculum reflects this, with a discussion of the authority given to employees to stop or intervene in unsafe work practices.

Also added was job safety analysis/job hazard analysis. The discussion of items prohibited in work areas was expanded to include cell phones and other personal electronic devices, drug paraphernalia and other items.

The materials handling module was expanded to include a discussion of critical lifts. The first aid module was totally reworked and is now a module on first aid and employee health. Health topics regarding staph and other risks that may be associated with adverse weather conditions and local wildlife (i.e., alligators, bears, insects, snakes, spiders and scorpions) were added.

The new wellsite environmental protection module addresses waste management and wellsite environmental issues such as leaks, spills and releases.

The new optional land endorsement module is designed for new-hires working onshore and will provide insights to issues unique to that environment. Examples include trenching and shoring, plus onshore environmental issues.

The previous Rig Pass curriculum was first implemented in 2004 and contained 10 core safety modules, plus an optional offshore endorsement module that remains unchanged.

A pre-packaged HSE Rig Pass Course – ideal for the small- and medium-sized in-house contractor program or commercial training organization – has been developed. The course is designed for facilitated-style delivery with interactive learning exercises. Course materials include participant guide, facilitator guide, and sample tests for all modules.

Once approved by the Rig Pass Review Panel, the materials make IADC accreditation for an HSE Rig Pass orientation program a snap.


The Drilling Industry Training (DIT) Accreditation System has experienced significant growth this year, expanding from 26 courses in 2008 to over 100 courses to date. Each accredited course is custom designed, ranging from introductory to advanced levels of training, education and competencies. The accredited courses are located around the globe (Europe, Asia, Middle East, Africa, New Guinea, Mexico and United States) and are currently offered in five languages.


Ethics & Corporate Compliance Committee

The IADC Ethics and Corporate Compliance Committee continues its mission to help the global drilling industry understand and comply with the Foreign Corrupt Practices Act (FCPA) and other laws related to corruption and bribery. Since its inception in 2007, the committee has provided drilling contractors a forum for members to share best practices, discuss strategies to promote ethical behavior and hear from guest speakers.

IADC has continued to bring industry focus to anti-bribery and compliance issues by way of the association’s global conferences. IADC World Drilling 2009, held in Dublin in June, featured a special FCPA presentation covering some of the most common anti-bribery compliance traps. November’s Annual General Meeting will also feature a segment on FCPA enforcement risks.

In addition, IADC raised the subject of anti-bribery compliance at the Middle East Operations Forum in Bahrain in late October with the goal of conducting a Middle East workshop on the Organisation for Economic Co-operation and Development Anti-Bribery Convention.

IADC also hosted a complimentary FCPA/anti-bribery workshop in September geared toward international marketing and operations personnel, rig managers and other individuals likely to encounter FCPA scenarios in the field. Industry representatives covered issues such as how employees can protect themselves and their company from possible FCPA violations; consequences for companies that violate the FCPA; and when employees should seek counsel from in-house compliance officers or legal representatives.

The workshop featured presentations from representatives of three major drilling companies (ENSCO International, Pride International and Transocean), Global Industries and TRACE International. A total of 80 people registered for the event, where the informal workshop format led to productive interaction between attendees and presenters.

Technical Publications Committee

The IADC Technical Publications Committee continues its efforts to publish a comprehensive series of books designed to serve as an encyclopedia of drilling. In addition to multiple meetings throughout the year, the committee assembled on 24-25 September on South Padre Island for a two-day event to review book outlines and possible inclusions to the series. The committee has published two books – “Casing and Liners for Drilling and Completion” and “Managed Pressure Drilling” – and has several other titles in various stages of preparation. The committee hopes to release two new titles in 2010.

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