Oil and Gas and Sulfur Operations on the Outer Continental Shelf-Oil and Gas Production Safety Systems
Federal RegisterSep 7, 2016
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DEPARTMENT OF THE INTERIOR
Bureau of Safety and Environmental Enforcement
30 CFR Part 250
[Docket ID: BSEE-2012-0005; 16XE1700DX EX1SF0000.DAQ000 EEEE500000]
RIN 1014-AA10
Oil and Gas and Sulfur Operations on the Outer Continental Shelf—Oil and Gas Production Safety Systems
AGENCY:
Bureau of Safety and Environmental Enforcement (BSEE), Interior.
ACTION:
Final rule.
SUMMARY:
The Bureau of Safety and Environmental Enforcement (BSEE) is amending and updating the regulations regarding oil and natural gas production safety on the Outer Continental Shelf (OCS) by addressing issues such as: Safety and pollution prevention equipment design and maintenance, production safety systems, subsurface safety devices, and safety device testing. The rule differentiates the requirements for operating dry tree and subsea tree production systems and divides the current BSEE regulations regarding oil and gas production safety systems into multiple sections to make the regulations easier to read and understand. The changes in this rule are necessary to improve human safety, environmental protection, and regulatory oversight of critical equipment involving production safety systems.
DATES:
This rule becomes effective on November 7, 2016. Compliance with certain provisions of the final rule, however, will be deferred until the times specified in those provisions and as described in part II.E of this document.
The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of November 7, 2016.
FOR FURTHER INFORMATION CONTACT:
Amy White, BSEE, Office of Offshore Regulatory Programs, Regulations Development Section, at 571-230-2475 or at
regs@bsee.gov
.
SUPPLEMENTARY INFORMATION:
Executive Summary
This rule amends and updates BSEE's regulations for oil and gas production safety systems. The regulations (30 CFR part 250, subpart H) have not, until now, undergone a major revision since they were first published in 1988. Since that time, much of the oil and gas production on the OCS has moved into deeper waters and the regulations have not kept pace with the technological advancements.
These regulations address issues such as production safety systems, subsurface safety devices, safety device testing, and production processing systems and areas. These systems play a critical role in protecting workers and the environment. In this final rule, BSEE has made the following changes to subpart H:
• Restructured subpart H to have shorter, easier-to-read sections and clearer, more descriptive headings.
• Updated and improved safety and pollution prevention equipment (SPPE) design, maintenance, and repair requirements in order to increase the overall level of certainty that this equipment will perform as intended, including in emergency situations.
• Expanded the regulations to differentiate the requirements for operating dry tree and subsea tree production systems on the OCS.
• Incorporated by reference new industry standards and update the previous partial incorporation of other standards to require compliance with the complete standards.
• Added new requirements for firefighting systems, shutdown valves and systems, valve closure and leakage, and high pressure/high temperature (HPHT) well equipment.
• Rewrote the subpart in plain language.
In addition to revising subpart H, we are revising the existing regulation (§ 250.107(c)) that requires the use of best available and safest technology (BAST) to follow more closely the Outer Continental Shelf Lands Act's (OCSLA, or the Act) statutory language regarding BAST.
ER07SE16.004
ER07SE16.005
Table of Contents
I. Background
A. BSEE's Statutory and Regulatory Authority
B. Incorporation by Reference of Industry Standards
C. Production Safety Systems
II. Basis and Purpose of This Rule
A. Developments in Offshore Production
B. Proposed Revisions to Subpart H
C. Summary of Documents Incorporated by Reference
D. Summary of Significant Differences Between the Proposed and Final Rules
1. Best Available and Safest Technology (BAST)—§ 250.107(c)
2. Firefighting Systems—§ 250.859
3. Operating Pressure Ranges—§§ 250.851, 250.852, 250.858, and 250.865
4. Emergency Shutdown Systems—§ 250.855
E. Deferred Compliance Dates
III. Final Rule Derivation Table
IV. Comments on the Proposed Rule and BSEE's Responses
A. Overview
B. Summary of General Comment Topics
1. Requests for an Extension of the Public Comment Period;
2. BSEE and USCG Jurisdiction
3. Arctic Production Safety Systems
C. Response to Comments and Section-by-Section Summary
1. General Comments
2. Economic Analysis Comments
3. Section-by-Section Summary and Responses to Comments
V. Procedural Matters
I. Background
A. BSEE's Statutory and Regulatory Authority
OCSLA, 43 U.S.C. 1331
et seq.,
was first enacted in 1953, and substantially amended in 1978, when Congress established a National policy of making the OCS “available for expeditious and orderly development, subject to environmental safeguards, in a manner which is consistent with the maintenance of competition and other National needs.” (43 U.S.C. 1332(3).) In addition, Congress emphasized the need to develop OCS mineral resources in a safe manner “by well-trained personnel using technology, precautions, and techniques sufficient to prevent or minimize the likelihood of blowouts, loss of well control, fires, spillages, physical obstruction to other users of the waters or subsoil and seabed, or other occurrences which may cause damage to the environment or to property, or endanger life or health.” (43 U.S.C. 1332(6).) The Secretary of the Interior (Secretary) administers the OCSLA provisions relating to the leasing of the OCS and regulation of mineral exploration and development operations on those leases. The Secretary is authorized to prescribe “such rules and regulations as may be necessary to carry out [OCSLA's] provisions . . . and may at any time prescribe and amend such rules and regulations as [s]he determines to be necessary and proper in order to provide for the prevention of waste and conservation of the natural resources of the [OCS] . . .” and that “shall, as of their effective date, apply to all operations conducted under a lease issued or maintained under the provisions of [OCSLA].” (43 U.S.C. 1334(a).)
The Secretary delegated most of the responsibilities under OCSLA to BSEE and the Bureau of Ocean Energy Management (BOEM), both of which are charged with administering and regulating aspects of the Nation's OCS oil and gas program. BSEE and BOEM work to promote safety, protect the
environment, and conserve offshore resources. BSEE adopts regulations and performs offshore regulatory oversight and enforcement. BSEE's regulatory oversight includes, among other things, evaluating drilling permits, and conducting inspections to ensure compliance with applicable laws, regulations, lease terms, and approved plans and permits.
B. Incorporation by Reference of Industry Standards
BSEE frequently uses standards (
e.g.,
codes, Specifications (Specs.), and Recommended Practices (RPs)) developed through a consensus process, facilitated by standards development organizations and with input from the oil and gas industry, as a means of establishing requirements for activities on the OCS. BSEE may incorporate these standards into its regulations by reference without republishing the standards in their entirety in regulations. The legal effect of incorporation by reference is that the incorporated standards become regulatory requirements. This incorporated material, like any other regulation, has the force and effect of law, and operators, lessees and other regulated parties must comply with the documents incorporated by reference in the regulations. BSEE currently incorporates by reference over 100 consensus standards in its regulations. (
See
§ 250.198.)
Federal regulations, at 1 CFR part 51, govern how BSEE and other Federal agencies incorporate documents by reference. Agencies may incorporate a document by reference by publishing in the Federal Register the document title, edition, date, author, publisher, identification number, and other specified information. The preamble of the final rule must also discuss the ways that the incorporated materials are reasonably available to interested parties and how those materials can be obtained by interested parties. The Director of the Federal Register will approve each incorporation of a publication by reference in a final rule that meets the criteria of 1 CFR part 51.
When a copyrighted publication is incorporated by reference into BSEE regulations, BSEE is obligated to observe and protect that copyright. BSEE provides members of the public with Web site addresses where these standards may be accessed for viewing—sometimes for free and sometimes for a fee. Standards development organizations decide whether to charge a fee. One such organization, the American Petroleum Institute (API), provides free online public access to review its key industry standards, including a broad range of technical standards. All API standards that are safety-related and all API standards that are incorporated into Federal regulations are available to the public for free viewing online in the Incorporation by Reference Reading Room on API's Web site. Several of those standards are incorporated by reference in this final rule (as described in parts II.C and IV of this document). In addition to the free online availability of these standards for viewing on API's Web site, hardcopies and printable versions are available for purchase from API. The API Web site address is:
http://www.api.org/publications-standards-and-statistics/publications/government-cited-safety-documents
.
1
1
To review these standards online, go to the API publications Web site at:
http://publications.api.org
. You must then log-in or create a new account, accept API's “Terms and Conditions,” click on the “Browse Documents” button, and then select the applicable category (
e.g.,
“Exploration and Production”) for the standard(s) you wish to review.
For the convenience of members of the viewing public who may not wish to purchase or view these incorporated documents online, they may be inspected at BSEE's office, 45600 Woodland Road, Sterling, Virginia 20166, or by sending a request by email to
regs@bsee.gov
.
C. Production Safety Systems
BSEE's regulations require operators to design, install, use, maintain, and test production safety equipment to ensure safety and the protection of the human, marine, and coastal environments.
2
Operators may not commence production until BSEE approves their production safety system application and BSEE conducts a preproduction inspection. These inspections are necessary to determine whether the operator's proposed production activities meet the OCSLA requirements and BSEE's regulations governing offshore production. The regulatory requirements include, but are not limited to, ensuring that the proposed production operations:
2
The relevant provisions of the existing regulations, and the provisions of this final rule, typically apply to “you,” defined by existing § 250.105 as “a lessee, the owner or holder of operating rights, a designated operator or agent of the lessees(s), a pipeline right-of-way holder, or a State lessee granted a right-of-use and easement.” For convenience, however, throughout this document we refer to the parties required to comply with the provisions of the existing regulations and this final rule as the “operator” or “operators,” unless explicitly stated otherwise.
• Conform to OCSLA, as amended, its applicable implementing regulations, lease provisions and stipulations, and other applicable laws;
• Are safe;
• Conform to sound conservation practices and protect the rights of the U.S. in the mineral resources of the OCS;
• Do not unreasonably interfere with other uses of the OCS; and
• Do not cause undue or serious harm or damage to the human, marine, or coastal environments. (
See
§§ 250.101 and 250.106.)
BSEE will approve the operator's production safety system if it meets these criteria.
Typically, well completions associated with offshore production platforms are characterized as either dry tree (surface) or subsea tree completions. The “tree” is the assembly of valves, gauges, and chokes mounted on a well casing head and used to control the production and flow of oil or gas. Dry tree completions are typical for OCS shallow water production platforms, with the tree in a “dry” state located on the deck of the production platform. The dry tree arrangement allows direct access to valves and gauges to monitor well conditions, such as pressure, temperature, and flow rate, as well as direct vertical well access. Dry tree completions are easily accessible. Because of their easy accessibility, even as oil and gas production moved into deeper water, dry trees were still used on new types of production platforms more suitable for deeper water, such as compliant towers, tension-leg platforms (TLPs), and spars. These platform types gradually extended the depth of usage for dry tree completions to over 4,600 feet of water depth.
Production in the Gulf of Mexico (GOM) now occurs in depths of 9,000 feet of water, however, with many of the wells producing from water depths greater than 4,000 feet utilizing “wet” or subsea trees. Subsea tree completions are done with the tree located on the seafloor. These subsea completions are generally tied back to floating production platforms, and from there the production moves to shore through pipelines. Due to the location on the seafloor, subsea trees or subsea completions do not allow for direct access to valves and gauges, but the pressure, temperature, and flow rate from the subsea location is monitored from the production platform and, in some cases, from onshore data centers.
In conjunction with all production operations and completions, including both wet and dry trees, there are associated subsurface safety devices designed to prevent uncontrolled releases of reservoir fluid or gas.
Most of the current regulatory requirements for production safety systems are contained in subpart H of part 250 of BSEE's existing regulations (existing §§ 250.800 through 250.808). Revision of those requirements is the primary focus of this rulemaking.
II. Basis and Purpose of This Rule
A. Developments in Offshore Production
The existing regulations on production safety systems that this final rule is amending were first published on April 1, 1988. (
See
53 FR 10690). Since that time, various sections have been updated, and BSEE has issued several Notices to Lessees and Operators (NTLs) to clarify the regulations and to provide guidance to lessees and operators.
3
3
This includes NTL-2006-G04,
Fire Prevention and Control Systems
(2006), and NTL-2009-G38,
Using Alternate Compliance in Safety Systems for Subsea Production Operations
(2009). All NTLs can be viewed at:
http://www.bsee.gov/Regulations-and-Guidance/Notices-to-Lessees/index/
.
As discussed in part I.C of this document, subsea trees and other technologies have evolved, and their use has become more prevalent offshore, over the last 28 years, especially as more and more production has shifted from shallow waters to deepwater environments. This includes significant developments in production-related areas as diverse as foam firefighting systems; electronic-based emergency shutdown (ESD) systems; subsea pumping, waterflooding, and gas lift; and new alloys and equipment for high temperature and high pressure wells. The subpart H regulations, however, have not kept pace with those developments.
B. Proposed Revisions to Subpart H
On August 22, 2013, BSEE published a Notice of Proposed Rulemaking (the proposed rule) in the
Federal Register
entitled “Oil and Gas and Sulphur Operations on the Outer Continental Shelf—Oil and Gas Production Safety Systems.” (
See
78 FR 52240.) The purpose of that proposed rule was to improve worker safety and protection of the marine and coastal environment by helping reduce the number of production-related incidents resulting in oil spills, injuries and fatalities. The proposed rule was intended to keep pace with the changing technologies that enable the industry to develop resources in deeper waters (which often involves placing safety equipment on the seabed rather than on a surface platform) by addressing issues such as production safety systems, subsurface safety devices, safety device testing, and production processing systems and areas, and by incorporating best practices currently being deployed by industry leaders.
The comment period for the proposed rule was originally set to close on October 21, 2013. However, in response to several requests, BSEE published a notice on September 27, 2013 (78 FR 59632), extending the comment period until December 5, 2013.
As discussed in part IV.C of this document, BSEE received 57 separate written comments on the proposed rule from a variety of interested stakeholders (
e.g.,
industry, environmental groups, and other non-governmental organizations).
After the close of the comment period, BSEE subject matter experts and decision-makers carefully considered all of the relevant comments in developing this final rule. In part IV of this document, BSEE responds to those comments and discusses how several provisions of the proposed rule were revised in this final rule to address concerns or information raised by commenters.
As a result of BSEE's consideration of all the relevant comments and other relevant information, BSEE has developed this final rule, which is intended to improve worker safety and protection of marine and coastal ecosystems by helping to reduce the number of production-related incidents resulting in oil spills, injuries, and fatalities.
Among other significant changes to the existing regulations, this final rule establishes new requirements for the design, testing, maintenance, and repair of SPPE, using a lifecycle approach. The lifecycle approach involves careful consideration and vigilance throughout SPPE design, manufacture, operational use, maintenance, and decommissioning of the equipment. It is a tool for continual improvement throughout the life of the equipment. The lifecycle approach for SPPE is not a new concept, and its elements are discussed in several industry documents already incorporated by reference in the existing regulations (
see
§ 250.198), such as API Spec. 6A, API Spec. 14A, and API RP 14B. This final rule codifies aspects of the lifecycle approach into the regulations and brings more attention to its importance.
