Postlease Operations Safety

DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Parts 218, 250, 252, 253, 256 and 282

RIN 1010-AC32

Postlease Operations Safety

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Final rule.

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SUMMARY: This rule: Updates and clarifies requirements related to

postlease operations and stresses diligence; Allows MMS to grant a

right-of-use and easement for an Outer Continental Shelf (OCS) leased

or unleased block to a State lessee; Brings uniformity to the public

release time for all proprietary geophysical data and information

gathered under prelease; Clarifies the distinction between granting and

directing a suspension, and the different consequences of each;

Requires evacuation statistics for natural occurrences; Sets out

criteria to disqualify an operator with repeated poor operating

performance from continuing as designated operator; and Allows

operators the opportunity to propose alternative regulatory approaches

if they can demonstrate an equal or higher level of performance.

EFFECTIVE DATE: The rule is effective on January 27, 2000. The

incorporation by reference of certain publications listed in these

rules is approved by the Director of the Federal Register as of January

27, 2000.

FOR FURTHER INFORMATION CONTACT: Kumkum Ray, Engineering and Operations

Division, at (703) 787-1600.

SUPPLEMENTARY INFORMATION: On February 13, 1998, we published a Notice

of Proposed Rulemaking (63 FR 7335), titled ``Postlease Operations

Safety,'' revising the entire 30 CFR part 250, subpart A. The proposed

rule was subsequently corrected in a notice on March 9, 1998 (63 FR

11385). We extended the 90-day comment period once (to provide a

comment period of 120 days that closed on July 17, 1998). We received

11 responses during the comment period. On March 24, 1998 (during the

comment period), we held a public meeting to consult on establishing

criteria for the disqualification provision in the rule. This final

rule amends the regulations at 30 CFR 218.154; 30 CFR part 250, subpart

A; 30 CFR 256.1, 256.4, 256.35, and 256.73; and it corrects regulatory

citations throughout the CFR to reflect the new subpart A sections.

Redesignation of 30 CFR Part 250

On May 29, 1998, we published a final rule that redesignated 30 CFR

part 250 and assigned new section numbers to each section in part 250.

The subpart A proposed rule was published before the redesignation. The

redesignation rule allowed us to add more sections to the subpart A

final rule and to break down lengthy sections into shorter and clearer

sections. In our discussion of comments on the rule, we retained the

section numbers from the proposed rule when we referred to the comments

that we received. When we refer to the current regulations, we use the

redesignated numbers as published in the final rule, published in the

Federal Register on May 29, 1998 (also in the bound copy of the CFR,

dated July 1, 1998).

MMS Position on Incorporated Documents

Incorporation by reference allows Federal agencies to comply with

the requirements to publish regulations in the Federal Register by

referring to materials already published elsewhere. The legal effect of

incorporation by reference is that the material is treated as if it

were published in the Federal Register. This material, like any other

properly issued regulation, then has the force and effect of law. We

hold operators accountable for complying with the documents

incorporated by reference in our regulations.

Differences Between Proposed and Final Rules Not Directly Related

to Comments

In addition to changes we made to the final rule in response to

comments, we reworded certain complex sections for further clarity. We

also changed the wording/format of several section titles and headings.

Although not directly related to public comments on the proposed rule,

these changes were often triggered by the comments to other sections

because so many of the sections are interrelated. Following are the

major changes by section. We emphasize that the wording revisions do

not change any requirements. In many instances, the changes improve

MMS's internal work processes to better serve its external customers.

In the table at Sec. 250.102(b), we added a reference to

Oil Spill Financial Responsibility coverage.

We added Sec. 250.103 on issuing Notices to Lessees and

Operators (NTLs).

In Sec. 250.105, we modified the definition of exploration

to clarify that exploration is not just any drilling per se, but are

those drilling activities conducted in searching for potential

commercial quantities of oil and gas.

In Sec. 250.105, we removed the definition of

``information'' as the definition was too narrow and restrictive. In

addition to geological and geophysical (G&G) information, we deal with

many different kinds of information including archaeological,

biological, engineering, environmental, financial, and technical.

