Judicial lifting of drilling ban may not last

Another day, another deepwater moratorium? Seems likely. Although US District Judge Martin Feldman of New Orleans issued a 22 June injunction lifting the drilling ban, Secretary of the Interior Ken Salazar has vowed to reinstate the moratorium. The original moratorium applied to all drilling in water depths exceeding 500 ft, including sidetracks. Workover operations may continue.

(Recommendations, rulings and clarifications to same are available on IADC’s Offshore GOM Reform website, www.IADC.org/Offshore_GOM_Reform. The site also includes model letters to US Congressmen and Senators stating support for a resumption of offshore drilling, as well as news from IADC and other sources.)

The Secretary made his intention clear in a meeting with oil industry representatives on 28 June, DC has learned. Department of Interior officials further indicated that, irrespective of conformance with new drilling safety regulations, no deepwater permits would be approved until operators could assure the government that adequate oil-spill plans were in place.

In any case, the 5th US Circuit Court of Appeals set 8 July as the date to hear an appeal by DOI. IADC will file an amicus brief supporting the original suit opposing the moratorium.

Within days of the 20 April explosion and fire on the Macondo prospect, in which 11 lives were lost, the DOI paused all drilling, except for sidetracks and certain other exceptions, in the Gulf of Mexico for 30 days pending development of recommendations for safer drilling to President Obama.

The 6-month deepwater drilling moratorium, ending all drilling in water depths exceeding 500 ft, was imposed on 28 May.

Blowout scenarios

The emphasis today is shifting from improving well-control practices to controlling blowouts and preparation and execution of spill clean up and remediation, according to reports of the meeting. MMS set forth specific blowout control requirements in an 18 June Notice to Lessees (NTL No. 2010-N06; available on www.IADC.org/Offshore_GOM_Reform).

Operators must provide:

• Blowout scenario predicting the highest volume of liquid hydrocarbons, the potential for the well to bridge over, likelihood of successful surface intervention, availability of a rig to drill a relief well, and rig package constraints;
• Description of assumptions and calculations used to estimate flow volume in a worst-case discharge scenario;
• Description of measures to reduce the likelihood of a blowout and to conduct effective early intervention, including contingency for relief wells.

Shallow-water permit ok’d

Meanwhile, the government has adopted a trickle-down approach to granting permits for shallow-water drilling. The government issued late in the week of 21 June the first shallow-water permit since drilling was paused on 28 May and since the deepwater moratorium was imposed.

Drilling in less than 500 ft of water was excluded from the deepwater moratorium largely due to the efforts of the Shallow Water Coalition and IADC

“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,” reads an 8 June DOI news release.

Still, the few permits issued in the days following the deepwater suspension were almost immediately rescinded.

The permit approved late in the week of 25 June by the new Bureau of Ocean Energy, successor to the US Minerals Management Service, went to Bannon Energy. Bannon had received one of the permits issued previously. “They had to do a lot,” one industry source commented dryly when asked what steps the operator took to gain final approval.

Bannon contracted Seahawk Drilling for the well. At press time, the rig was waiting on weather, as Hurricane Alex passed through the Western GOM.

As of 24 June, 18 other jackups were waiting on permits. Crews of at least two jackups had been laid off.

Regulatory sea changes

The length of the deepwater moratorium will doubtless influence the vigor of the US offshore deepwater drilling industry. The longer it lingers, the more jobs, revenue and production will be lost.

Irrespective of time span, however, it appears clear that sea changes to offshore well design, equipment and operations are in the offing.

On 8 June, the Minerals Management Service issued specific directives for both shallow and deepwater drilling. These requirements, in NTL No. 2010-N05 (available on IADC’s website) flesh out recommendations of the 27 May DOI Report to President Obama, “Increased Safety Measures for Energy Development on the Outer Continental Shelf.”

An important point is that BOPs must be inspected and verified independently for each well, rather than per rig, according to a clarification made by MMS during June. “However,” the clarification reads, “the operator can verify multiple wells at a given location where all variables are the same (i.e., verify all equipment at one time, and the operator will then submit the individual verifications with each applicable well permit).”

Key elements of the 8 June NTL are available at www.IADC.org/Offshore_GOM_Reform and will be published in the July/August edition of Drilling Contractor.