BSEE's focus in the development of this rule has been, and will continue to be, improving worker safety and protection of the environment by helping to reduce the number of production-related incidents resulting in oil spills, injuries and fatalities. For example, there have been multiple incidents, including fatalities, injuries, and facility damage related to the mechanical integrity of the fire tube for tube-type heaters. BSEE is aware that this type of equipment has not been regularly maintained by industry. In the final rule, BSEE is requiring that this type of equipment be removed and inspected, and then repaired or replaced as needed, every 5 years. This requirement will improve equipment reliability to help limit incidents associated with the mechanical integrity of the fire tubes.
Three existing NTLs are directly related to issues addressed in this rulemaking:
• NTL No. 2011-N11,
Subsea Pumping for Production Operations;
• NTL No. 2009-G36,
Using Alternate Compliance in Safety Systems for Subsea Production Operations;
and
• NTL No. 2006-G04,
Fire Prevention and Control Systems.
Most of the elements from these NTLs are codified in this final rule. After the final rule is effective, BSEE intends to rescind these NTLs and remove them from the
BSEE.gov
Web site. BSEE may issue new NTLs to address any elements of those NTLs that are consistent with but not expressly incorporated in the final rule.
C. Summary of Documents Incorporated by Reference
BSEE is incorporating by reference one new standard in the final rule, API 570, Piping Inspection Code: In-service Inspection, Rating, Repair, and Alteration of Piping Systems, Third Edition, November 2009. As discussed in the standard, API 570 covers inspection, rating, repair, and alteration procedures for metallic and fiberglass-reinforced plastic piping systems and their associated pressure relieving devices that have been placed in service. The intent of this code is to specify the in-service inspection and condition-monitoring program that is needed to determine the integrity of piping systems. That program should provide reasonably accurate and timely assessments to determine if any changes in the condition of piping could compromise continued safe operation. It is also the intent of this code that owners/users respond to any inspection results that require corrective actions to assure the continued integrity of piping consistent with appropriate risk analysis. Items discussed in this standard include inspection plans, condition monitoring methods, pressure testing of piping systems, and inspection recommendations for repair or replacement.
The other standards referred to in this final rule are already incorporated by
reference in other sections of BSEE's existing regulations. BSEE is incorporating more recently reaffirmed versions of those standards in this rule, as follows:
• BSEE is incorporating a more recently reaffirmed version of American National Standards Institute (ANSI)/API Spec. 6AV1, Specification for Verification Test of Wellhead Surface Safety Valves and Underwater Safety Valves for Offshore Service, First Edition, February 1996; Reaffirmed April 2008. This standard includes the minimum acceptable standards for verification testing of surface safety valves (SSVs)/underwater safety valves (USVs) for two performance requirement levels.
• BSEE is also incorporating a more recently reaffirmed version of ANSI/API Spec. 14A, Specification for Subsurface Safety Valve Equipment, Eleventh Edition, October 2005, Reaffirmed June 2012. This standard provides the minimum acceptable requirements for subsurface safety valves (SSSVs), including all components that establish tolerances and/or clearances that may affect performance or interchangeability of the SSSVs. It includes repair operations and the interface connections to the flow control or other equipment, but does not cover the connections to the well conduit.
• BSEE is incorporating a recently reaffirmed version of API RP 14E, Recommended Practice for Design and Installation of Offshore Production Platform Piping Systems, Fifth Edition, October 1991; Reaffirmed January 2013. This standard provides minimum requirements and guidelines for the design and installation of new piping systems on production platforms located offshore. This document covers piping systems with a maximum design pressure of 10,000 pounds per square inch gauge (psig) and a temperature range of −20 degrees to 650 degrees Fahrenheit.
• BSEE is incorporating a more recently reaffirmed version of API RP 14F, Recommended Practice for Design, Installation, and Maintenance of Electrical Systems for Fixed and Floating Offshore Petroleum Facilities for Unclassified and Class 1, Division 1 and Division 2 Locations, Fifth Edition, July 2008, Reaffirmed April 2013. This RP sets minimum requirements for the design, installation, and maintenance of electrical systems on fixed and floating petroleum facilities located offshore. This RP is not applicable to mobile offshore drilling units (MODUs) without production facilities. This document is intended to bring together in one place a brief description of basic desirable electrical practices for offshore electrical systems. The RP recognizes that special electrical considerations exist for offshore petroleum facilities, including inherent electrical shock, space limitations, corrosive marine environment, and motion and buoyancy concerns.
• BSEE is incorporating a recently reaffirmed version of API RP 14J, Recommended Practice for Design and Hazards Analysis for Offshore Production Facilities, Second Edition, May 2001; Reaffirmed January 2013. This standard assembles into one document useful procedures for planning, designing, and arranging offshore production facilities, and performing a hazards analysis on open-type offshore production facilities.
• BSEE is incorporating a more recently reaffirmed version of ANSI/API Spec. Q1, Specification for Quality Programs for the Petroleum, Petrochemical and Natural Gas Industry, Eighth Edition, December 2007, Addendum 1, June 2010. This standard states that the adoption of a quality management system should be a strategic decision of any organization. The design and implementation of an organization's quality management system is influenced by its organizational environment, its varying needs, its particular objectives, the product it provides, and its size and organizational structure.
In addition, this rule incorporates API RP 500, Recommended Practice for Classification of Locations for Electrical Installations at Petroleum Facilities Classified as Class I, Division 1 and Division 2, Second Edition, November 1997, Reaffirmed November 2002. The purpose of this RP is to provide guidelines for classifying locations at petroleum facilities as Class I, Division 1 and Class I, Division 2 for the selection and installation of electrical equipment.
D. Summary of Significant Differences Between the Proposed and Final Rules
After consideration of all relevant comments, BSEE made a number of revisions to the proposed rule language in the final rule. We are highlighting several of these changes here because they are significant, and because multiple comments addressed these topics. A discussion of the relevant comments, including BSEE's specific responses, is found in part IV of this document. All of the revisions to the proposed rule language made after consideration of relevant comments are explained in more detail in that part. The significant revisions made in response to comments include:
1. Best Available and Safest Technology (BAST)—§ 250.107(c)
BSEE proposed to revise the BAST provisions in existing § 250.107 in order to align the regulatory language more closely with the statutory BAST language in OCSLA, to clarify BSEE's expectations, and to make it easier for operators to understand when they must use BAST. BSEE proposed to delete existing paragraph (d) (regarding authority of the Director to impose additional BAST measures) and to revise paragraph (c) to include more of the statutory language and to provide an exception from use of BAST when an operator demonstrates that the incremental benefits of using BAST are insufficient to justify its incremental costs.
BSEE received numerous comments on this proposed change. Among other issues, some commenters stated that the proposed language failed to confirm BSEE's prior position regarding compliance with BSEE's regulations being considered the use of BAST. As explained in more detail in part IV.C of this document, after consideration of the comments and further deliberation, BSEE has revised and reorganized final § 250.107(c) to address many of these issues. The revised language clarifies BSEE's position that compliance with existing regulations is presumed to be use of BAST until (and unless) the Director makes a specific BAST determination that other technology is required. The final rule also provides that the Director may waive the requirement to use BAST on a category of existing operations if the Director determines that use of BAST by that category of existing operations would not be practicable. In addition, the revised language provides a clear path for an operator of an existing facility to request a waiver from use of BAST if the operator demonstrates, and the Director determines, that use of BAST would not be practicable. These revisions are consistent with the statutory language and intent of OCSLA, and will further clarify for operators when use of BAST is or is not required and when that requirement may be waived.
2. Firefighting Systems—§ 250.859
BSEE proposed to revise the firewater systems requirements for both open and totally enclosed platforms. Among other things, BSEE proposed requiring that the firefighting systems conform to API RP 14G, Recommended Practice for Fire Prevention and Control on Fixed Open-type Offshore Production Platforms. This proposed requirement was in addition to existing § 250.803(b)(8),
which only requires firefighting systems to conform to section 5.2 in API RP 14G. Many commenters expressed concerns that incorporating the entire RP would create conflicts with the regulations and subsequent inspection policies because API RP 14G does not include a step-by-step method of designing and installing a complete firefighting system. Furthermore, the commenters noted that API RP 14G discusses multiple types of firefighting systems (
e.g.,
fire water, foam, dry chemical, and gaseous extinguishing agent). The commenters suggested various alternatives for compliance with API RP 14G, including requiring compliance only with applicable firewater system sections of API RP 14G.
BSEE understands that there are many different types of firefighting systems discussed in API RP 14G. Accordingly, in this final rule, BSEE has revised proposed § 250.859(a) to require compliance with the firewater system sections of API RP 14G. This change will clarify BSEE's expectations for compliance with this industry standard. This change will also enhance the overall firewater system operability by requiring compliance with provisions in API RP 14G (
e.g.,
inspection, testing, and maintenance) in addition to section 5.2, as required by the former regulations.
BSEE also made other changes to the proposed § 250.859. Specifically, as suggested by several commenters, we clarified the firefighting requirements to minimize confusion regarding U.S. Coast Guard (USCG) jurisdiction and to separate the firewater requirements for fixed facilities and floating facilities. In particular, we revised § 250.859(a) in the final rule to include requirements for firefighting systems on “fixed facilities,” and added final paragraph (b) to clarify the requirements for firefighting systems on floating facilities. Final § 250.859(b) also clarifies that the firewater system must protect all areas where production-handling equipment is located, that a fixed water spray system must be installed in enclosed well-bay areas where hydrocarbon vapors may accumulate, and that the firewater system must conform to the USCG requirements for firefighting systems on floating facilities.
3. Operating Pressure Ranges—§§ 250.851, 250.852, 250.858, and 250.865
BSEE received a number of comments on proposed §§ 250.851(b), 250.852(a), 250.858(b), and 250.865(b), regarding the operating pressure ranges for certain types of equipment, including the pressure safety high and low set points. As discussed in the proposed rule, pressure recording devices must be used to establish the new operating pressure ranges for specific equipment (
i.e.,
pressure vessels, flowlines, gas compressor discharge sensors, and surface pump discharge sensors) at any time when the normalized system pressure changes by a certain pressure or percentage. An operating range is used to establish the safety device set points that would trigger a component shut-in. Multiple commenters expressed concerns about the proposed change in operating pressures that would trigger a production safety system shut-in. Commenters also discussed the need to help prevent nuisance shut-ins (
i.e.,
shut-ins that occur under normal operating conditions when a safety device's operating pressures are set too narrowly).
BSEE is requiring the operating pressure ranges because we are aware that not all operators monitor how the pressure regimes are changing. Nonetheless, to help prevent nuisance shut-ins, the final rule allows operators to use a more conservative approach by resetting the operating pressure at an operating range that is lower than the specified change in pressure. To clarify how a new operating pressure range can be established, BSEE added language to the appropriate locations in final §§ 250.851, 250.852, 250.858, and 250.865 stating that once system pressure has stabilized, pressure recording devices must be used to establish new operating pressure ranges. The revised language also clarifies that the pressure recording devices must document the pressure range over time intervals that are no less than 4 hours and no more than 30 days long. Establishing new operating ranges based on these parameters will help prevent nuisance shut-ins, by basing the shut-in set points on an identified, stabilized baseline. BSEE also added a minimum time provision to each of these final provisions to ensure that the system pressure is stable before setting the operating ranges. The time interval limits were set, in part, because pressure spikes and/or surges may not be discernable in a range chart if the run time is too long.
4. Emergency Shutdown System—§ 250.855
In proposed § 250.855, BSEE retained the ESD requirements from § 250.803(b)(4) in the existing regulations, and clarified that the breakable loop in the ESD system is not required to be physically located on the facility's boat landing; however, in all instances, the breakable loop must be accessible from a vessel adjacent to or attached to the facility. A commenter expressed concern that the proposed rule referenced only pneumatic-type valves, while current technology incorporates electronic switching devices.
After considering the issues raised in the comment and reviewing current technology, BSEE has revised proposed § 250.855(a) in the final rule to provide that electric ESD stations should be wired as “de-energize to trip” or as supervised circuits. Since BSEE is now allowing electric ESD switches, BSEE wants to ensure that ESD equipment is fully functional, because the key role of the ESD system is to shut-in the facility in an emergency. Therefore, BSEE also added new language clarifying that all ESD components should be of high quality and corrosion resistant, and that ESD stations should be uniquely identified. These revisions are necessary to help ensure that these newer types of ESD stations function properly and to assist personnel in recognizing the ESD location for activation in an emergency.
In addition to the differences between the proposed and final rules discussed here and in part IV, BSEE also made minor changes to the proposed rule language in response to comments suggesting that BSEE eliminate redundancy, clarify potentially confusing language, streamline the regulatory text, or align the language in the rule more closely with accepted industry terminology. BSEE also made other revisions to this final rule to correct grammatical or clerical errors, eliminate ambiguity, and further clarify the intent of the proposed language.
E. Deferred Compliance Dates
The final rule is effective on November 7, 2016. However, BSEE has deferred the compliance dates for certain provisions of the final rule until the times specified in those provisions and as discussed in more detail in part IV of this document.
Compliance with § 250.801(a)(2) for requirements related to boarding shutdown valves (BSDVs) and their actuators as SPPE is deferred until September 7, 2017.
Compliance with § 250.851(a)(2), regarding District Manager approval of existing uncoded pressure and fired vessels that are not code stamped according to ANSI/American Society of Mechanical Engineers (ASME) Boiler and Pressure Vessel Code, is deferred until March 1, 2018.
Compliance with the elements of § 250.859(a)(2) requiring all new firewater pump drivers to be equipped
with automatic starting capabilities upon activation of the ESD, fusible loop, or other fire detection system is deferred until September 7, 2017.
III. Final Rule Derivation Table
The final rule restructures the provisions of existing subpart H. The new regulations are divided into shorter, easier-to-read sections. These sections are more logically organized, as each section focuses on a single topic instead of multiple topics, as found in each section of the existing regulations. To assist in understanding the revised subpart H regulations, the following table shows how sections of the final rule correspond to the provisions in former subpart H:
ER07SE16.006
ER07SE16.007
IV. Comments on the Proposed Rule and BSEE's Responses
A. Overview
In response to the proposed rule, BSEE received 57 separate sets of comments from individual entities (companies, industry organizations, or private citizens). (One comment included 1,527 individual letters, as an attachment, although the content of all of these letters was substantially the same.) Some entities submitted comments multiple times. All comments are posted at the
Federal eRulemaking Portal:
http://www.regulations.gov
. To access the comments, enter “BSEE-2012-0005” in the search box. BSEE reviewed all comments submitted. For the complete list of public comments with summaries
of Responses, refer to the comment-response file located in the rulemaking docket.
In addition to the comments on all provisions of the proposed rule, BSEE solicited comments on certain issues related to those proposed provisions, including:
• Organization of the rule based on use of subsea trees and dry trees;
• Lifecycle approach to other types of critical equipment, such as blowout preventers (BOPs);
• Failure Reporting and Information Dissemination; and
• Third-party Certification Organizations.
BSEE also solicited comments and requested information on other topics that were indirectly related to, but outside the specific scope of, this rulemaking. These topics included:
• Opportunities to limit emissions of natural gas from OCS production equipment; and
• Opportunities to limit flaring of natural gas.
BSEE requested comments on natural gas emissions and flaring to inform future policies and potential rulemakings. Since the information provided in response to these topics is not directly related to, and was not considered in developing, this final rule, we have not discussed those comments or information in this document.