In Sec. 250.105, we expanded definitions of (1) ``lessee''

to include the MMS-approved assignee of the lease or the operating

rights; (2) ``operator'' to include a designated agent of the

lessee(s); and (3) ``you'' to include a designated agent of the

lessee(s) and a pipeline right-of-way holder.

In Sec. 250.105, for consistency, we used 30 CFR 251

definitions for terms related to G&G.

In Sec. 250.105, in defining ``sensitive reservoirs,'' we

deleted the word ``initially'' and added the words ``for submitting the

first MER.''

In Sec. 250.108, we clarified the recordkeeping timeframe

for crane operator qualifications to 4 years instead of 2 years. This

clarification ensures that the crane operator has completed the

appropriate training within the past 4 years. The 4-year timeframe is

consistent with the currently incorporated Third Edition of API RP 2D,

which says that operator qualifications are to be maintained at a

minimum of 4 years through appropriate refresher training.

In Sec. 250.115, we separated the criteria for determining

whether a well was an oil well or a gas well.

In Secs. 250.118 through 250.124, wherever applicable, we

changed ``reinject'' and ``reinjection'' to ``inject'' and

``injection'' to denote that the gas is being injected for the first

time.

We revised Sec. 250.120 to read: (a) ``If you produce gas

from an OCS lease and inject it into a reservoir on the lease or unit

according to paragraph Sec. 250.118(b), you are not required to pay

royalties until you remove or sell the gas from the reservoir. (b) If

you store the gas according to paragraph Sec. 250.119(c), you are

required to pay royalty before injecting it into the storage

reservoir.'' The reason is that injection of gas for a commercial

storage project is not for the benefit of the lease; therefore,

royalties are due before injection. This is consistent with the

subsurface storage project approved by the Gulf of Mexico (GOM) Region

for Chandeleur Block 29.

In Sec. 250.140(a) we replaced ``written approval'' with

``written decision'' because it is not a foregone

[[Page 72757]]

conclusion that the decision will be an approval.

In the last sentence of Sec. 250.162, we replaced the

words ``provide you'' with the word ``recognize.'' The grant of the

right-of-use or easement by MMS ``provides'' the ``rights.'' The

lessee, or any subsequent lessee, simply recognizes those rights.

We deleted proposed Sec. 250.119(l)(5) which would have

allowed us to grant a Suspension of Production (SOP) for exploratory

reasons without a commitment to development and production. To give

meaning to the primary term, we expect lessees to complete exploration

and delineation to commit to production by the end of the lease term.

We deleted proposed paragraph Sec. 250.119(l)(6) which would have

clarified when geophysical work could be used as a basis for an SOP

approval. We deleted it because the regulatory authority provided in

Sec. 250.175(b)(1) allows us to grant an SOP when a lessee is committed

to production and needs to complete geophysical work. In this section,

we also removed the vague phrase ``good faith efforts.''

In Sec. 250.180, we inserted a new paragraph (a) to

provide for reporting requirements for leases in their primary term and

added clarity and specificity to paragraphs (e), (f), and (i).

In Sec. 250.190, we added a sentence at the end of

paragraph (a)(2) to put the responsibility of the contents of a

computer-generated form on the lessee/operator who generates the form.

In the table at Sec. 250.196, we added language to clarify

that part 251 determines the public release of all proprietary

geophysical data and information acquired under an exploration permit,

even when the data and information are later submitted to MMS under

part 250 stipulations. These permit data and information are protected

under Sec. 251.14 (currently 50 years for data and 25 years for

information). The proprietary terms of these permit data and

information would be unaffected by lease expiration or relinquishment.

The vast majority of seismic data and information submitted by

lessees was originally acquired under exploration permits. The lessees

acquired the data and information indirectly on a nonexclusive basis

under a license agreement among the permittee, the geophysical

contractor who acquired the data and information under part 251, and

the lessee, who is a third party to the data and information.

However, part 250 determines the release of proprietary geophysical

data and information that were acquired on a lease exclusively by or

for a lessee, under terms of a lease, and submitted to MMS under part

250. These data and information are protected for a period of 10 years,

or until the lease is relinquished or expires, whichever is sooner.

This would include all seismic data and information acquired

exclusively by or for the lessee and submitted for unitization

purposes, or in support of exploration or development and production

plans.

