Regulatory Processes Proliferate as Offshore Energy Development Moves Forward

HBW Resources: Greenfield Offshore Energy Report

Below is a summary of publicly available activities currently underway that could affect the development of offshore oil and gas resources prepared by Brent Greenfield, HBW Resources’ Director of Ocean Policy and Regulatory Affairs.

North Carolina Gov. Agrees to Chair Offshore Coalition, Discusses Offshore Drilling with Obama

Following Alaska Gov. Sean Parnell’s recent decision to step down from his role as Chair of the Outer Continental Shelf Governors Coalition (Coalition) to address increasing commitments and a reelection campaign, North Carolina Gov. Pat McCrory has agreed to serve as Chair of the Coalition.

In related news, the Raleigh News & Observer reported on Gov. McCrory’s recent encounter with President Obama, during which he discussed the subject of offshore drilling.

Greeting President Obama on the tarmac in Morrisville, NC, Gov. McCrory said that he “talked about wanting to build a relationship with the White House in dealing with complex issues” including offshore drilling.  President Obama then took the opportunity to introduce Gov. McCrory to U.S. Energy Secretary Ernest Moniz.
During his conversation with Sec. Moniz, Gov. McCrory discussed the OCS Governors Coalition’s upcoming February meeting in Washington, DC.  Gov. McCrory reported that he is setting up a meeting with Sec. Moniz and the Coalition members “to explore and hopefully move forward offshore drilling, at least for natural gas off our coast.”  Gov. McCrory added that “we are beginning that dialogue,” stating that “we need to move forward with energy exploration in North Carolina and at least this first window of opportunity of dialogue and I look forward to building that dialogue.”
Gov. McCrory said his message to the Obama Administration is “Let us at least begin seismic testing to see what’s out there…Let us find out what’s out there so we can start developing plans for implementation. Until we can do that we are wasting our time talking about it.”
BSEE Issues Safety Alert 

The Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE) has issued a Safety Alert following the completion of a panel investigation into a June 2012 fixed production platform incident that occurred in the Santa Barbara Channel offshore southern California and resulted in the spillage of ~35 barrels of crude oil.

Based on the investigation findings, BSEE recommends that operators review Safety and Environmental Management System plans to ensure the following:

  • Platform piping, safety devices, and shutdown systems are designed and maintained to handle anticipated process upset conditions.
  • Management of Change procedures are adequate to identify and implement new or modified measures needed to ensure the integrity of the production process when equipment is removed for repair.
  • Maintenance, testing, and documentation procedures of pressure safety elements (PSEs) and other safety devices are adequate to ensure those devices will perform as intended. Operators should check the status and condition of any PSEs or similar devices in use in their production systems.
  • Operators should be especially aware of the age of such discs as well as the working conditions that the discs are subjected to, which may result in fatiguing or failure. The rupture disc marking identification tags should be attached and legible. Operators should inspect rupture discs for damage or pre-existing flaws before installing replacements.
  • Maintenance and testing procedures are adequate to ensure that audible alarms will function as intended.
  • Visual alarms are designed and installed so that platform personnel are alerted to process upset conditions in a timely manner.
  • Training programs are adequate to ensure that personnel can respond effectively to anticipated process upset conditions.

National Marine Sanctuary System Business Advisory Council Holds Inaugural Meeting

NOAA’s Office of National Marine Sanctuaries (ONMS) recently announced that the new Sanctuary System Business Advisory Council (Council) would hold its first public meeting in Washington, DC on Wednesday, January 29, 2014.