B. Summary of General Comment Topics
In addition to comments on specific provisions of the proposed rule, various commenters raised more general issues, including:
• Extension of the public comment period;
• BSEE and USCG jurisdiction; and
• Arctic production safety systems.
The following is a summary of, and BSEE's responses to, comments on these topics. BSEE's responses to more specific comments on proposed provisions are addressed in the “Section-by-Section” discussion in part IV.C of this document.
1. Requests for an Extension of the Public Comment Period
BSEE received a number of comments requesting an extension of the public comment period. In response to these requests, BSEE extended the public comment period by 45 days. Some commenters also requested that BSEE hold a public workshop on the proposed rule.
BSEE determined that the extension of the public comment period was sufficient for the public to review, understand, and comment on the proposed rule and thus, that a workshop was not necessary. In addition, BSEE determined that a public workshop would result in significant delays in developing and publishing a final rule, which would also delay the improvements in safety and environmental protection intended by the final rule with no commensurate benefits to justify that delay.
2. BSEE and USCG Jurisdiction
BSEE received comments on a number of provisions in the proposed rule expressing concerns that BSEE was reaching beyond its authority and trying to regulate activities that are under USCG jurisdiction. Both BSEE and the USCG have jurisdiction over different aspects and components of oil and gas production safety systems. These regulations apply only to operations that are under BSEE authority. OCSLA directs that the Secretary prescribe regulations necessary to provide that OCS operations are “conducted in a safe manner by well-trained personnel using technology, precautions, and techniques sufficient to prevent or minimize the likelihood of blowouts, loss of well control, fires, spillages,. . . or other occurrences which may cause damage to the environment or to property, or endanger life or health.” (43 U.S.C. 1332(6).) Those regulations apply to all operations conducted under an OCS lease. (43 U.S.C. 1334(a).)
To promote interagency consistency in the regulation of OCS activities, and to describe the agencies' respective and cooperative roles, BSEE and USCG have signed formal memoranda of understanding (MOUs) and memoranda of agreement (MOAs). Those memoranda recognize that, in many respects, BSEE and USCG share responsibility and authority over various aspects of safety and environmental protection related to oil and gas operations on the OCS. The memoranda reflect that BSEE has, and exercises, authority to regulate safety and environmental functions related to OCS facilities, including: developing regulations governing OCS operations, permitting, conducting inspections and investigations, enforcing regulatory requirements, and overseeing oil spill response planning and preparedness. Similarly, the memoranda reflect USCG's authority to regulate the safety of life, property, and navigation and protection of the environment on OCS units and vessels engaged in OCS activities, as well as its authority to regulate workplace safety and health, workplace activities, conditions and equipment on the OCS, and oil spill preparedness and response.
The various memoranda are intended to minimize duplication of effort and promote consistency of regulations and policies where shared responsibilities exist (including, for example, issues related to both fixed and floating facilities) but do not limit either agency's statutory authorities and responsibilities. The USCG-BSEE memoranda are available on BSEE's Web site at:
https://www.bsee.gov/newsroom/partnerships/interagency
.
Numerous comments were submitted regarding BSEE and USCG jurisdiction in connection with multiple sections within the rule. Some comments cited jurisdictional concerns as a general reason why a section should not have been included in the proposed rule. Other commenters expressly noted concern that BSEE's crossing of jurisdictional lines with the USCG could lead to confusion or result in regulatory burdens on the operators. These commenters noted that the USCG has its own rules that govern all or portions of pressurized vessels and fixed and floating facilities. All of the comments that discussed USCG's rules asserted that BSEE lacked some degree of authority concerning the regulation of production safety systems under OCSLA.
Commenters also raised issues concerning BSEE's authority with regard to distinctions between floating and fixed platforms. Commenters described BSEE's authority as limited to fixed platforms and, due to that limitation, they asserted that BSEE does not have the authority to regulate issues regarding floating facilities. These issues were often raised with regard to specific provisions, such as §§ 250.861, Foam firefighting systems, and 250.862, Fire and gas-detection systems.
Some comments raised jurisdictional issues regarding sections of the proposed rule dealing with certain technical or safety matters that the commenters asserted are within USCG's area of expertise (
e.g.,
fire and smoke protection, detection and extinguishing systems, pressure vessels, and electrical systems).
BSEE does not agree with the comments suggesting that the provisions in the proposed rule are outside of BSEE's jurisdiction. This rulemaking applies to production operations that BSEE has historically regulated under longstanding regulations consistent with the authority granted by OCSLA to the Secretary and subsequently delegated to BSEE. This final rule is consistent with the USCG-BSEE MOAs and MOUs. Nothing in the USCG-BSEE MOAs or
MOUs limits BSEE's statutory authority as consistently exercised through BSEE's regulations at part 250.
3. Arctic Production Safety Systems.
A number of comments requested that BSEE add specific production safety requirements for the Arctic OCS environment to the final rule.
BSEE does not agree that new Arctic-specific provisions, which were not included in the proposed rule, should be added to this final rule. Prior to approval by BSEE, all proposed oil and gas production operations on the OCS, including in the Arctic, are required to have production safety equipment that is designed, installed, operated, and tested specifically for the surrounding location and environmental conditions of operation. In particular, the existing BSEE regulations (retained in relevant part by this final rule) require that production safety system equipment and procedures for operations conducted in subfreezing climates take into account floating ice, icing, and other extreme environmental conditions that may occur in the area. (
See
§ 250.800.) In addition, all production system descriptions included in Development and Production Plans (DPPs), submitted for development and production activities on a lease or unit in any OCS area other than the Western GOM, go through a formal review and comment period by the public, which provides an opportunity for any interested stakeholder to suggest additional safety measures for production facilities in the Arctic.
4
Moreover, because of the unique Arctic environment, BSEE conducts extensive research on enhanced technologies for oil and gas development on the Arctic OCS (
see www.bsee.gov/Technology-and-Research/Technology-Assessment-Programs/Categories/Arctic-Research
). These research projects and the knowledge gained from them will inform future decisions, rulemaking, and guidance for Arctic OCS operations.
4
See
30 CFR 550.267(b). DPPs are reviewed and approved by BSEE's sister agency, BOEM, which also considers the public comments on submitted DPPs.
C. Response to Comments and Section-by-Section Summary
This discussion summarizes: all of the regulatory sections in the final rule; specific comments submitted, if any, on each section in the proposed rule; and BSEE's responses to those comments, including whether BSEE made any revisions to the proposed regulatory text in this final rule in response to the comments. The comments and BSEE's responses are organized as follows: General Comments; Economic Analysis Comments; and Section-by-Section Summary and Responses to Comments.
1. General Comments
BSEE received public comments on the following general issues related to the proposed rule that were not specific to any proposed requirement.
Third-Party Certifications
Comment—Commenters asserted that, by including so many third-party certifications of equipment and processes in the proposed rule, BSEE is implying that other proposed requirements that do not call for certifications are somehow less important.
Response—All of the provisions in this final rule are important. The certifications required by this rule are just one tool that BSEE uses to help ensure that operators meet the level of safety and environmental protection mandated under OCSLA. Other provisions of this rule also help meet that mandate through requirements placed directly on the operators.
Employee Qualifications
Comment—Commenters asserted that the rule does not ensure operator qualification requirements for staff responsible for operating the offshore production facility. They suggested that each company permitted to conduct offshore production facility operations should have a written operator qualification program. They recommended that programs should include, at a minimum, an evaluative procedure (including reevaluation as appropriate), explicit reasons why individuals no longer would be qualified, and record-keeping requirements.
Response—BSEE does not agree that any such requirements should be added to this final rule. Operator personnel qualifications are already addressed in the Safety and Environmental Management System (SEMS) regulations in part 250, subpart S, specifically § 250.1915, What training criteria must be in my SEMS program?
Conflicts With Other Regulations
Comment—A commenter asserted that BSEE needs to ensure that the proposed subpart H changes align with the requirements of existing regulations in subparts J, S, I, and O, as well as with the regulatory requirements of other agencies (
i.e.,
USCG). The commenter suggested that many of the conflicts with other subparts in proposed subpart H could be resolved through regulatory changes in the other subparts. The commenter provided several examples to illustrate the concern—
e.g.,
that the subpart J regulations include the BSDV, although there are requirements for BSDVs in proposed subpart H that either supplement or conflict with the existing requirements in subpart J. The commenter also stated that other parts of the proposed rule referred to issues that operators would expect to be addressed under a different subpart (
e.g.,
proposed § 250.800(c)(3) requirements for stationkeeping would be more appropriate in subpart I).
Response—BSEE does not agree with the suggestion that this final rule conflicts with or contradicts any other provision in BSEE's regulations. There may be overlapping requirements in the various subparts, however, BSEE does not agree that there are conflicts. If there is a need for additional clarity, BSEE will issue guidance in the future. For example, the suggestion that the BSDV requirements in proposed subpart H conflict with BSDV requirements in existing subpart J is incorrect. Subpart H applies to any piping downstream of the BSDV, while subpart J's requirements apply to piping upstream of the BSDV. Similarly, the stationkeeping design requirements for floating production facilities in final § 250.800(c)(3) refer to API RP 2SK and API RP 2SM, which are also incorporated by reference in the design requirements for platforms under § 250.901 of subpart I. While the commenter may consider this duplicative, including the same requirements in subpart H and subpart I ensures that the facilities are designed with the production systems in mind and helps prevent conflicts. While BSEE is not aware of any inconsistencies, BSEE will monitor implementation of this final rule to assess whether any confusion arises from any overlap between subpart H provisions and other BSEE regulations. BSEE will consider whether to address any such issues, if they arise, in possible future rulemakings or guidance.
Finally, as previously discussed, this final rule is aligned with the responsibilities and regulations of the USCG.
Impacts on Existing Equipment
Comment—Commenters asserted that the proposed regulations were not clear with respect to the impact of the requirements on existing equipment (such as non-certified SPPE, BSDVs and single bore production risers) that is fit for purpose and performing satisfactorily within the established operating window and design conditions.
Response—BSEE does not agree that the proposed rule was unclear as to any potential impacts on existing equipment. BSEE considered the impact on existing equipment designs when specifying the effective dates for new provisions and determined whether and when it is appropriate for new requirements to apply to existing equipment. For example, most existing SPPE is already certified under the existing regulations; this final rule adds a requirement for certification of BSDVs and their actuators, beginning 1 year after publication of the final rule. Also, under the final rule, operators may continue to use existing SPPE, such as BSDVs. However, if a BSDV fails or does not meet the applicable requirements (
e.g.,
final §§ 250.836 and 250.880(c)(4)), then the operator must replace it with a BSDV that meets all of the requirements, including final §§ 250.801 and 250.802.
Similarly, under final § 250.800(c)(2), operators may continue to use single bore production risers that are already installed on floating production systems, although they cannot install new single bore production risers on floating productions systems after the effective date of this final rule (as explained further in part IV.C). However, for already-installed single bore production risers, additional precautions are necessary for wear protection, wear measurement, fatigue analysis, and pressure testing to perform any well operations with the tree removed. This is consistent with established BSEE policy and approvals for well operations using single bore production risers.
Pew Arctic Standards Report
Comment—A commenter asserted that the Pew Charitable Trusts' September 2013 Arctic Standards Report identified a number of improvements that could be made in BSEE's regulations. The commenter requested that BSEE review and incorporate specific sections of this report related to the subpart H rulemaking.
5
5
Examples of the specific topics in the Pew Arctic report referenced by the commenter included: Tank Performance Standards; Critical Operations Curtailment; and Equipment Design and Operating Performance Standards.
Response—BSEE reviewed the information provided in the Pew Arctic report, which only addresses Arctic operations. This rulemaking, however, applies to production operations in all OCS regions; the requirements are not specific to one area of the OCS. As previously mentioned, the existing BSEE regulations already require that production safety system equipment and procedures for operations located in subfreezing climates take into account floating ice, icing, and other extreme environmental conditions that may occur in the area. This final rule does not change that requirement. The sections of the report the commenter cited are outside the scope of this rulemaking and address matters not proposed for public notice and comment through the proposed rule.
2. Economic Analysis Comments
BSEE received public comments on the following issues related to the initial economic analysis for the proposed rule and the economic analysis summary in the proposed rule.
Facility Modifications
Comment—A commenter asserted that the initial economic analysis did not reflect the extensive facility modifications that the proposed rule would trigger. The commenter asserted that the agency failed to consider the economic impact of codifying numerous NTLs and industry practices. One commenter specifically questioned the estimated impact on existing fire-fighting systems designed in accordance with the existing regulations and previously approved by BSEE.
Response—BSEE disagrees with the suggestion that we have underestimated the potential cost impacts of this rule. Many of the provisions in the proposed rule were based on existing policy and guidance contained in permit conditions and NTLs. NTLs provide guidance to operators on compliance with existing regulations. BSEE included any costs associated with existing regulatory policy and guidance and industry practices in the baseline of the economic analysis. As specified by Executive Order (E.O.) 12866 and Office of Management and Budget (OMB) Circular A-4, “Regulatory Analysis” (2003), which provides guidance to Federal agencies on the preparation of economic analyses, BSEE estimates the costs of a rule resulting from modifications or new provisions in the rule that cause changes from the baseline. Pursuant to OMB Circular A-4, the baseline represents the agency's best assessment of what the world would be like without the new rule. The baseline includes all practices that are already incorporated into industry or regulatory standards, and that would continue to exist even if the new rule were not adopted. For economic analysis purposes, we assume that operators are already following the published NTLs in order to comply with existing regulations; thus, there is no change in industry practices, and no additional costs, when such practices are codified in the regulations.
In particular, the requirements for the firefighting systems in the final rule are consistent with the requirements in the existing BSEE regulations. The costs for the chemical firefighting systems and the inspection and testing of foam in the foam firefighting systems are addressed in the final economic analysis for this rule.
Impacts on Small Businesses
Comment—A commenter asserted that the bureau failed to accurately determine the impacts on small businesses operating offshore and on those businesses supporting the offshore industry through services and equipment.
Response—In the Regulatory Flexibility Act (RFA) determination for this final rule (
see
part V of this document), BSEE estimated that there are 99 companies with active operations on the OCS and approximately 54 companies operating on the OCS that are considered small businesses. However, analyses conducted under the RFA are only required to consider the direct impacts of a new regulation. The indirect impacts of a regulation, or the effects of the regulation on industries that support the directly affected industry, are not considered in an RFA determination or analysis.
As explained in the RFA discussion in part V, BSEE estimated that the total annual cost of the rule per small entity would be about $18,000, which BSEE determined is not a significant economic impact. More details about these estimates are in the RFA discussion in part V of this document.
Impacts on Existing Operations
Comment—A commenter asserted that, while the proposed rule is intended primarily to codify standard industry practice and clarify existing regulations, BSEE had not acknowledged the impact of the proposed rule on existing operations and that the initial economic analysis grossly underestimated the actual cost.
Response—BSEE disagrees with those comments. The initial economic analysis adequately addressed the significant new costs that BSEE anticipated at the time of the proposed rule. However, as explained in more detail in part V of this document, the final economic analysis includes several adjustments to the estimated costs of the final rule, based on comments on the proposed rule and on changes to existing practices that BSEE now expects will occur as a result of the final
rule. For example, the requirements for the firefighting systems in the final rule are consistent with the requirements in the existing BSEE regulations. The costs for the chemical firefighting systems and the inspection and testing of foam in the foam firefighting systems are addressed in the final economic analysis for this rule.