In the table at Sec. 250.199(e)(1), we added the following

reason for collecting information, specifically G&G data and

information under 30 CFR part 250, subpart A: to support the unproved

and proved reserve estimation, resource assessment, and fair market

value determinations.

Comments on the Rule

We received comments on specific issues from the Trustees for

Alaska (Trustees), the International Association of Drilling

Contractors (IADC), Newfield Exploration Company, the State of Florida,

and the Small Business Administration (SBA). The American Petroleum

Institute (API) and Offshore Operator's Committee (OOC), representing

the industry, sent a consolidated comments table and clearly depicted

their suggested language changes and rationale. The National Ocean

Industries Association, the Independent Petroleum Association of

America, and some of the large oil companies sent letters endorsing the

American Petroleum Institute/Offshore Operator's Committee (API/OOC)

consolidated comments. We posted all comments on the MMS internet

homepage. We noted a universal comment on the need for a side-by-side

comparison of existing regulations and plain language rewrites; we will

adopt this suggestion for future rules rewritten in plain language. We

have included in this notice our responses to comments other than those

included on the table submitted by API/OOC followed by the API/OOC

comments in tabular form together with our responses. Some of the

comments in the consolidated API/OOC comments table were reiterated by

other commenters. Since our response was the same, we have not provided

in this notice a separate set of comments and responses for those

comments. We organized our responses to comments other than those

included in the API/OOC table under the following topics: I. comments

and responses to miscellaneous issues; II. disqualifying an operator;

III. granting a right-of-use and easement (with detailed responses to

the extensive comments we received on the section); and IV. comments

from SBA.

I. Comments and Responses to Miscellaneous Issues

Comment: The reference to conservation, which was under

the Director's authority at current Sec. 250.104, was removed.

Response: The reference was never removed and appears at

Sec. 250.101(b): Under this authority, the MMS Director requires that

all operations conform to sound conservation practice to preserve,

protect, and develop mineral resources of the OCS to balance orderly

energy resource development with protection of the human, marine, and

coastal environments.

Comment: Retain wording to the effect that the

implementation of the regulation of operations on the OCS remains

``subject to the supervisory authority of the Secretary.''

Response: The Secretary's authority is stated clearly at

Sec. 250.101: ``The Secretary of the Interior (Secretary) authorized

the Minerals Management Service (MMS) to regulate oil, gas, and sulphur

exploration, development, and production operations on the outer

Continental Shelf (OCS). Under this authority, the Director requires

that all operations. * * *'' To clarify that ``this authority'' refers

to the Secretary's authority, we are changing the words in italics to

read ``Under the Secretary's authority.''

Response: We strengthened the language at Sec. 250.106.

Comment: Include definition for natural resources.

Response: We included the OCS Lands Act (OCSLA) definition for

natural resources.

Comment: Provide definitions for Eastern and Western GOM.

Response: We put back a definition for Eastern GOM, which was

deleted in the proposed rule. We also included a definition for the

Western GOM. In both definitions, we clarify that these areas are not

to be confused with the planning areas that we use for lease sales.

Comment: The requirements for cranes at proposed

Sec. 250.105 should not apply to mobile offshore drilling units (MODU)

or other vessels.

Response: We clarified in Sec. 250.108(a) that the requirements for

cranes apply only to fixed platforms.

Comment: Proposed change at Sec. 250.106(g)(5)

(italicized): You may not weld while you drill, complete, workover, or

conduct wireline operations unless the fluids in the well, (being

drilled, completed, worked over, or having wireline operations

conducted), are noncombustible, and

[[Page 72758]]

you have precluded the entry of formation hydrocarbons into the

wellbore either by mechanical means or by a positive overbalance toward

the formation. The intent is to limit welding activities on or near

wells that are being serviced or drilled, not limit welding because

other wells in the wellbay are live.

Response: We have made the suggested changes at Sec. 250.113(c)(6).

Comment: ``You'' as used in proposed Sec. 250.13 is too

restrictive and should be expanded to include any person an MMS order

or decision may adversely impact.