According to the agenda, the meeting was to include the following items:

  • Overview of the National Marine Sanctuary System
  • Presentation: Why the Sanctuary System Business Advisory Council
  • Discussion: What is the one thing the sanctuary system must do to engage the corporate sector?
  • Discussion: What can the sanctuary system do to ensure success with corporate partners at the World Parks Congress?
  • Discussion: What do you as a member hope to gain from being on the Council?
  • 10-minute public comment opportunity

Established in September 2013, the 15-member Council has been established to provide advice and recommendations to the ONMS Director regarding the relationship of ONMS with the business community, and is specifically tasked with providing advice on the following:

  • Engaging the corporate sector and other non-traditional partners with mutual interest in marine resource protection;
  • Assessing and expressing the economic, social, and cultural value of national marine sanctuaries and other marine protected areas;
  • Leveraging the recreational and aesthetic values of national marine sanctuaries for building strong local, national, and international economies; and
  • Developing joint initiatives and projects with the goal of sustaining and protecting special marine places

Interior Secretary Presents Conservation Awards for Atlantic Canyons and Rigs to Reefs Work
Interior Secretary Sally Jewell recently presented the 2013 Partners in Conservation Awards to 20 public-private partnerships, including the Atlantic Canyons-Pathways to the Abyss (nominated by the Bureau of Ocean Energy Management), Rigs to Reefs Policy (jointly nominated by the Bureaus of Ocean Energy Management and Safety and Environmental Enforcement), and Ocean Renewable Energy Stewardship Partnership (nominated by the Bureau of Ocean Energy Management).

An Interior Department document notes that information obtained from the Atlantic Canyons study will be used to “inform offshore energy management decisions,” adding that “[r]esults from deep-sea communities and historical shipwrecks off the mid-Atlantic coast will strengthen the protection and conservation of these habitats from potential impact related to energy development.”

With regard to Rigs to Reefs policy, the document states that BSEE and the National Ocean Council “successfully coordinated, communicated, and built consensus with stakeholders from industry to the local angler and diver through meetings and open forums to create this policy.”  It adds that the Rigs to Reefs process “provides ecosystem and economic sustainability by creating healthy and robust marine habitats while improving the long-term viability of fishing, diving, and tourism industries” and “is now
paving the way as a collaborative planning tool for future partnership efforts.”

Interior Official Leaves for New Role at NOAA

NOAA recently announced the appointment of Eileen Sobeck to be Assistant Administrator for NOAA Fisheries.  Sobeck, who has been serving as Acting Assistant Interior Secretary for the Office of Insular Affairs, assumed new position on January 27.

In making the announcement, Acting NOAA Administrator Dr. Kathryn Sullivan said that Sobeck’s background “will be an asset at NOAA Fisheries as they work to continue turning the corner on overfishing, protect endangered marine species, and promote smart management approaches to build sustainable fisheries, and vibrant coastal communities.”

Sobeck will replace Samuel Rauch, who will return to his previous position as NOAA Deputy Assistant Administrator for Regulatory Programs.  Sobeck’s previous experience includes service as U.S. Deputy Assistant Interior Secretary for Fish and Wildlife and Parks and stints with NOAA’s Office of General Counsel and the Justice Department’s Environment and Natural Resources Division.

U.S. Rep. Reintroduces Energy Bill with Offshore Oil and Gas Provisions

U.S. Rep. Jeff Duncan (R-SC) recently reintroduced the Energy Exploration and Production to Achieve National Demand (EXPAND) Act (H.R. 3895).  Previously introduced in April 2012, the legislation includes provisions including, among others, the following:

  • Requires lease sales for all of those included in Table A of the Draft Proposed OCS Oil and Gas Leasing Program 2010-2015 beginning in FY2015 (including Eastern GOM [with expanded program area if moratorium lifted], Chukchi, Beaufort, North Aleutian Basin, South Atlantic, Mid-Atlantic, North Atlantic, Southern California, Northern California); exempts such lease sales from CZMA consistency review and deems EIS released with 2010-2015 Proposed Program as final
  • Requires Draft Proposed 2015-2020 OCS Leasing Program within 1 year of enactment
  • Terminates Eastern Gulf of Mexico leasing moratorium
  • Requires Eastern GOM lease sales in Destin Dome and Pensacola areas within 1 year, with other areas in the region offered for lease as soon as practicable, and such areas shall be included in all future 5-Year plans; Eastern GOM lease sales shall not be subject to CZMA consistency reviews
  • Requires issuance of Final PEIS and Record of Decision for Atlantic seismic environmental review
  • Requires establishment of process for ensuring timely completion of Atlantic seismic permitting and processing activities
  • Within 18 months, requires issuance of Preliminary EIS for Southern California seismic activity
  • Requires payment of 37.5% of offshore revenue to coastal states with adjacent offshore oil and gas development (exempts Western/Central GOM leases subject to GOMESA)
  • Extends by an additional 2 years certain deepwater leases that were not producing as of April 30, 2010 (to be extended an additional 18 months if less than 20 exploration or development wells have been spudded on deepwater GOM leases within 18 months of enactment); any such leases that have expired since April 30, 2010 shall be reinstated
  • Requires annual review of national defense areas to determine whether such areas should remain under restriction
  • Requires the Interior Sec. to ensure that at least 10% of the OCS is leased for energy production
  • Requires decision on permit drilling applications within 30 days
  • Requires consultations between Secretaries of Interior and Defense regarding military operational needs in OCS; any conflicts that can’t be resolved would be referred to President within 90 days for immediate resolution
  • Prohibits federal departments and agencies from implementing National Ocean Policy Executive Order

Comments Sought on Marine Casualty Reporting Guidance

The U.S. Coast Guard has announced that it is seeking comments on draft guidance contained in a Navigation and Vessel Inspection Circular (NVIC) titled “Title 46, Code of Federal Regulations (CFR), Part 4 Marine Casualty Reporting Procedures Guide with Associated Standard Interpretations.”  Comments are due by Monday, April 14, 2014.

According to the announcement, the NVIC “will assist regulated maritime industry stakeholders in determining if certain occurrences are reportable or not reportable to the Coast Guard, other than those related to recreational vessel casualties.”

Comments are sought on the impacts that the interpretations and policies included in the NVIC would have on vessel owners/operators or other affected parties.

Revisions Proposed for Fire Protection, Detection, and Extinguishing Equipment USCG Regulations

The U.S. Coast Guard recently announced that it is seeking comments on its proposal to amend regulations for certain design and approval standards for fire protection, detection, and extinguishing equipment on inspected and uninspected vessels, Outer Continental Shelf facilities, deepwater ports, and mobile offshore drilling units.  Comments are dye by Monday, April 14, 2014.

According to the announcement, the proposed changes would “harmonize Coast Guard regulations with appropriation national and international consensus standards; address advances in fire protection technologies and standards; update Coast Guard approval processes for fire detection and alarm systems; and revise Coast Guard regulations for other types of equipment or components, such as spanner wrenches, non-metallic pipes, and sprinkler systems.”

The Coast Guard further states that the proposed changes would ensure that regulations “are clear, contain additional flexibility through alternative compliance options, and reflect current industry practice, industry consensus standards, and modern technology.”  The proposed changes would incorporate 26 voluntary consensus standards.

Comments Sought on Platform/Structure-Related ICR Renewal

The Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE) has announced that it is seeking comments on its intention to seek Office of Management and Budget approval for renewal of an information collection pertaining to (1) general platform requirements; (2) Platform Verification Program; (3) platform inspection, maintenance, and assessment; and (4) general departure.

Comments are due by Monday, March 17, 2014.

Comments Sought on ICR Renewal Regarding Notification of Oil/Hazardous Substance Releases

EPA has announced that it is seeking comments on its request for Office of Management and Budget approval to renew an information collection concerning notification of episodic releases of oil and hazardous substances.  Comments are due by Thursday, February 13, 2014.

EPA notes that the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) requires persons in charge of a facility or vessel to immediately notify the National Response Center of a hazardous substance release into the environment if the amount equals or exceeds the substance’s reportable quantity limit.  In addition, the Clean Water Act requires persons in charge of a vessel to immediately notify the National Response Center of an oil spill into U.S. navigable waters if the spill causes a sheen, violates applicable water quality standards, or causes a sludge or emulsion to be deposited beneath the surface of the water or upon adjoining shorelines.