Uncertainty of Regulatory Benefits
Comment—A commenter asserted that the proposed rule did not discuss why the new requirements are necessary and asked what incidents may be avoided by the proposed requirements. The commenter noted that although the bureau did conduct a break-even analysis for the proposed rule, since the regulatory benefits are highly uncertain, neither the proposed rule notice nor the initial economic analysis discussed the regulatory benefits of the proposed rule.
Response—BSEE does not agree that the proposed rule did not explain why the proposed requirements were necessary. The preamble to the proposed rule adequately described the general and specific purposes of the proposal. (
See
78 FR 52241) In addition, as discussed in part V of this document, BSEE follows E.O. 12866 and 13563 and OMB Circular A-4 in performing its economic analyses. The costs and benefits related to this final rule are presented in the final economic analysis, available in the public docket and summarized in part V. The final economic analysis includes a break-even analysis, describes the types of incidents that could be avoided, and estimates the cost savings that would result by implementing the final rule. The full economic analysis describes in detail BSEE's data, methodology, and results for the benefits analysis. The potential benefits resulting from the final rule include the potential reduction in oil spills and injuries to workers, which are difficult to quantify and are highly dependent on the actual reduction in the probabilities of the incidents occurring. Due to this uncertainty, BSEE conducted a break-even analysis consistent with the guidance provided in OMB Circular A-4.
Reports of Design Changes or Modifications
Comment—One commenter questioned the initial economic analysis conclusion that there would only be a limited number of reports of design changes or modifications. The estimated labor for BSEE to work with this information is $68. Given this effort by BSEE to analyze the information, the commenter questioned how this new requirement will be of any value to BSEE.
Response—In BSEE's experience, design changes do not happen frequently; therefore, we do not anticipate very many reports based on this requirement (
i.e.,
BSEE estimated 1 change per year). Since the reporting of design changes to BSEE is a new requirement, the number of design change reports is only an estimate; BSEE will adjust the frequency of design changes based on the actual number when we renew the relevant information collection in 3 years. The reporting of design changes due to the failure of critical safety equipment, as well as the reporting of such failures, is extremely important to the development of a knowledge-base that can be used to analyze past equipment failures and responses and help to prevent future failures that would jeopardize safety and environmental protection on the OCS.
Estimated Costs for Marine Construction
Comment—A commenter questioned the accuracy of the estimated costs for marine construction in the initial economic analysis because the estimates did not include any costs (or the time) for transportation on the OCS.
Response—Although the commenter did not explain what it meant by “marine construction,” BSEE assumes it was referring to the cost of transportation on the OCS. BSEE does not agree that the total costs of transportation on the OCS should be included in the costs of the rule because operators can use regularly scheduled trips, coordinating with crew boats or helicopter trips, to achieve compliance with the final rule. There does not need to be a special, separate trip for this purpose. Moreover, trips to and from these facilities already occur frequently and are, therefore, part of the baseline. The costs for the petroleum technician, labor, shipping and materials are discussed in the final economic analysis.
Oil Spill Estimates
Comment—A commenter asserted that BSEE overestimated the amount of spilled oil in the initial economic analysis, and that the estimate of 57 leakage occurrences appears too high. The commenter requested that a list of the incidents considered by BSEE be included in the response to comments in the final rulemaking.
Response—It appears that the commenter assumed that the oil spill volumes estimated in the initial analysis were related to the leakage occurrences. However, the oil spill estimate is not related to leakage incidents or leakage rates. Oil spill volumes refer to oil released into the environment. By contrast, the leakage occurrences refer to leaking SSSVs, which are part of a closed safety system, designed to minimize oil spills by stopping the flow within the tubing if the riser is damaged; thus, that oil is not released into the environment. Based on BSEE data for June 2003 through May 2013, BSEE issued a total of 57 Incidents of Noncompliance (INCs) associated with leakage rates (P-280) under the category of “Subsurface Safety Device Testing.”
Impacts of BAST
Comment—Several commenters questioned the economic feasibility and impact of using BAST. They also asserted that the initial economic analysis failed to include any costs associated with the proposed revisions to § 250.107(c) and that those potential costs should have been estimated and analyzed in the economic analysis.
Response—This rule does not identify any technology as BAST and merely clarifies the regulatory language to be more in alignment with the statutory language. BSEE disagrees with the suggestions that the revisions to § 250.107(c) constitute either a BAST program or a BAST determination, and that those revisions will impose new costs on operators. As explained in more detail later in this document, the revisions to § 250.107(c) are intended to align the language of that paragraph more closely with the statutory language and intent of the BAST provision in OCSLA (43 U.S.C. 1347(b)). In fact, final § 250.107(c)(1) uses essentially the same language as the statutory provision, although the language in the final regulation is arranged so as to be more clear and easier to follow. Similarly, final § 250.107(c)(2) clarifies and confirms the longstanding principle, stated in former § 250.107(c), that conformance with BSEE regulations qualifies as the use of BAST, unless or until the BSEE Director makes a specific BAST determination that other technologies are required. Thus, since final paragraph (c)(1) merely incorporates and clarifies the statutory language, and paragraph (c)(2) clarifies and reconfirms the existing regulatory language and policy, those provisions do not impose any new BAST requirements or create a new BAST program.
6
Moreover, even assuming that
there were any costs associated with final § 250.107(c)(1) and (2), they would be considered part of the economic baseline, as they merely reflect existing law and practice.
6
In fact, several industry comments acknowledged that BSEE has been implementing a BAST program for some time, as discussed later in part IV.C with regard to comments on proposed § 250.107(c).
The only arguably significant addition to existing § 250.107(c) is final paragraph (c)(3), which states that the Director may waive the requirement to use BAST for a category of existing operations if the Director determines that use of BAST by that category of existing operations would not be practicable, and that the Director may waive the use of BAST at an existing operation if the operator demonstrates, and the Director determines, that the use of BAST would not be practicable for that operation. However, paragraph (c) in the existing regulation already effectively provided for such an exception from the required use of BAST,
7
although it did not provide any explicit direction as to how to invoke that exception. Final paragraph (c)(3) provides a well-defined path for operators to seek and be granted a waiver from BAST requirements. Moreover, both the exception language in former paragraph (c) and the waiver language in final paragraph (c)(3) are consistent with the statutory BAST language, which states that BAST must be used on existing operations “whenever practicable.” Final paragraph (c)(3) embodies the converse of that requirement, and clarifies that use of BAST will not be required on existing facilities when the operator demonstrates, and the Director determines, that it is not practicable. Thus, final paragraph (c)(3) does not impose any new requirements, and any potential costs associated with that provision are properly included in the economic baseline, because final paragraph (c)(3) is consistent with the exception in existing § 250.107(c) and with OCSLA. Nonetheless, BSEE has estimated the minimal potential costs associated with BAST waiver requests and included that estimate in the final economic analysis and the Paperwork Reduction Act burden estimate, as described in part V of this document.
8
7
Existing § 250.107(c) provides that “You must use the best available and safest technology (BAST)
whenever practical
on all exploration, development, and production operations.” (Emphasis added.)
8
The final economic analysis estimates that the total annual cost to all of the affected industry from the waiver provision would be $910.
BAST Process
Comment—Another commenter asserted that there was no transparent process for identifying what technology qualifies as “BAST” and that, due to the lack of clarity and transparency on what would be required, the cost impact was grossly understated.
Response—BSEE disagrees with this comment. As stated in response to the prior comment, neither proposed nor final § 250.107(c) involves or affects BSEE's process for determining what specific technology is BAST. Revised § 250.107(c) only clarifies, on a non-technology-specific basis, when use of BAST is or is not required, and confirms that conformance with existing BSEE regulations is considered use of BAST unless and until the BSEE Director makes specific determinations that other technologies are BAST. Thus, as previously discussed, there are no costs associated with this section. Further, as several industry comments acknowledged, BAST is already an established part of BSEE regulations. Thus, since final § 250.107(c) is consistent with the statutory requirements of OCSLA and with existing § 250.107(c), any costs that might be attributable to the provision are part of the economic baseline. To the extent the commenter objects to, or wants to suggest improvements to, the process by which BSEE makes BAST determinations, the commenter may submit its views to BSEE. However, those views are beyond the scope of this rulemaking.
Costs for § 250.800—General
Comment—A commenter pointed out that the initial economic analysis did not include cost estimates for proposed § 250.800—General.
Response—BSEE disagrees with the suggestion that revised § 250.800 would impose new costs that should have been included in the economic analysis. That section of the final rule contains essentially the same requirements as existing § 250.800, except for new language added to proposed and final paragraph (c)(2) and new paragraph (d). The new language in paragraph (c)(2) prohibits the installation of new single bore production risers. However, there are no new costs resulting from this new language because BSEE has not approved installation of any new single bore production riser for the last 8 years; BSEE has only approved installation of dual bore risers over that time, and this now represents standard and longstanding industry practice. Therefore, the prohibition of new single bore risers is not a new development, and even assuming there are any costs associated with that prohibition, they are properly included in the baseline because the prohibition reflects existing industry and BSEE practice.
Similarly, new paragraph (d), which was added to the final rule based on comments received, also does not impose any new costs on operators. That paragraph provides general guidance for compliance with subpart H; specifically, that in case of any conflicts between any incorporated standard and any provision in subpart H, the specific regulatory provision controls.
The only other revisions to existing § 250.800 incorporate or clarify the applicability of industry standards, previously incorporated in other sections of BSEE's regulations, to production safety equipment (
e.g.,
productions safety systems on fixed leg platforms). As previously discussed, any costs attributable to incorporation of industry standards are properly included in the baseline because those standards represent generally accepted practices used by the industry in day-to-day operations, particularly those already codified in BSEE's regulations.
SPPE Certification
Comment—A commenter raised the concern that the initial economic analysis related to proposed § 250.801 (SPPE certification) did not discuss costs associated with BSDV certification. The commenter also asserted that the certification requirement was a BAST determination that did not comply with the BAST statute because BSEE did not demonstrate that certified valves perform better than non-certified valves.
Response—We disagree with the comment suggesting that the proposed requirement for certification of SPPE constitutes a BAST determination by the bureau and that such determination is deficient. There is no connection between the SPPE certification process and BAST determinations because, among other reasons, the certification process is not a technology; rather, certification is a verification process. In addition, BSEE has considered the costs of certification of BSDVs and other SPPE in the final economic analysis, as discussed in part V of this document.
Cost for Retaining Documentation
Comment—A commenter stated that costs associated with proposed § 250.802(e) (regarding retention of certain documentation on SPPE for 1 year after decommissioning) were not discussed or analyzed in the initial economic analysis. The commenter did not, however, provide an estimate of the potential costs involved with this proposed requirement.
Response—BSEE agrees with the comment, and the SPPE document retention requirement under final § 250.802(e) is now addressed in the
final economic analysis as well as in the Paperwork Reduction Act (PRA) burden estimates that are discussed in part V of this document.
SPPE Costs
Comment—A commenter asserted that potential costs under proposed § 250.806 were not included in the initial economic analysis.
Response—BSEE assumes that this comment refers to the existing § 250.806, which was reorganized and re-codified in §§ 250.801 and 250.802 of the final rule. Section 250.806 is now reserved. The provisions from § 250.806 of the existing regulations, now in final §§ 250.801 and 250.802, require certification that certain SPPE valves were manufactured under a quality assurance program standard recognized by BSEE, such as API Spec. Q1. Since those provisions were codified in the existing regulations, and rely on existing industry standards, any costs associated with those existing requirements that are retained in final §§ 250.801 and 250.802 are included in the economic baseline. The additional potential costs of complying with the new provisions of the certification requirement are included in the final economic analysis, as discussed in part V.
Costs for Floating Production Unit Safety Systems
Comment—In connection with proposed § 250.854 (Floating production units equipped with turrets and turret-mounted systems), a commenter asserted that costs associated with new requirements were not discussed or analyzed in the economic analysis.
Response—Section 250.854 addresses floating production units with either auto slew systems or swivel stacks. Floating production, storage, and offloading facilities (FPSOs) in the GOM are already in compliance with this section, so it will not result in new costs for existing FPSOs. There are no new costs for floating production units with an auto slew system because final § 250.854 does not require the installation of new equipment. If an operator uses an auto slew system, this provision simply states that the auto slew system must be integrated with the process safety system, which does not require any new activity or equipment.
Similarly, the requirement that a floating production unit with a swivel stack must have a hydrocarbon leak detection system tied in to the process safety system imposes no new costs. These facilities already have a leak detection system, as required in their approved Deepwater Operations Plans (DWOPs), since the FPSO's swivel stack is a critical leak path subject to longstanding DWOP leak detection conditions. Further, there are no additional costs resulting from the requirement to tie the leak detection systems into the process safety system because these requirements are longstanding conditions of approval under the DWOP process for floating production units.
Cost for Glycol Dehydration Units
Comment—A commenter referenced proposed § 250.857(b) and (c) (regarding installation of certain valves on glycol dehydration units), stating that there was no clarity on whether existing glycol dehydration units must comply with this requirement, and noted that if they do need to comply, those costs must be considered. The commenter requested that the final rule address the status of existing equipment.
Response—This requirement is based on API RP 14C, which is already incorporated into BSEE regulations. The final rule simply clarifies that the location of the valves needs to be as close to the glycol contact tower as possible. As previously explained, BSEE includes the costs for following industry standards and existing regulation as part of the economic baseline.
Firefighting Systems
Comment—A commenter noted that proposed new § 250.859 would require that certain firefighting systems comply with all of API RP 14G, while the corresponding provision in existing § 250.803(b)(8) only required firefighting systems to comply with section 5.2 of API RP 14G. The commenter asserted that the proposed change would have significant implications, and that the costs associated with the incorporation of the entire document were not considered in the initial economic analysis.
Response—BSEE does not agree that any costs associated with firefighting systems meeting any provisions of API RP 14G must be added to the costs of the rule. As previously stated, and as explained in the final economic analysis, any costs associated with following existing industry standards are part of the economic baseline. In addition, as previously explained, BSEE has revised final § 250.859(a) to require that firewater systems need to comply only with the relevant provisions of API RP 14G, which eliminates potential confusion as to whether firewater systems would have to meet new requirements under API RP 14G that currently do not apply to such systems.
Chemical Firefighting Systems
Comment—A commenter asserted that proposed § 250.860 (regarding chemical firefighting systems) included new requirements from an existing NTL, and that BSEE should have analyzed the costs of those requirements.
Response—BSEE disagrees. As already stated, any costs associated with following the guidance provided in existing NTLs, and now contained in this final rule, are part of the economic baseline. Consistent with OMB Circular A-4, the baseline includes all practices that are already incorporated into industry and regulatory standards, and that would continue even if the new regulations were never imposed. Since NTLs interpret, and provide guidance on how to comply with, existing regulations, BSEE expects that industry already follows the NTLs to comply with the relevant existing regulations and to ensure safety and reliability of operations.