Response: We deleted the reference related to civil penalty appeals

from subpart A. On August 8, 1997 (62 FR 42668), we published a final

rule revision to subpart N that provides information related to civil

penalty appeals. We further shortened Sec. 250.104 on appeals because

all appeals will be processed at the Department level and not at the

agency level. We expanded the definition of ``you'' to include an

operating rights holder, a designated operator of the lessee(s), a

designated agent of the lessee(s), a pipeline right-of-way holder, or a

State lessee granted a right-of-use and easement.

Comment: Should the U.S. Coast Guard (USCG), rather than

MMS, be the recipient of such reports (Evacuation Statistics at

proposed Sec. 250.123(b)).

Response: The requirement at Sec. 250.192 relates to our need to

know, for national security reasons, the amount of production shut-in.

Comment: Question duplicative accident reporting to both

MMS and USCG.

Response: We deleted the proposed accident reporting table (at

proposed Sec. 250.120(a)). We retained the requirement in current

regulations (at Sec. 250.119(a)) under Sec. 250.191 in this final rule.

We will propose a separate rule to establish a joint MMS-USCG web-based

system for reporting incidents to either agency. The rule will also

give more guidance on thresholds for fires and factors that impair

safety. (See comments and our responses in comment/response table.)

II. Disqualifying an Operator

Industry asked that we delete this new section. Environmental

groups supported it. In response to a comment to provide adequate

notice before disqualifying an operator, we inserted language in the

rule at Sec. 250.135. A commenter wanted to know what would happen if

we revoked a company's designation as operator, and it was the sole

lessee. If an operator is the sole lessee and designated operator of a

lease, and has been disqualified from operating a facility on that

lease, then the onus is on the lessee to find a new and acceptable

designated operator and submit the change for our approval.

On March 24, 1998, we held a public meeting to consult on

establishing criteria for the disqualification provision in the

proposed rule. At the meeting we explained the disqualification

process. The principal goal of the disqualification process is to

improve performance and operational safety on the OCS by focusing on

the designated operators. We analyze performance based on either a

periodic assessment of specific measures or because of an event or

performance concern.

At a minimum, we will analyze every operator's performance

annually. Compliance history and accidents are the two primary areas of

measurement we use to determine performance. In addition, we use other

information gathered during annual performance reviews to determine an

operator's overall performance. Using this information, we decide

whether operators are acceptable or unacceptable performers.

We may also assess operator performance through a safety meeting.

Several things may trigger a safety meeting--an accident, a bad

inspection, failing a 30 CFR 250, subpart O training audit, or a civil

penalty. During the meeting, we will discuss the triggering event with

the operator and may also review their general performance if the

situation warrants. We may issue a directed suspension if we perceive

the triggering event as a continued threat to human safety or the

environment. The actual event could lead us to determine that the

operator is unacceptable.

In general, operators who exhibit unacceptable performance would

undergo an incremental approach to improving their overall performance.

At the annual performance review meeting, we would take the opportunity

to highlight areas of concern regarding an operator's performance. The

District Supervisor or Regional Supervisor for Field Operations may

make specific recommendations to the operator for improving the safety

of its operations.

It may be necessary for us to issue a directed suspension for a

given facility because it poses an imminent threat to safety or the

environment. A directed suspension or chronic poor performance could

lead us to place an operator on probation. Four things then occur:

1. We notify the designated operator and all relevant lessees in

writing that the operator is on probation for a specific period. The

Regional Director will determine the length of probation.

2. We prohibit the designated operator from becoming the designated

operator on leases during its probation.

3. We require the designated operator to submit a Performance

Improvement Plan (PIP) to address the performance concerns and detail

how the operator will bring its inventory of facilities into

compliance.

4. We have the discretion to increase the number of performance

review meetings as necessary.

Through additional performance analysis, we may determine that an

operator's overall performance is improving, and the operator could be

removed from probation. Conversely, an operator's performance could

remain poor or worsen, and we may take more stringent actions such as:

A facility-specific disqualification as designated

operator for a period of time set by the Regional Director;

A district-specific disqualification as designated

operator for a period of time set by the Associate Director for

Offshore Minerals Management (AD/OMM);

A region-specific disqualification as designated operator

for a period of time set by the AD/OMM; and

An OCS-wide disqualification as designated operator for a

period of time set by the Director of MMS.