Comments Sought on Cooling Water Intake ICR Renewal for Offshore O&G Facilities

EPA has announced that it is seeking comments on its request for Office of Management and Budget approval to renew an information collection from new offshore oil and gas extraction facilities that use a cooling water intake structure(s) that (1) uses at least 25 percent of the water it withdraws for cooling purposes, and (2) has a design intake flow greater than two (2) million gallons per day.

EPA notes that under the Clean Water Act, the location, design, construction and capacity of cooling water intake structure(s) at such facilities must reflect the best technology available for minimizing adverse environmental impact.

Comments are due by Tuesday, February 18, 2013.

Interior Dept. Announces States’ Decisions on Accounting & Auditing Relief for Marginal Properties

The Interior Department’s Office of Natural Resources Revenue (ONRR) has released a list of states’ decisions in 2013 on whether to participate in accounting and auditing relief for qualifying marginal Federal oil and gas properties.

The Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 allows for states to relieve lessees of marginal properties from certain reporting, accounting, and auditing requirements.  Regulations promulgated in 2004 provide two types of accounting and auditing relief for Federal onshore or Outer Continental Shelf lease production from marginal properties.

Louisiana is the only Gulf Coast state to have qualifying marginal properties and elect to allow relief.  Federal oil and gas properties in all other states where ONRR does not share a portion of federal royalties with the state are eligible for relief if they qualify as marginal under the regulations.

National Petroleum Council Renewed for Two Years

The U.S. Energy Department has announced the renewal of the National Petroleum Council (NPC) for a 2-year period beginning on January 10, 2014.

Established in 1946, NPC is a federal advisory committee that advises, informs, and makes recommendations to the Secretary of Energy on matters related to oil and natural gas or the oil and gas industries.

NPC members include representatives of integrated oil and gas companies, larger independents, smaller independents,, natural gas companies, independent oil transporters, refiners, and marketers, construction, drilling, and oilfield support-service companies, financial and consultant services, electric companies and large consumers, and non-industry and not-for-profit members.

Comment Period Extended for Proposed Phase III GOM Early Restoration Projects 

The Interior Department recently announced that it is extending the public comment period on the Draft Programmatic and Phase III Early Restoration Plan and Draft Early Restoration Programmatic Environmental Impact Statement (Draft Phase III ERP/PEIS) prepared by the Federal and State natural resource trustee agencies that are conducting the Deepwater Horizon-related Natural Resource Damage Assessment.  Comments are now due by Wednesday, February 19, 2014.

Comments are sought on the proposed alternative contained in the Phase III DERP/PEIS, which proposes 44 early restoration projects valued at $627 million.  Roughly 63% of the funds would be applied toward ecological projects, while 37% would be allocated to lost recreational use projects.

The Phase III DERP/ER has been prepared under the terms of the “Framework for Early Restoration Addressing Injuries Resulting from the Deepwater Horizon Oil Spill” (Framework Agreement), whereby BP agreed to provide up to $1 billion to address Deepwater Horizon-related natural resource injuries prior to the resolution of the Natural Resource Damage Assessment.

Additional Information

For additional information, contact Brent Greenfield with HBW Resources. His contact information is below.

Brent Greenfield
HBW Resources
2211 Norfolk Street, #410
Houston, TX 77098
Tel: 713-337-8810
E-mail: bgreenfield@hbwresources.com
Web: http://www.hbwresources.com

If you have any general questions, please give me a call anytime. Previous reports and other updates can be found at the HBW Resources Intelligence Tab at: https://hbwresources.com/intelligence/.   Hope you have a great day.

Thanks,

Michael Zehr
HBW Resources
1666 K Street, NW, Suite 500
Washington, DC 20006
Direct: 202-429-6081
Cell: 202-277-3927
E-mail: mzehr@hbwresources.com
Twitter: @mzehrhbw