Pressure Recording Devices
Comment—A commenter noted that proposed § 250.865(b) contained new requirements regarding pressure recording devices, and that there was no discussion in the proposed rule's preamble or the initial economic analysis concerning the need for and the costs of these new requirements.
Response—BSEE does not agree that there are new costs associated with this provision that need to be accounted for as costs in the economic analysis because the pressure recording requirements in paragraph (b) were already required by § 250.803(b)(1)(iii) of the existing regulations and, thus, are part of the economic baseline.
Atmospheric Vessels
Comment—A commenter asserted that proposed § 250.872(a), regarding atmospheric vessels, contained new requirements and that there was no discussion in the proposed rule or the initial economic analysis concerning the need for or costs of these new requirements.
Response—BSEE disagrees. Proposed—and now final—§ 250.872(a) requires compliance with API RP 500 and API RP 505, both of which are incorporated in existing BSEE regulations (
e.g.,
§§ 250.114, 250.802 250.803). Therefore, there are no new costs, beyond those included in the baseline, associated with this section.
Inspection Costs for Fire and Exhaust Heated Components
Comment—A commenter asserted that the estimated costs ($5,000) in the initial economic analysis for proposed
§ 250.876, regarding inspection of fired and exhaust heated components, were too low. The commenter suggested that a better cost estimate would be at least 3 or 4 times that amount, and that the ability to obtain a qualified third-party to inspect these components in the timeframe required may be difficult.
Response—BSEE agrees that these costs may be higher than what was originally estimated and has adjusted the costs appropriately in the final economic analysis.
3. Section-by-Section Summary and Responses to Comments
Definitions (§ 250.105)
Section Summary
—This section provides definitions of terms used throughout part 250.
Regulatory text changes from the proposed rule
—BSEE did not propose any changes to this section of the existing regulations in the proposed rule and has made no changes in the final rule.
Comment—One commenter suggested that BSEE add a definition for the term “platform” to the final rule.
Response—BSEE did not propose to define that term, and has decided not to add the commenter's suggested definition to the final rule. The word “platform” can have several meanings within BSEE's regulations, depending on where and how it is used. In addition, the suggested definition was specifically related to the commenter's concerns about future development of the Arctic OCS. BSEE recognizes the importance of the concerns related to future Arctic development and recently focused on Arctic-related issues in a separate final rulemaking, as already discussed in part IV.B.3.
What must I do to protect health, safety, property, and the environment? (§ 250.107)
Section summary
-This section of the existing regulations lays out performance-based and other requirements that operators must meet to protect safety, health, property and the environment. Paragraph (c) of the existing regulation required the use of BAST whenever practical on all exploration, development and production operations, while paragraph (d) authorized the Director to require additional measures to ensure use of BAST.
Regulatory text changes from the proposed rule
—BSEE proposed revisions to paragraph (c), and proposed to remove paragraph (d), in order to more closely track the BAST language in OCSLA and to provide additional clarity regarding how the BAST requirements would be implemented. Many of the comments on the proposed changes to this section supported the proposed language, although many industry commenters, while acknowledging issues or concerns related to the existing language, raised concerns related to the potential impact of the proposed language on existing facilities. In the final rule, BSEE has removed existing paragraph (d), as proposed.
However, based on the comments received, BSEE has reorganized and revised the proposed changes to paragraph (c). BSEE has revised final paragraph (c)(1) to track even more closely the language of the relevant OCSLA provision. Final paragraph (c)(2) revises the proposed language to further clarify and confirm that compliance with BSEE regulations will be presumed to constitute the use of BAST, unless and until BSEE's Director determines that other technologies are required in accordance with final paragraph (c)(1). In addition, final paragraph (c)(3) revises the proposed BAST exception language to clarify that the Director may waive the requirement to use BAST for a category of existing operations if the Director determines that use of BAST for that category of operations would be impracticable. That paragraph also clarifies that the Director may waive the requirement to use BAST for an existing operation, if the operator demonstrates, and the Director determines, that using BAST in that operation would be impracticable.
Comments and responses
—BSEE received public comments on the following issues related to the proposed revisions to § 250.107 and responds as follows:
Whether Proposed BAST Revision Not Needed/Premature
Comment—Many comments asserted that the proposed changes to § 250.107 are premature and should be delayed until BSEE develops a detailed process for making and implementing BAST determinations and the National Academy of Engineering (NAE) completes a report on BAST.
Response—BSEE disagrees with these comments. BSEE did not propose any changes to or request comments on the internal processes that BSEE uses to evaluate technologies in making BAST determinations. The primary objective of the proposed changes was to better align the regulatory provisions with the statutory mandate.
That statutory provision requires:
On all new drilling and production operations and, wherever practicable, on existing operations, the use of the best available and safest technologies which the Secretary determines to be economically feasible, wherever failure of equipment would have a significant effect on safety, health, or the environment, except where the Secretary determines that the incremental benefits are clearly insufficient to justify the incremental costs of utilizing such technologies. (43 U.S.C. 1347(b).)
In OCSLA, Congress directed the Secretary to require the use of BAST in these circumstances. Over a period of years, the regulatory language used to implement this statutory provision was modified as the offshore regulations were revised. As noted in the preamble of the proposed rule, BSEE believes that the existing regulatory language does not give full effect to the BAST obligations contained in the Act. (
See
78 FR 52243.)
Revision of the BAST language in existing § 250.107 is also consistent with the recommendations of the Ocean Energy Safety Advisory Committee (OESC), which was formed following the
Deepwater Horizon
incident to provide advice to the Secretary on issues related to offshore safety. The OESC, which consisted of representatives from industry, Federal government agencies, non-governmental organizations and the academic community, specifically recommended that BSEE revise the BAST regulations to more accurately reflect the statutory language and to ensure the effective implementation of a BAST program.
Thus, BSEE does not believe that the proposed regulatory changes need to be delayed until the internal BAST implementation process is fully developed. In any case, since publication of the proposed rule in 2013, BSEE has developed an internal process defining how technology will be evaluated by BSEE using a transparent and data-driven approach. This internal process was developed with significant input from many industry organizations and was discussed in detail at the BAST Conference hosted by the Ocean Energy Safety Institute on November 12, 2015. Moreover, the NAE final report on BAST, published in January 2014, was considered by BSEE in the development of this internal process. More information about the BAST Conference, NAE final report, and the BAST determination process is currently available on BSEE's BAST Web page at
http://www.bsee.gov/bast/
. Pre-publication copies of the NAE final report are available through BSEE's BAST Web page which links to NAE's Web site, or by going directly to NAE's Web site at:
http://
www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=18545.
Whether Proposed Changes to BAST Language Are Unnecessary
Comment—Some commenters asserted that regulatory changes are unnecessary since BSEE already implements an effective BAST program through the combination of regulations, industry standards, plan and permit approvals, alternative compliance approvals, departure approvals, platform verification, inspection and enforcement, data collection, training, and the safety alert program.
Response—While BSEE agrees that it already maintains an effective BAST program, it nevertheless believes that changes to the existing regulatory language are necessary. As described in the proposed rule, and in prior responses to other comments, the changes to existing § 250.107(c) provide greater clarity and ensure consistency between the regulation and the language contained in OCSLA. BSEE agrees that, in many cases, existing regulations (including standards that are incorporated by reference in the regulations) will represent BAST. This is consistent with the intent of the language in existing § 250.107(c).
9
In the final regulations, § 250.107(c)(2) confirms and clarifies that compliance with the regulations is presumed to constitute BAST unless and until the Director makes a determination that other equipment or technology is required as BAST.
9
Existing § 250.107(c) states that “In general, we consider your compliance with BSEE regulations to be the use of BAST.”
Whether Revised BAST Provisions Would Be Disruptive
Comment—Several commenters stated that the proposed rule changes would disrupt an already established BAST process, that they would create uncertainty in the established BAST process, and that the impact of this uncertainty should be considered. Other commenters asserted that industry standards represent BAST.
Response—BSEE does not agree that the proposed or final revisions to § 250.107 would create more uncertainty. The proposed rule language essentially mirrored statutory language that has been in place since 1978 and eliminated ambiguous language that was perceived as potentially inconsistent with the statute. This final rule presents that language in an even clearer way and provides additional clarification on how BAST will be applied, while maintaining and improving alignment with the statutory language. For example, existing § 250.107 did not provide any express parameters for identifying when compliance with the regulations would no longer be considered the use of BAST. The final rule clarifies that this situation would occur when the Director makes a formal BAST determination that specific technology is required.
In addition, BSEE does not agree that consensus-based industry standards that have not been incorporated in applicable BSEE regulations automatically represent BAST. BSEE has incorporated by reference many industry standards into its regulations, and they play an important role in establishing a minimum baseline for the safety of offshore activities and equipment. And compliance with a regulation that incorporates a standard will be presumed to be the use of BAST, unless and until the Director makes a determination to require other technology(ies). However, a determination as to whether a specific, non-incorporated standard reflects BAST would need to be made by the Director on a case-by-case basis.
Whether BAST Determination Process Is Unclear
Comment—Several commenters asserted that the proposed rulemaking was unclear regarding what factors and thresholds BSEE will use when deciding whether it will require an operator to use a certain technology as BAST and how long the operator has to come into compliance. Other commenters asserted that existing facilities should be “grandfathered” out of any new BAST requirements.
Response—BSEE has revised § 250.107(c) of the final rule to clarify that the BSEE Director will determine when to apply a particular technology as BAST. This change is consistent with the OCSLA BAST language (and a prior delegation of the Secretary's authority to the Director). Specifically, the Director will:
• Determine when the failure of equipment would have a significant effect on safety, health, or the environment;
• Determine the economic feasibility of the technology;
• Decide whether the incremental benefits are clearly insufficient to justify the incremental costs of utilizing such technologies;
• Decide whether to waive the use of BAST for a category of existing operations because the use of BAST would not be practicable for those operations; and
• Decide whether to waive the use of BAST for an existing operation if the operator of an existing facility requests a waiver and demonstrates, and the Director determines, that the use of BAST in that existing operation would not be practicable.
BSEE does not agree, however, that an automatic “grandfathering” provision for existing facilities is appropriate. The language in OCSLA specifically makes BAST applicable to existing operations, provided that it is practicable and that the other determinations specified by the statute are made. BSEE has, however, clarified in final § 250.107(c)(3) the process for requesting a waiver from the use of BAST on existing facilities based on a demonstration by the operator, and a determination by the Director, of impracticability.
Economic Feasibility, Practicability, and Other Considerations in BAST Determinations
Comment—Several comments addressed the criteria and process for making BAST determinations with respect to economic feasibility, practicability, and cost-benefit analyses regarding BAST. It was suggested that BSEE define and publish its determinations for the terms “economically feasible” and “practicable,” and designate a pre-determined length of time for existing operations to come into compliance.
Commenters also suggested that BAST waivers or exceptions should be accompanied by a description of how the incremental benefits of using BAST were less than the incremental costs and should be subject to public review and comment. Commenters asserted that BSEE should incorporate the factors and thresholds on which it will determine which technology is BAST prior to finalizing the proposed rule, and that BSEE should be the ultimate decisionmaker as to BAST requirements.
Additionally, one commenter stated that the proposed text increases uncertainty in that it appears to require operators to demonstrate that the incremental benefits of using BAST are insufficient to justify the costs in order to obtain an exception, which improperly shifts the burden to the operator.
Response—BSEE agrees that some clarifications and revisions of the benefit-cost determination and the proposed exception language are appropriate. Consistent with Congress' intent concerning the evaluation of costs and benefits, final paragraph (c)(1) now clarifies that the Director will determine
whether the incremental benefits of certain technology are clearly insufficient to justify the incremental costs of utilizing BAST.
10
Accordingly, BSEE has removed the cost-benefit language in the exception provision of proposed paragraph (c)(2) from the final rule.
11
In addition, final paragraph (c)(3) clarifies that the Director may waive a BAST requirement for an existing operation if the waiver request demonstrates, and the Director determines, that the use of the BAST in question is not practicable. This is also consistent with Congress' intent that an operator show that use of BAST is not practicable for an existing operation: “It is, of course, the responsibility of an operator on an existing operation to demonstrate why application of a new technology would not be `practicable'.” H.R. Rep. No. 95-1474, at 109 (Aug. 10, 1978).
BSEE does not agree, however, with the comments suggesting that the final rule include definitions or specific factors or “thresholds” for economic feasibility and practicability on which the Director will make BAST determinations or waiver decisions, respectively. OCSLA requires that BSEE (through a delegation from the Secretary) make BAST determinations, and BSEE has developed its formal process for BAST determinations in line with that authority. Every BAST determination requires a benefit-cost analysis of its own, to demonstrate that the BAST candidate technology is economically feasible and that it will result in benefits that are not clearly insufficient to justify the costs. For any future BAST determinations, BSEE will specify what is economically feasible for BAST purposes through rulemaking, except in cases involving emergency safety issues. These decisions will be largely technology- and fact-specific, and it would be premature to specify in this rule how such facts will be considered in particular cases.
10
See, e.g.,
Report by the Ad Hoc Select Committee on the [OCS], Rep. No. 95-590 at 159 (Aug. 29, 1977) (“A balancing of danger and costs is required. The focus of this [BAST] provision is to require that operations in the [OCS] on leases are to be the safest possible. The regulator is to balance the significance of the procedure or piece of equipment on safety. If adoption of new techniques or equipment would significantly increase safety, and would not be an undue economic hardship on the lessee or permittee, he is to require it. In determining whether an undue economic hardship is involved, the regulator is to weigh incremental benefits, against incremental costs.”)
See also
H.R. Rep. No. 95-1474, at 109 (Aug. 10, 1978) (“[C]onsiderations of costs and benefits should also be done by the regulating agency . . . .”)
11
Since the final waiver provision does not require the operator to make an incremental cost-benefit demonstration, the comment suggesting that BSEE make the cost-benefit factors for a waiver or exception available for public review is moot.
In any case, the proposed and final revisions of the language in § 250.107(c) do not constitute a BAST determination and do not address BSEE's internal processes for making specific BAST determinations. BSEE revised this section in the final rule in large part to clarify that the BSEE Director will determine when to make those specific BAST determinations in accordance with the statutory criteria.
Similarly, “practicability” demonstrations and decisions for waiver requests will depend on the circumstances of the existing operations at issue. However, BSEE expects that unique factors, such as the types or ages of specific facilities or environmental conditions, that make installation of BAST impracticable will be relevant in this decisonmaking.
Time Requirements for BAST Determination Process
Comment—One comment requested that BSEE place a time limit on itself to review requests under the proposed provision allowing an operator to request an exception from using BAST by demonstrating that the incremental benefits are clearly insufficient to justify the incremental costs. The commenter said that BSEE's estimate that it would take an operator 5 hours to prepare the information to satisfy the proposed requirements for an exception is inadequate. The commenter asserted that it would take many more hours to compile, analyze and prepare information that demonstrates to BSEE that the operator's technology fits the exception to BAST. The commenter also asserted that BSEE will require far more time than predicted to analyze and review the information required by the proposed exception provision. Furthermore, the commenter stated that BSEE has not provided any guidance or process for implementing this proposed requirement.
Response—BSEE does not agree with the suggestion that it needs to establish a more-detailed BAST exception (waiver) process or provide guidance for waivers prior to revising § 250.107(c). BSEE may, however, provide guidance on the implementation of the BAST requirements, including the waiver process, in the future.