We will not take these disqualification actions without the

operator having the opportunity for a review by MMS officials. These

actions require that an operator submit a PIP to us that details its

efforts to improve the safety of its operations and bring its

facilities back into regulatory compliance. The primary purpose of this

rule is to ensure that operators who demonstrate a disregard for safety

are unable to direct operations on leases on the OCS. We will pursue

Department of the Interior debarment proceedings if we determine that

it is appropriate to disqualify an operator from acquiring new leases/

assignments on an OCS-wide basis.

These adverse actions may take place sequentially or in any order

that the Director of MMS deems appropriate.

III. Granting a Right-of-Use and Easement

Comment: Trustees commented that the proposed rule did not

provide sufficient rationale for the need to expand our authority to

issue rights-of-use and easement in the OCS to accommodate State

lessees and questioned the statutory authority for this expansion of

the regulation. Specifically, Trustees do not believe

[[Page 72759]]

that we have the legal authority to allow the placement of exploratory

or production drill rigs or authorize other related uses in areas where

we have not authorized OCS leasing, or where there are no active

leases. (``As written, the proposed regulatory change might arguably

allow exploration and related activities even in areas currently

covered by OCS leasing moratoria, contrary to the expressed intent of

Congress and recent Presidential actions.'')

Response: This rule simply clarifies our authority; the rule does

not expand our authority. Between May 10, 1954, and December 13, 1979,

Sec. 250.18 specifically authorized the Regional Supervisor to grant a

Federal or State lessee a ``right-of-use and easement'' on leased or

unleased lands ``for the conduct of operations on any other lease,

State or Federal.'' On October 26, 1979, the U.S. Geological Survey

(USGS) published a final rule (44 FR 61889) revising 30 CFR part 250 to

implement the statutory changes of the OCSLA Amendments of September

18, 1978, and for other purposes. Instead of continuing its authority

to grant rights-of-use and easement to State lessees, it stated that

``State lessees wishing to obtain a right-of-way across the OCS must

apply for a grant from the Bureau of Land Management (BLM).'' In

October of 1979, USGS exercised the Secretary's authority to grant

rights-of-use and the authority to grant easements while BLM exercised

the Secretary's authority to grant pipeline rights-of-way. BLM had

convinced the USGS that it should stop granting rights-of-use and

easement for lessee-owned pipelines that extended from the OCS to

shore. The change in the 1979 rulemaking recognized the agreement

between the USGS and BLM that the USGS would no longer grant a right-

of-use and easement for lessees to construct and operate a pipeline

from the OCS to shore.

Neither the OCSLA, nor the 1978 amendments, makes a distinction

that permits the Secretary to grant a State lessee a right-of-way but

not a right-of-use and easement. Furthermore, there is little reason

for a State lessee to apply for a right-of-way across the OCS. The

right-of-way provisions of section 5 seem to require that the right-of-

way be granted for the transportation of oil and gas produced from

areas leased under the OCSLA. MMS has always had the authority to grant

rights-of-use and easements, but it was inadvertently dropped from the

regulations in 1979. We are simply reinserting it specifically in the

regulations.

We may grant a right-of-use or easement to authorize the grantee to

construct and maintain one or more platforms, fixed structures, or

artificial islands on areas of the OCS; to drill a directional well or

wells to be bottomed under the lease area; to produce and rework the

well or wells; and to handle, treat, and store the production from the

well or wells. Normally, we grant a right-of-use and easement to permit

a lessee to conduct leasehold-type activities at a more advantageous

location off the leasehold. There has to be an existing Federal or

State lease that entitles the lessee to conduct oil and gas activities

before a right-of-use and easement could even be considered. This

regulation change does not allow us to authorize the initiation of

exploration or production drilling or related activities into areas

where the driller does not already have active lease and rights to

drill. In addition, MMS would not issue authority to conduct operations

that are not consistent with the policy of the Department and the

President.

Comment: Trustees also expressed concern that the proposed

new language on rights-of-use and easement appears to arbitrarily

broaden the rights of lessees without justifying the need for such a

change. They felt that we had not identified where and for what purpose

the regulations were being modified. Trustees specifically asked ``* *

* does it cover gravel mining, placement of gravel mining, placement of

gravel islands, disposal of dredge spoils, oil and natural gas pipeline

construction and operation, processing platforms, seawater treatment

plants, underground injection well sites, placement of exploratory

drill ships or concrete island drilling structures?''