The commenter's concern that a request for an exception under the proposed language would likely take many hours to complete and review has been effectively resolved by the revisions in final § 250.107(c)(3), which now provides that the operator only needs to demonstrate that use of BAST is not practicable (
i.e.,
the operator does not need to demonstrate that the incremental costs exceed the incremental benefits). BSEE's current estimates as to the time needed for operators and BSEE to take the actions contemplated under the final waiver language are contained in the final economic analysis and the PRA portion of part V of this document.
Definition of “Failure”
Comment—One commenter requested clarification as to the definition of “failure” in the context of the proposed § 250.107(c)(1), which stated that “[w]herever failure of equipment may have a significant effect on safety, health, or the environment . . . .” the use of BAST is required. The commenter stated that “failure” could have multiple meanings including mechanical failure, electrical failure, or test failure.
Response—BSEE does not agree that a specific definition of “failure” is necessary. The relevant language is drawn directly from OCSLA, which states that BAST must be used “[w]herever failure of equipment would have a significant effect on safety, health, or the environment . . .” BSEE used this language in the proposed and final rule to provide parameters for the types of failure that trigger the OCSLA requirement to use BAST. The Director would not require the use of BAST equipment if failures of that equipment would not result in a significant effect on safety, health, or the environment. What constitutes failure of equipment depends upon the context of the operation and equipment. Under this section, BSEE is addressing equipment failure as a general matter. Specific provisions related to equipment functionality are addressed in existing regulatory provisions and throughout this final rule.
BAST Discretion and Waiver
Comment—One commenter requested clarification on proposed § 250.107(c)(1)(ii), which proposed that operators must use economically feasible BAST, “wherever practicable on existing operations.” The commenter requested clarification as to whether, at the discretion of BSEE personnel, existing equipment that is properly operating under normal conditions would need to be replaced even if it did not pose a threat of a malfunction or failure.
Response—In the final rule, BSEE revised the language of proposed § 250.107(c) to clarify that the Director will make the BAST determinations regarding economic feasibility and other
factors listed in final paragraph (c)(1). BSEE has also clarified the language in final paragraph (c) on the application of BAST to existing operations, consistent with the OCSLA BAST language. Under final § 250.107(c)(3), the Director may waive the requirement to use BAST for a category of existing operations if the Director determines that use of BAST would be impracticable for that category.
In addition, the Director may waive the requirement to use BAST for an existing operation if the operator of an existing facility submits a waiver request demonstrating, and the Director then determines, “that the use of BAST would not be practicable” in that operation. For example, if an operator demonstrates, and the Director determines, that such technology(ies) would be unduly difficult or impossible to retrofit at an existing facility, the Director could grant the operator a waiver. In the absence of a waiver, however, existing operations must comply with BAST. As explained in response to other comments, OCSLA expressly requires the use of BAST for existing operations, whenever practicable, so Congress did not view existing technologies inherently to represent BAST.
Regulatory Flexibility Act Compliance Regarding BAST
Comment—Several commenters asserted that BSEE had not met its obligations under the RFA with regard to the proposed BAST language;
i.e.,
that it had not conducted a regulatory flexibility analysis to assess the impact of the proposed provision on small entities. Commenters also noted that, in the proposed rule, BSEE concluded that this rule is not likely to have a significant economic impact and, therefore, an initial RFA analysis was not required by the RFA, even though BSEE provided a contractor-prepared initial regulatory flexibility analysis in support of the certification. The commenters asserted, however, that this analysis was inadequate because BSEE considered only the estimated impacts of proposed revisions to subpart H and the estimated costs of seven provisions of subpart H. The analysis—and, by extension, the resulting certification of no significant impact—omits any consideration of estimated impacts from BSEE's proposed revision to the BAST rule in subpart A. In addition, several comments assert that by eliminating the longstanding general equivalence of regulatory compliance with BAST, BSEE's proposed revisions to the BAST rule would have significant impacts upon regulated entities, which BSEE had failed to consider, because that change would create uncertainty for regulated entities pertaining to whether their planned and ongoing operations meet BAST.
Response—BSEE does not agree that it failed to comply with the RFA regarding the cost impact on small entities of the proposed revisions to § 250.107(c). As previously explained in part IV.C.2, the proposed and now-final revisions to the BAST language impose no significant new costs on any entity, small or otherwise. The final revisions to § 250.107(c) clarify the intent of the existing regulation and better align the regulatory language with the longstanding BAST language in OCSLA. In addition, the commenters' claim regarding the costs of the proposed deletion of former language equating compliance with BSEE regulations with BAST is moot, since the final rule now includes language maintaining that longstanding regulatory principle.
As stated in previous responses, since the revisions to § 250.107(c) do not establish a new BAST program or new BAST requirements, but rather clarify and incorporate existing baseline statutory and regulatory principles governing BAST compliance, they create no new costs for small entities.
12
12
As explained elsewhere in part IV.C.2, any costs associated with BAST waiver requests may be considered part of the economic baseline. Nonetheless, BSEE has included those minimal costs in the final economic analysis and in the Paperwork Reduction Act burden estimate in part V of this document.
Whether Proposed BAST Rule Constitutes a “Significant Regulatory Action”
Comment—Commenters asserted that this rule constitutes a “significant regulatory action” which should trigger a review by the Office of Information and Regulatory Affairs (OIRA) of its anticipated costs and benefits. The commenters noted that the proposed rule and its supporting documentation indicated that both BSEE and OIRA determined that this rule is not a significant rulemaking under E.O. 12866. Commenters asserted that both the proposed rule and the initial economic analysis considered only the potential costs and benefits of the proposed regulatory provisions of subpart H. Commenters suggested that this analysis—and by extension, the resulting determination that the proposed rule would not be significant—omits any consideration of estimated impacts from BSEE's proposed revision to the BAST rule in subpart A. Commenters also asserted that BSEE omitted the costs arising from the significant uncertainty the proposed BAST rule interjects into the operations and decision making by regulated entities that have long depended upon BSEE's regulations and regulatory process for implementing BAST in their offshore planning.
Response—BSEE does not agree that its and OIRA's determination that this is not a significant rulemaking under E.O. 12866 is incorrect, especially with regard to the revised BAST language. As previously explained in responses to other comments, the revisions to § 250.107(c) do not create a new BAST program or reflect any new BAST determinations, but rather merely clarify and incorporate longstanding baseline statutory and regulatory principles regarding BAST compliance, and, thus, impose no new costs on operators. The concerns related to the loss of certainty provided by regulatory compliance presumptively constituting BAST are likewise mitigated by the revisions BSEE made from the proposed to the final rule.
Definition of BAST
Comment—One commenter suggested that BSEE has acknowledged that technologies already in place are BAST. The commenter also proposed language that recognizes that existing technologies meet the intent of OCSLA.
Response—BSEE does not agree that the commenter's suggested language change is necessary or appropriate. The proposed concept is not consistent with OCSLA or its implementing regulations. Existing BSEE regulations at § 250.105 define BAST as “the best available and safest technologies that the BSEE Director determines to be economically feasible wherever failure of equipment would have a significant effect on safety, health, or the environment.” This existing definition is consistent with the language and intent of OCSLA and clarifies that the Director may make BAST determinations on an industry-wide basis or for different classes or categories of operations based on economic feasibility. BSEE revised the BAST provisions under § 250.107(c) in the final rule to be consistent with OCSLA and, thus, with the existing definition. The revisions also clarify that the Director will determine when to deem specific technology—not already required by BSEE's regulations—to be BAST, using the criteria specified in OCSLA, and that the Director also will determine when to waive the application of BAST to existing operations. Moreover, since OCSLA expressly requires the use of BAST, as determined in accordance with OCSLA, for existing operations whenever
practicable, we can conclude that Congress did not view all “technologies already in place” or “existing technologies” inherently to represent BAST.
How must I install, maintain, and operate electrical equipment? (§ 250.114)
Section summary
—This section of the existing regulations requires that areas be classified, and electrical systems installed, in compliance with certain incorporated electrical standards and that employees who maintain such systems have appropriate expertise. BSEE did not propose any changes to this section; however, BSEE has revised the section heading in the final rule to include “maintain,” in order to more fully and accurately capture the existing requirements of this section.
Service Fees (§ 250.125)
Section summary
—This existing section contains fees charged to operators for services BSEE provides, such as processing various applications. The final rule will revise this section to update the cross-references in paragraphs (a)(5) through (a)(10) to conform to the recodification of § 250.802(e) to § 250.842, as discussed later in this document. The entire table is republished in this final rule for completeness.
Regulatory text changes from the proposed rule
—In the final rule, BSEE has revised the fees from proposed § 250.842 in order to reflect the current fee amounts in existing § 250.802(e), some of which have changed since the proposed rule was published. BSEE revised final paragraphs (a)(5) and (a)(6) to clarify that facility visits are pre-production inspections.
Comments and responses
—BSEE did not receive any comments on this service fees section.
Documents Incorporated by Reference (§ 250.198)
Section summary
—Section 250.198 of the existing regulations contains provisions regarding how BSEE incorporates documents by reference in BSEE's regulations, lists all of the documents BSEE incorporates by reference in part 250, and confirms BSEE's general expectations for compliance with those documents. The requirements for complying with a specific incorporated document can be found where the document is referenced in the regulations, as specified in § 250.198. As proposed, the final rule incorporates by reference one standard (API 570) that had not previously been incorporated in § 250.198, and requires compliance with API 570 in various sections of the proposed rule (as described in part II.B of this document). As proposed and as explained elsewhere, various sections of the final rule require compliance with 8 standards that had previously been incorporated by reference in existing § 250.198; thus, the final rule revises § 250.198, as proposed, by adding the section numbers for those new requirements to the appropriate subparagraphs in § 250.198.
Regulatory text changes from the proposed rule
- In the final rule, BSEE has revised proposed paragraph (h)(51) to include references to the incorporation by reference of the identified documents at §§ 250.292 and 250.733. Final paragraph (h)(70) was also revised to include references to the incorporation by reference of the identified documents at §§ 250.730 and 250.833.
13
The references to sections §§ 250.292 and 250.833 were inadvertently omitted in the proposed rule. Similarly, the final rule makes minor, non-substantive punctuation and related changes to paragraphs (h)(93) through (h)(95), which were added to § 250.198 by separate final rules published after this proposed rule.
14
References were also updated in other sections to reflect the most recent reaffirmations of relevant documents.
13
The references to §§ 250.730 and 250.733 are necessary because those sections were added to 30 CFR part 250 as part of the final rule, “Blowout Preventer Systems and Well Control” published on April 29, 2016 (81 FR 25888).
14
Those final rules are the Blowout Preventer Systems and Well Control Rule, at 81 FR 26015, and the Requirements for Exploratory Drilling on the Arctic Outer Continental Shelf Rule, 81 FR 46478, 46560 (July 15, 2016).
Comments and responses
—BSEE received public comments on this section and responds to the comments as follows:
Standards Already Incorporated in Other Parts of the Regulations
Comment—One commenter observed that some of the standards incorporated by reference into the proposed rule are already incorporated into other parts of the existing regulations.
Response—Standards may be incorporated into multiple parts of the regulations, as when similar equipment may be used for different operations subject to different regulatory provisions. For example, subparts H and I require similar considerations for design; incorporating the same standards in relevant sections of both subparts ensures that the production safety system and the platform or structure are integrated. In other cases, BSEE has decided that the same standards should apply for other reasons. For example, pipelines, which are regulated under subpart J, and certain aspects of production safety systems related to piping, regulated under subpart H, implicate several of the same standards and BSEE has determined that it is important to incorporate each relevant standard in all regulatory sections to which it applies.
Request of BAST Determination for Incorporated Standards
Comment—One commenter requested an explanation of how BSEE determined that each standard proposed for incorporation in the regulations was the best available and safest technology and operating practice for the OCS.
Response—The incorporation of industry standards does not reflect a specific BAST determination by BSEE. The authority to incorporate industry standards into BSEE regulations is separate from the BAST authority. The National Technology Transfer and Advancement Act (NTTAA) mandates that Federal agencies use technical standards developed or adopted by voluntary consensus standards bodies, as opposed to using government-unique standards, where practicable and consistent with applicable law. These criteria for rulemaking are different from those applicable to BAST determinations under OCSLA and § 250.107(c). BSEE follows the requirements of the NTTAA and the relevant guidance in OMB Circular A-119 when incorporating standards into its regulations.
Availability of Standards for Public Review
Comment—Some commenters expressed concern about the availability of the standards incorporated by reference in the proposed rule. They were concerned that many standards are not easily accessible or generally available to the public as part of the rulemaking process or thereafter. One commenter estimates that the public's burden for purchasing the industry standards that were not made available to the public would be approximately $5,900. This amount includes all the standards referenced at § 250.198 that are not available to the public free-of-charge. Some commenters also stated that the public cost burden makes meaningful public participation in rulemaking cost-prohibitive and proposes that BSEE change its process for incorporating standards.
Response—As discussed in part II.C of this document, all standards incorporated by reference in BSEE's regulations are available to view for free
at BSEE offices. In addition, the public may view API documents incorporated in BSEE regulations free of charge on API's Web site (
http://www.api.org/publications-standards-and-statistics/publications/government-cited-safety-documents
). Some standards organizations make their standards available for viewing on ANSI's Web page (
http://ibr.ansi.org/Standards/Default.aspx
). In addition, documents from other standards organizations may be purchased directly from those organizations. Standards may be copyright protected under U.S. and international law. Federal law, including the NTTAA, upon which BSEE relies to incorporate industry consensus standards by reference, does not eliminate the availability of copyright protection for industry-developed consensus standards incorporated by reference into Federal regulations.
15
While BSEE works to maximize the accessibility of incorporated documents, and provides directions to where the materials are reasonably available pursuant to Office of
Federal Register
(OFR) requirements, it also must respect the publisher's copyright. OFR's regulations state that, if a proposed rule does not meet the applicable requirements for incorporation by reference, the OFR Director will return the proposed rule to the agency (
see
1 CFR 1.3); that did not occur here. There is no requirement that such documents be available either online or for free. (
See
79 FR 66269-72 (Nov. 7, 2014), explaining why OFR declined to include such requirements in its regulations on incorporation by reference.)
The estimate provided by the commenter ($5,900 to purchase the standards that were not made available to the public for this rulemaking) includes standards already incorporated into existing BSEE regulations. The commenter stated that the $5,900 estimate includes all the standards referenced in § 250.198 that are not available to the public free-of-charge. The estimated cost, therefore, includes standards that are not incorporated into subpart H or related to this rulemaking and overstates the costs associated with this rulemaking.
15
See, e.g.,
Incorporation by Reference final rule, Office of the Federal Register, 79 FR 66267, 66273 (Nov. 7, 2014) (“[T]he NTTAA [has] not eliminated the availability of copyright protection for privately developed codes and standards that are referenced in or incorporated into federal regulations. Therefore, we cannot issue regulations that could be interpreted as removing copyright protection from IBR'd standards.”)