Response: The rule does not broaden the rights of lessees. Lessees

must apply for a right-of-use and easement and show the need for

conducting lease-related activities off the leasehold. We will continue

to grant rights-of-use and easement to provide authority to conduct

those leasehold-type activities that must be conducted off the leased

areas; i.e., activities that would normally be approved under the

authority of a lease (Federal OCS or State submerged lands) such as the

ones listed in the comment.

Comment: Trustees expressed concern that the new language

in the regulations on right-of-use and easement may further reduce the

environmental standards and opportunities for public involvement in

controversial oil drilling projects. They gave the example of ARCO's

Warthog well that was drilled from Federal OCS leases into State leases

off the coast of the Arctic National Wildlife Refuge.

Response: The Warthog exploration program was conducted from an OCS

lease and received a complete technical and environmental review

through the exploration plan review process established under 30 CFR

250.204. The Warthog program did not involve a right-of-use and

easement. The new rule will not circumvent the lease sale, Exploration

Plan (EP) and Development and Production Plan (DPP) review process to

allow production from facilities located on unleased OCS areas without

the benefit of public, National Environmental Policy Act (NEPA), and

Coastal Zone Management Act (CZMA) consistency review.

The rule prescribes that any drilling under a right-of-use and

easement must comply with the requirements of our regulations which, in

turn, implement NEPA, CZMA, and the OCSLA requirements for public

review; thus EP/DPP, NEPA, and CZMA consistency review and technical

standards continue to apply. Consideration for a right-of-use and

easement on unleased OCS lands, to conduct activity into adjoining

State lands, will still require that a State lease would be in place

and the issuance of that State lease would have included a public

review/or equivalent process. The State lessee must also obtain State

authorization for activities under a right-of-use and easement into or

under the State lease before any exploration or development activity

could begin.

The regulation will call for MMS officials to vigilantly ensure

that the operations on Federal and State leases are conducted in an

equitable way. We may have to verify that officials of the regulatory

agency for the adjacent coastal State will permit wells to be drilled

from State lands to reservoirs underlying Federal OCS leases that are

located near or adjacent to the Federal and State boundary.

The regulation requires payment of fees and includes special

bonding provisions to ensure that wells drilled from Federal OCS lands

to explore for or develop and produce oil and gas from State leases are

properly plugged and abandoned, that platforms and other facilities are

removed, and that the seafloor is cleared of obstructions to other uses

of the ocean.

Comment: Trustees also suggested that, ``The failure to

better define `right-of-use' in the regulations may be the nub of this

problem.''

Response: The definition of ``right-of-use'' provided in the rule

simply refers a reader to the regulations and is broadly defined since

the regulations are clear on the use of this term. We have also

provided a definition for the term ``easement.''

[[Page 72760]]

IV. Comments from SBA

SBA commented on the Regulatory Flexibility Act (RFA) section in

the proposed rule preamble and pointed out that it was devoid of

specific data on firm size and receipts. They also pointed out that

although we discussed the economic effects of the rule (factual

statement), a more thorough analysis was needed. In response to those

comments, we have rewritten the RFA portion of the preamble.

Table of MMS Responses to American Petroleum Institute/Offshore

Operator's Committee (API/OOC) Comments to 30 CFR Part 250, Subpart

A

In the table, under the comments column, we show words in

``brackets'' that were in bold/strikeout in the original comments. We

show in ``italics'' words that were underscored in bold type. We have

provided the new citations in the MMS response column.

----------------------------------------------------------------------------------------------------------------

Section API/OOC comments API/OOC rationale MMS response

----------------------------------------------------------------------------------------------------------------

218.154(a)(1)........................... (1) Directs the The MMS proposal would We simplified the

suspension of [both] require lessees to wording to make clear

operations [and] or pay rental or minimum that rentals and

production; or royalty if an SOO is minimum royalties are

granted on a lease due when a suspension

when there is no is granted, or when

production but there directed due to the

is a producible well. lessee's failure to

This is contrary to comply with

existing practice in applicable law,

which there is a regulation, order, or

distinction and provision of a lease

obligation to pay or permit.

based on ``who''

directed or requested

the suspension. It is

entirely possible to

have an MMS-directed

suspension on the

lease with a

producible well in

its history but no

production. In such

case, lessees should

be relieved of the

responsibility to pay.