Conflicts Between Incorporated Standards and BSEE Regulations
Comment—Commenters expressed concern that there is a lack of clarity regarding precedence when a standard conflicts with a regulation. Commenters stated that the regulations should specifically state that wherever BSEE's regulations are more specific or provide more stringent requirements than those listed in an industry standard, BSEE's regulations take precedence.
Response—BSEE has provided clarification, in final § 250.800(d), that if there is a conflict between the standards incorporated through this rulemaking and other provisions of subpart H, the operator must follow the regulations.
Public Review and Comment on Incorporated Standards
Comment—Commenters asserted that: BSEE should go through the process of public review and comment prior to incorporating a new or updated standard: There should be at least a 30-day public review and comment period on proposed rulemakings to update an industry standard; and BSEE should provide a technical support document for that proposed rulemaking showing how BSEE determined the updated standard to be the best available and safest technology and operating practices and explaining why incorporating the industry standard results in a safety improvement.
Response—The commenters' requests as to how BSEE should incorporate industry standards in the future is beyond the scope of this rulemaking. As previously discussed, in this rulemaking BSEE made all of the documents incorporated by reference available for public review in connection with the comment period provided for the proposed rule and continues to make publicly available at its office all of the standards incorporated by reference in the final rule.
In any event, in its rulemakings, BSEE complies with the NTTAA requirement that an agency “use standards developed or adopted by voluntary consensus standards bodies rather than government-unique standards, except where inconsistent with applicable law or otherwise impractical.” (OMB Circular A-119 at p. 13). BSEE also complies with the OFR regulations governing incorporation by reference. (
See
1 CFR part 51.) Those regulations also specify the process for updating an incorporated standard at § 51.11(a), and BSEE complies with those requirements, including seeking approval by OFR for a change to a standard incorporated by reference in a final rule. BSEE generally provides for public notice and comment through proposed rulemaking when incorporating a new standard into its regulations.
16
16
Under certain circumstances, existing § 250.198(a)(2) authorizes BSEE to incorporate a newer edition of an industry standard through a direct final; however, that authority was not exercised in this rulemaking.
Finally, as previously explained, the incorporation of industry standards does not reflect a specific BAST determination by BSEE; those actions derive from separate authorities and are governed by different criteria.
Updating Standards Incorporated in the Regulations
Comment—Commenters suggested that BSEE should: Review all industry standards listed in § 250.198 to eliminate discontinued standards; update standards for which newer versions have been published, if BSEE determines the updated standard version provides BAST and operating practice improvements; and eliminate standards that no longer represent BAST and best operating practices.
Response—This comment, seeking future action by BSEE to amend § 250.198, is also outside the scope of this rulemaking. BSEE reiterates that a decision to incorporate, or revise an existing incorporation of a standard is separate from specific BAST determinations. Nonetheless, BSEE engages in retrospective review of its regulations in accordance with E.O. 13563 and E.O. 13610 “to ensure, among other things, that regulations incorporating standards by reference are updated on a timely basis . . . .” (OMB Circular A-119 at p. 4). In fact, BSEE has already begun reviewing many of the standards incorporated in the existing regulations and will provide additional information regarding its review when appropriate. If BSEE decides that some updating of incorporated standards (
e.g.,
by referencing new editions of existing standards, or replacing previously incorporated standards with different standards, or simply deleting outdated standards) is warranted, it will explain its position through future rulemakings, as necessary. Of course, BSEE may also decide, for appropriate reasons, to keep a previously incorporated edition of a standard in the regulations even if there is an updated edition.
Tubing and Wellhead Equipment (§ 250.518)
Section summary
—Paragraph (d) of existing § 250.518 requires that subsurface safety equipment be installed, maintained, and tested in
compliance with the applicable provisions of subpart H. BSEE proposed to revise this section to include updated cross-references to new section numbers in subpart H.
Regulatory text changes from the proposed rule
—BSEE corrected the section number in the final rule to “§ 250.518,” since the citation (“§ 250.517”) used in the proposed rule was in error.
Incorrect Section Number
Comment—A commenter pointed out that the proposed revision actually belongs in existing § 250.518.
Response—BSEE agrees and has corrected the section number in the final rule to § 250.518 (Tubing and wellhead equipment).
Tubing and Wellhead Equipment (§ 250.619)
Section summary
—Paragraph (e) of § 250.619 of the existing rule requires that subsurface safety equipment be installed, maintained, and tested in compliance with the applicable provisions of subpart H. BSEE proposed to revise this section to include updated cross-references to the new section numbers in subpart H.
Regulatory text changes from the proposed rule
—BSEE updated the section number in the final rule to “§ 250.619” because the citation used in the proposed rule (“§ 250.618”) was in error.
Incorrect Section Number
Comment—A commenter pointed out that the proposed revisions actually belong in § 250.619, not § 250.618.
Response—BSEE agrees and has corrected the section number to “§ 250.619” in the final rule.
General (§ 250.800)
Section summary
—This section of the existing regulations established general requirements for the design, installation, use, maintenance, and testing of production safety equipment, including production safety systems to be used in subfreezing climates, to ensure safety and to protect the environment. This section of the final rule retains most of those requirements and further clarifies the design requirements for production safety equipment. In particular, BSEE added a new paragraph (b) to the final rule, as proposed, specifying the industry standard—API RP 14J, Recommended Practice for Design of Risers for FPSs and TLPs—that operators must follow for new production systems on fixed leg platforms. In the final rule, BSEE revised existing paragraph (b) and redesignated it as paragraph (c), which retains the existing requirement that new floating production systems (FPSs) comply with API RP 14J. Existing paragraph (b) also required new FPSs to comply with the drilling and production riser standards of API RP 2RD, Recommended Practice for Design of Risers for FPSs and TLPs; final paragraph (c), as proposed, omits the reference to the drilling standards, but retains the requirement for compliance with the production riser standards of API RP 2RD.
Final paragraph (c), as proposed, also provides examples of FPSs (
e.g.,
column-stabilized-units (CSUs); FPSOs; TLPs; and spars) and revises the existing stationkeeping system requirements for new floating facilities by adding a reference to API RP 2SM, Design, Manufacture, Installation, and Maintenance of Synthetic Fiber Ropes for Offshore Mooring. In addition, BSEE proposed in paragraph (c) to prohibit installation of single bore production risers on floating production facilities beginning 1 year after the publication date of the final rule.
Regulatory text changes from the proposed rule
—After consideration of public comments, BSEE removed the proposed provision that would have allowed operators 1 year after publication of the final rule to comply with the prohibition against installing new single bore production risers. Thus, final paragraph (c)(2) now prohibits the installation of single bore production risers from floating facilities as of the effective date of the final rule.
BSEE also added the parenthetical “(
i.e.,
anchoring and mooring)” after the word “stationkeeping” to final paragraphs (c)(3) and (c)(4) in order to clarify the types of stationkeeping systems for floating production facilities to which those paragraphs apply. Those revisions also clarify that this provision is not intended to regulate the design of the dynamic positioning system (
i.e.,
the propulsion system); rather, they will simply ensure that the potential impacts an anchoring or mooring system could have on an FPS are considered during design of the production process system. (For example, the buoy of a turret-mounted FPS is a structural element of the production system, while the mooring system may also affect the production system.)
Based on public comments, BSEE also added a new paragraph (d) to clarify that if there are differences between the incorporated industry standards and the regulations, the operator must follow the regulations. Finally, BSEE added new paragraphs (e) and (f) to point out that operators may submit requests to use alternate procedures or equipment or for a departure from the subpart H regulations under existing §§ 250.141 and 250.142, respectively.
Comments and responses
—BSEE received comments on several issues related to dual bore and single bore risers under this proposed section and responds to the comments as follows:
Dual Bore Production Risers/Prohibition on New Installation of Single Bore Risers
Comment—Some commenters took issue with the requirement for dual barrier production risers, stating that the term “production riser” may have several meanings. Commenters asserted that dual barrier production risers do not need to be used when subsea trees are in place, but accepted that dual barrier production risers are appropriate when using dry trees. Commenters also stated that using single barrier production risers downstream from subsea trees is a widely-accepted industry practice and that “it has generally been considered safe practice to complete wells through [an] outer riser, using mud weight and the outer riser to provide two barriers with a surface blow out preventer having at least two rams.” Commenters asserted that requiring dual barrier risers downstream from subsea trees would be uneconomical or impossible. Commenters stated that where subsea trees are used, the tree provides a failsafe barrier to the ocean and, thus, that using single barrier risers downstream of subsea trees is a safe and acceptable practice. Commenters asserted that “a blanket ban on one particular type of riser configuration and operation does not comply with the statutory requirement for BAST or with the industry experience” and urged BSEE to reconsider the proposed rule.
Response—Final § 250.800(c)(2) only applies to the installation of production risers from new FPSs.
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The regulations do not require operators to discontinue use of single-bore production risers that are already in place. The prohibition of installation of single bore production risers from new floating production facilities does not apply to single bore pipeline or flowline risers. BSEE does not consider the pipeline or flowline from a subsea tree to the host facility to be a production riser; rather BSEE considers it a pipeline or flowline riser. BSEE recognizes that the use of single bore pipeline or flowline risers is a
widely-accepted practice that allows for cost-effective hydrocarbon production. If there are any questions about what qualifies as a production riser, the operator may contact the appropriate District Manager.
17
The requirements for non-production risers used during drilling and well completion operations are addressed in existing § 250.733(b)(2) and are not addressed here.
Comment—Several commenters expressed concern about how the prohibition on installation of single bore production risers will affect existing single bore production risers. Commenters asserted that this technology is acceptable in some applications, and that BSEE should allow future uses of single bore production risers in certain circumstances given that such risers may allow for production from reservoirs that would otherwise be uneconomical. Commenters stated that the preamble of the proposed rule did not provide any detail on why BSEE believes this situation to be unacceptable and asked that BSEE provide justification for prohibiting a technology that has not been proven to be problematic. Furthermore, the commenters asked why, if BSEE believes this practice to be unsafe, BSEE would allow this practice to be available for up to a year after the publication of the final rule.
Commenters also recommended revising the regulatory text to confirm that operators can seek relief from the requirements of subpart H where appropriate.
Response—This section of the proposed and final rule does not address drilling, flowline, or pipeline risers; it only addresses single bore production risers installed on FPSs after the effective date of the rule. Moreover, the concerns about the prohibition on installation of single bore risers is academic, since it has been more than 8 years since BSEE approved the installation of any new single bore production risers; thus, in effect, the regulatory prohibition reflects longstanding BSEE policy and industry practice.
18
As to currently installed single bore risers, neither the proposed nor the final rule prohibits their continued use. Operators may continue to use single bore production risers that are currently installed, although when work is performed through a single bore production riser, it causes wear on the riser, compromising its integrity. Thus, additional precautions for wear protection, wear measurement, fatigue analysis, and pressure testing prior to performing any well work with the tree removed are necessary for currently installed single bore risers. This is consistent with established BSEE policy and past approvals for well operations using currently installed single bore production risers. It is possible to do this work safely if the existing riser is in good shape, but there is no room for error or failures, since a single bore riser has only a single mechanical barrier and the consequences of failure of a single bore riser with open perforations could be serious; that is why BSEE has long required in permitting decisions, and is now codifying the requirement, that operators use dual barrier production risers for new installations.
Regarding the implementation date for the prohibition of single bore risers, BSEE agrees with the commenter that making the prohibition effective in 1 year was not appropriate under the circumstances; thus, BSEE has changed the effective date of this provision in the final rule to be the same as the effective date of the rule. If there is a question about what a single bore production riser is and how this provision applies to a specific situation, the operator may contact the appropriate District Manager.
18
BSEE also finalized a similar provision as part of the Blowout Preventer Systems and Well Control Final Rule, effective July 28, 2016. (81 FR 25888 (April 29, 2016.)
Further, as suggested by some commenters, BSEE has added new paragraphs (e) and (f) to the final rule to point out that operators may seek approval to use alternate equipment or procedures in lieu of, or request departures from, the requirements of subpart H in accordance with existing §§ 250.141 and 250.142, respectively. Several provisions of the proposed rule included similar language; however, since the alternate compliance and departure provisions apply to all sections of part 250, it is not necessary to cite them expressly throughout the final rule. By including a single reference to §§ 250.141 and 250.142 in final § 250.800, BSEE confirms that those provisions are applicable to all subpart H requirements.
Hazard Analysis For FPSs
Comment—Commenters raised an issue related to proposed paragraph (c), requiring that all new FPSs comply with API RP 14J. Commenters stated that API RP 14J is a guidance document that identifies multiple tools for conducting a hazards analysis on offshore facilities, but noted that the proposed rule did not specify which tool(s) the operator must use to meet BSEE's expectations. Commenters also asserted that operators are already required to conduct a hazards analysis using one of the tools identified in API RP 14J or another recognized document in accordance with subpart S of BSEE's regulations, (
i.e.,
the SEMS regulations). Commenters recommended that BSEE first establish design and construction criteria for new units and then adjust the regulatory language to reflect the multiple tools in API RP 14J. Commenters recommended that BSEE either delete the API RP 14J requirement from this subpart, or revise the language to require operators to conduct a hazards analysis utilizing any one of the methodologies identified in API RP 14J.
Response—BSEE disagrees with the suggested changes to this section. API RP 14J, incorporated in final § 250.800(c) (for FPSs), was already incorporated by reference in former § 250.800(b) for the same types of facilities. Therefore, operators should already be complying with the relevant requirements, and this comment actually suggests eliminating existing regulatory requirements rather than modifying the proposed requirements. The existing and proposed (and now final) requirements are consistent with and complementary to those in the existing subpart S regulations. The operator may use any hazards analysis that satisfies subpart H to meet the requirements under existing § 250.1911 of subpart S; however, final § 250.800(c) will ensure that operators use an appropriate hazards analysis method selected in accordance with the relevant hazards analysis provisions of API RP 14J.
19
19
API RP 14J, section 7.1 states: “[t]he following sections describe the principal elements of hazards analysis and the various methods available, discuss review procedures to be followed, and outline the guidelines for selection of an appropriate method.”
Safety and Pollution Prevention Equipment (SPPE) Certification (§ 250.801)
Section summary
—This section of the final rule contains requirements that were contained in § 250.806 of the existing regulations, requiring the installation of certified SPPE on OCS wells or as part of the system associated with the wells. The final rule, as proposed, also contains provisions to clarify that SPPE includes SSVs and actuators, such as those installed on injection wells capable of natural flow as well as BSDVs beginning 1year after the publication date of the final rule. (The installation and use of BSDVs was previously addressed in NTL No. 2009-G36, which clarified that BSDVs have the same function as SSVs and that BSDVs are the most critical component of a subsea system; thus, BSDVs that received approval and were installed in accordance with that NTL should
already be in compliance with the requirements in the final rule.)
This section of the final rule also specifies that BSEE will not allow subsurface-controlled SSSVs on subsea wells and omits the reference to the ANSI/ASME standards found in existing § 250.806 because those standards are outmoded or have been withdrawn. The final rule also provides that SPPE equipment that is manufactured and marked pursuant to API Spec. Q1 will be considered certified SPPE under part 250. Although SPPE that is not manufactured or stamped pursuant to API Spec. Q1 is presumptively non-certified, final § 250.801(c) provides that BSEE may exercise its discretion to accept SPPE manufactured under quality assurance programs other than API Spec. Q1, provided that an operator submits a request to BSEE containing relevant information about the alternative program, that an appropriately qualified third-party verifies the alternative program as equivalent to API Spec. Q1, and that BSEE approves the request. In addition, final paragraph (c) authorizes an operator to request that BSEE accept SPPE that is marked with a third-party certification mark (other than an API monogram).
Regulatory text changes from the proposed rule
—In the final rule, BSEE revised proposed paragraph (a)(2) to include BSDV “and their actuators.” This is consistent with the requirements for other SPPE and acknowledges that the actuator is an integral part of the valve. BSEE further revised that paragraph to clarify that, for subsea wells, a BSDV is the equivalent of an SSV on a surface well. BSEE also revised proposed paragraph (c) to provide that any requested alternative quality management system must be verified as equivalent by an appropriately qualified entity.
Comments and responses
—BSEE received public comments on this section and responds to them as follows:
Quality Assurance Programs
Comment—Commenters expressed concern that proposed § 250.801 would only recognize the quality assurance program in API Spec. Q1 for certified SPPE. Those commenters suggested broadening the coverage of the rule to include International Organization for Standardization (ISO) 9001, “Quality Management Standards—Requirements”) (2015). Another commenter recommended that the equipment be marked by the manufacturer with the API Monogram as proof of conformance with the proposed requirement.
Response—BSEE evaluated this recommendation and has determined that the proposed quality assurance program requirements under paragraphs (a) and (b) are appropriate and provide sufficient flexibility. Nonetheless, BSEE has revised final § 250.801(c) to clarify that an operator may submit a request to BSEE to accept SPPE manufactured under another quality assurance program as compliant with paragraph (a), provided that an appropriately qualified entity (such as one that meets the criteria of ISO 17021-3, “Conformity assessment—Requirements for bodies providing audit and certification of management systems—Part 3: Competence requirements for auditing and certification of quality management systems,” or similar criteria) verifies that the other quality assurance program is equivalent to API Spec. Q1. In addition, although BSEE has decided that a monogram requirement is not necessary, since this provision helps ensure the quality of the SPPE during the manufacturing process, BSEE will consider the marking of SPPE with the API monogram or a similar third-party certification mark, as alternative evidence of conformance with this section.
Definition of BSDV
Comment—One commenter requested clarification of the definition of a BSDV. Another commenter requested that BSEE clarify that only those valves associated with subsea systems qualify as BSDVs.
Response—According to the Barrier Concept (as discussed in BSEE NTL No. 2009-G36), for subsea wells, the BSDV is the surface equivalent of an SSV on a surface well. BSEE has added text to § 250.801(a)(2) in the final rule to clarify this point. Thus, the function of the BSDV is similar to the function of the SSV, and since the BSDV is a critical component of the subsea system, it is appropriate for BSDVs to be subject to the same requirements as SSVs under § 250.801. This also ensures the appropriate level of safety for the production facility. Final § 250.835 states that BSDVs are associated with subsea systems; this point is also emphasized by the revised text in final § 250.801(a)(2).
Certification of SPPE
Comment—Commenters requested clarification as to whether BSEE will deem existing SPPE acceptable, despite new certification requirements, until such equipment can be replaced. A commenter also requested clarification of the estimated impact on the cost and supply of SPPE equipment once ANSI/ASME SPPE-1-1994, “Quality Assurance and Certification of Safety and Pollution Prevention Equipment Used in Offshore Oil and Gas Operations,” is no longer acceptable as an SPPE certification program.
Response—Section 250.806 of the existing regulations contained requirements similar to those in proposed § 250.802(d) regarding the use and installation of certified SPPE. Specifically, existing § 250.806 required use of certified SPPE if that SPPE was installed on or after April 1, 1998. However, existing § 250.806 also provided that non-certified SPPE in use as of that date could continue in service unless and until that equipment needed offsite repair, remanufacture or hot work (such as welding). Similarly, final § 250.802(d), as proposed, confirms that operators may continue to use any existing non-certified SPPE already in service unless and until it needs offsite repair, remanufacture or hot work. In addition, since final § 250.801 includes BSDVs as SPPEs (beginning September 7, 2017), the final rule provides that operators have until that date to come into compliance with the certification requirements for any new BSDVs; moreover, under final § 250.802(d), currently installed non-certified BSDVs may remain in service unless and until they require offsite repair, remanufacture or hot work.
The commenter's question about the cost and supply impacts that could occur once ANSI/ASME SPPE-1 was no longer recognized is already moot. That standard was withdrawn by industry in favor of API Spec. Q1 in 2013. Thus, the final rule should not adversely affect SPPE costs or supplies because industry has already evolved in keeping with the change in industry standards from ANSI/ASME SPPE-1 to API Spec. Q1.
Certified vs. Non-Certified SPPE
Comment—One commenter asserted that a report referred to in the proposed rule
20
demonstrates that a certified valve does not perform any better than a non-certified valve, and that BSEE has not demonstrated, through statistics and failure data, justification for the certification requirement. The commenter asserted that the requirement for use of only “certified” SPPE is not supported by the referenced
report and will not provide any greater degree of safety or dependability. The commenter supported BSEE's efforts to work with industry to increase reliability of BSDVs and to promote the use of API standards, but noted that the agency does not recognize API Spec. 6D, “Specification for Pipeline Valves,” or ANSI standards used in this service.
20
The proposed rule cited a 1999 Southwest Research Institute report, “Allowable Leakage Rates and Reliability of Safety and Pollution Prevention Equipment” (Project # 272), funded by MMS in connection with proposed safety system testing. (
See
78 FR 52250.) That report is available at
https://www.bsee.gov/research-record/tap-272-allowable-leakage-rates-safety-and-pollution-prevention-equipment
.
Response—BSEE disagrees with the suggestion that certification provides no additional assurance that critical safety equipment will perform as designed. The referenced report was not the only factor considered when developing the proposed SPPE certification requirements. The existing regulations have required use of certified SPPE since April 1, 1998. In developing the new proposed and final certification requirements, BSEE considered the effectiveness of this longstanding requirement, as well as the existence of industry standards (such as ANSI/ASME SSPE-1 and API Spec. Q1) that support the requirement for certification to ensure the quality and effectiveness of this equipment. The only substantive addition to the final rule regarding SPPE certification requirements is that BSDVs will be considered SPPE that must be certified and otherwise conform to final § 250.801. As stated elsewhere, BSEE considers the BSDV on subsea wells to be the equivalent of an SSV on a surface well and it is appropriate to include BSDVs as SPPE under § 250.801.
Moreover, under § 250.804(a)(5) of the existing regulations, USVs were required to meet a zero leakage requirement and to be replaced or repaired if they failed to do so. However, since BSDVs will need to be certified (when required) under final §§ 250.801(a)(2) and 250.802(d), and to meet the zero leakage requirement under final § 250.880(c)(4)(iii), USVs used in connection with BSDVs will no longer be required to do so.
In any event, operators may continue to use existing non-certified SPPE already in service until it requires offsite repair, re-manufacturing, or hot work, at which time the operator must replace the non-certified SPPE with SPPE that conforms to the requirements of final § 250.801.
Regarding the comment on certain standards that were not referenced in the proposed rule, BSEE continually works to review various standards for possible incorporation, including those from API, ANSI, and other standards development organizations. The standards referred to in this comment may be considered in future rulemakings. However, the fact that BSEE does not incorporate by reference a particular standard does not preclude an operator from voluntarily complying with that standard. BSEE presumes that industry follows its own standards, regardless of whether BSEE incorporates them in the regulations.
Expand SPPE Certification Requirements
Comment—A commenter suggested that the proposed SPPE certification requirements be expanded to include all SPPE used for any production systems on the OCS where flammable petroleum gas or volatile liquids are produced, processed, compressed, stored, or transferred, and not be limited to the four types of valves listed in § 250.801(a).
Response—BSEE does not agree that the suggested expansion of the certification requirement is appropriate at this time. The particular SPPE identified in this section is specifically used for controlling the flow of fluids from the wellbore. The other equipment mentioned by the commenter is for processing the fluids, and that equipment has separate design, installation, and maintenance requirements under other subparts of part 250 (
e.g.,
subpart J).
Approval of SPPE not Certified Under API Spec. Q1
Comment—A commenter requested further information regarding the expected duration of BSEE review for SPPE equipment approval based on alternate quality assurance programs; the process by which BSEE will approve SPPE; and whether recertification will be required on a periodic basis.
Response—The time required for BSEE to evaluate SPPE manufactured under other quality assurance programs depends on the type and quality of the information submitted. Under final § 250.801(c), only SPPE manufactured under quality assurance programs other than ANSI/API Spec. Q1 would require approval from BSEE. BSEE will handle each evaluation on a case-by-case basis, but because this is expected to happen infrequently, this process will not create serious delays in approval of such equipment. Recertification of SPPE is not required; however, final § 250.802(b) incorporates standards that require for regular testing of SPPE, and final § 250.802(d) contains provisions addressing when the operator must replace existing equipment with certified SPPE.
Requirements for SPPE. (§ 250.802)
Section summary
—The final rule recodifies many of the provisions in existing § 250.806(a)(3) as new § 250.802(a) and (b). Those provisions establish requirements for the valves defined as SPPE in final § 250.801, including requiring that all SSVs, BSDVs, USVs, SSSVs, and their actuators meet the specifications in certain API standards incorporated by reference in the final rule.
Final § 250.802(c) includes a summary of some of the requirements contained in the documents that are incorporated by reference in order to provide examples of those types of requirements. These requirements cover a range of activities affecting the SPPE over the entire lifecycle of the equipment and are intended to increase the reliability of the equipment through a lifecycle approach.
Final § 250.802(c)(1) also requires that each device be designed to function and to close in the most extreme conditions to which it may be exposed; this includes extreme temperature, pressure, flow rates, and environmental conditions. Under the final rule, the operator must have a qualified independent third-party review and certify that each device will function as designed under the conditions to which it may be exposed. Final § 250.802(c) also describes particular SPPE specifications and testing requirements.
BSEE has included a table in final § 250.802(d) to clarify when operators must install SPPE equipment that conforms to the requirements of § 250.801. Under the final rule, non-certified SPPE already in service can remain in service until the equipment requires offsite repair, re-manufacturing, or any hot work, in which case it must be replaced with SPPE that conforms to the requirements of § 250.801.
Final § 250.802(e) requires operators to retain all documentation related to the manufacture, installation, testing, repair, redress, and performance of SPPE until 1 year after the date of decommissioning of the equipment.
Regulatory text changes from the proposed rule
—BSEE added actuators to the provisions in this section regarding SSVs, BSDVs, USVs, and SSSVs in order to be consistent with § 250.801 and to emphasize that the actuators are an integral part of the valves; therefore, the same requirements will apply to both the valves and the actuators. BSEE also slightly revised the language in the table in final § 250.802(d) to further clarify the circumstances under which certified SPPE must be used.
Comments and responses
—BSEE received public comments on this section and responds to the comments as follows:
Definition of Lifecycle Approach
Comment—Commenters requested clarification of the meaning of “lifecycle approach.”
Response—Although this term is not used in the regulatory text, the lifecycle approach involves vigilance throughout the entire lifespan of the SPPE, including design, manufacture, operational use, maintenance, and eventual decommissioning of the equipment. This approach considers “cradle-to-grave” issues for SPPE and is a tool to evaluate the operational use, maintenance, and repair of SPPE over its lifetime. Addressing the full lifecycle of critical equipment is essential to increasing the overall level of confidence that this equipment will perform as intended in emergency situations. As discussed earlier in part II.B, this concept is currently reflected in several industry standards for SPPE (
e.g.,
API Spec. 6A), and incorporating that concept in the final rule will ensure that it is more consistently followed by operators.
A major component of the lifecycle approach involves the proper documentation of the entire process, from manufacture through the end of the operational limits of the SPPE, which allows for continual improvement throughout the life of the equipment by evaluating mechanical integrity and improving communication between equipment operators and manufacturers.
Requirements for Valves
Comment—A commenter stated that it is dangerous to open a large diameter valve with full differential pressure across the valve's gate and, thus, revisions should be made to the proposed language to allow an arrangement where a smaller valve, at full differential pressure, first opens to reduce the pressure across the larger valve.
Response—BSEE does not agree that the suggested revision is necessary. BSEE does not expect the operator to open a large diameter valve with full differential pressure across the gate. Nothing in this section prohibits use of smaller diameter actuated valves in equalization lines, assuming that the smaller actuated valves can be isolated with a manual valve. This section provides the basic requirements for the functioning of the device, meaning that it has to close under the most extreme conditions to which it may be exposed, but does not specify precisely how that must be done.
Definition of Traceability
Comment—A commenter requested clarification on the meaning of the “traceability” requirement in proposed paragraph (c)(5).
Response—Section 250.802(c)(5) requires operators to comply with and document all manufacturing, traceability, quality control, and inspection requirements for SPPE subject to subpart H, including the standards incorporated by reference in the regulations. Traceability refers to the ability to document the installation, maintenance, inspection and other significant events during the “lifecycle” of the particular piece of equipment as they relate to the equipment's proper functioning. This includes, for example, documenting the marking of the equipment received from the manufacturer, so the operator can accurately track each piece of SPPE during its useful life. The standards incorporated by reference in final § 250.802(a) and (b) contain specific provisions on traceability.
Use of Independent Third-Parties
Comment—A commenter suggested that independent third-parties may not have the expertise required to conduct the lifecycle analysis on SPPE that was called for in § 250.802(c)(1) of the proposed rule. That commenter also suggested that limiting third-party certifiers to API-approved independent third parties would limit the pool of expertise, which would delay certification. Another commenter requested clarification as to the criteria for establishing whether a third-party reviewer has sufficient expertise and experience to perform the review and certification. That commenter also asked whether third-party reviewers will require periodic reevaluation.
Response—Final § 250.802(c)(1), as proposed, requires the independent third-party to have sufficient expertise and experience to perform the SPPE review and certification. Contrary to one commenter's assumption, however, § 250.802(c)(1) does not limit the pool to API-approved independent third parties.
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Rather, that section makes operators responsible for ensuring that the third-party reviewers possess the appropriate experience and expertise. Operators currently have extensive experience in the use of independent third-party reviewers to comply with a number of existing regulatory requirements, and operators can use that experience to ensure that a third-party has the qualifications to perform its duties under § 250.802(c)(1). Based on BSEE's experience monitoring compliance with existing third-party requirements, BSEE believes that there is already a sufficient pool of qualified independent third-party reviewers for operators to choose from. Although BSEE does not need to approve third-party reviewers under this section, BSEE may consider the qualifications of independent third-party reviewers, on a case-by-case basis as the final rule is implemented and may, if appropriate, provide additional guidance in the future regarding third-party reviewer experience and expertise.
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The commenter may have confused the requirement in proposed paragraph (c)(3) that SPPE valves be tested by “API-licensed test agencies” with the third-party certification requirement in paragraph (c)(1). There is no such limitation in paragraph (c)(1) regarding third-party reviewers. Information from the tests performed by a licensed testing agency under paragraph (c)(3) may, of course, be used by an independent third party in reviewing and certifying SPPE under paragraph (c)(1), although additional documentation may also be necessary.
Finally, § 250.802(
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