218.154(a)(2)........................... (2) Directs the Safety and See comment to Sec.

suspension of environmental 218.154(a)(1).

operations on a lease requirements have

on which there is no been excluded on a

producible well under lease with no

the provisions of 30 producible well. It

CFR 250.19(j)(1), is entirely possible

(j)(2), (j)(3), that such a

(j)(4) or (k)(2). requirement could be

imposed by an agency

with authority over

such area near the

end of a lease term.

In such an instance a

drilling rig might

need to be re-

outfitted. This could

require a

mobilization to a

shore location (such

as a shipyard) to

add, for example,

zero-discharge

required equipment.

Lessees should not be

required to pay under

these circumstances.

This would be a

departure from

current practice

since the suspension

would be granted at

the direction of the

agency.

250.2................................... Best available and The Regional Director We changed the

safest technology and the Regional authority from

(BAST) means the best Staff customarily Secretary to the MMS

available and safest analyze what Director (Sec.

technologies which equipment is best 250.105 and Sec.

the [Secretary] suited to protect 250.107(d)).

Regional Director or safety, health, and

his designee the environment. The

determines to be Regional Offices

economically feasible consult with

wherever failure of Headquarters Staff

equipment would have when necessary in

a significant effect cases that require

on safety, health, or additional input.

the environment.

Competitive reservoir Clarification......... We made the suggested

means a reservoir in changes (Sec.

which there are one 250.105)

or more producible or

producing well

completions on each

of two or more leases

or portions of

leases, with

different lease

operating interests,

from which the

lessees plan future

production.

[[Page 72761]]

Conservation means The term conservation We deleted the

preservation, as proposed is too definition since it

[economy], and vague. Generally is not defined in the

avoidance of waste of speaking, it is the OCSLA or our

economically viable preservation and regulations. The

hydrocarbons. [It is prevention of waste OCSLA gives us the

especially important of economically authority to issue

in the petroleum viable hydrocarbons, regulations and rules

industry, since oil which is intended. in the interest of

and gas are conservation. The DOI

irreplaceable.]. needs the broad

authority to allow

for flexibility in

regulating the

Federal offshore

program (Sec.

250.105).

Development means Clarification......... We made the suggested

those activities changes (Sec.

which take place 250.105).

following discovery

of minerals in paying

quantities, including

but not limited to

geophysical activity,

drilling, platform

construction, and

operation of all

directly related

onshore support

facilities, and which

are for the purpose

of ultimately

producing the

minerals discovered.

Easement means an The proposed We made the suggested

authorization to use definition is a new change with respect

a portion of an OCS one. OCS tract is now to the term

lease block which is an archaic term. The ``tract.'' We

non-possessory and use of the phrase disagree with the

non-exclusive. [for a ``non-possessory and suggested wording

non-possessory, non- non-exclusive changes and have not

exclusive interest in interest'' is made them (Sec.

a portion of an OCS misleading since the 250.105).

tract, whether leased basic nature of

or unleased, which easement is right-of-

specifies the rights use as opposed to

of the holder to use interest which

the area embraced in appears to focus more

the easement in a on a possessory right.

manner consistent

with] The easement

may be granted on

leased or unleased

blocks and the rights

of the holder to use

shall be specified

and limited to the

terms and conditions

of the granting

authority.

Facility, as used in The word onshore must We deleted the

Sec. 250.11 be a typo, otherwise, reference to

concerning this new definition ``onshore'' and

inspections, means would improperly inserted (per

any installation expand MMS's comments from IADC) a

permanently or jurisdiction in the reference to MODUs.

temporarily attached area of inspection to We also revised the

to the seabed on the onshore facilities. definition of

OCS (that includes This would allow the facility as used in

manmade islands, and MMS to inspect gas Sec. 250.303 to

bottom-sitting plants that process clarify that ``during

structures)[and any OCS gas, coastal production, multiple

onshore installation] facilities that installations or

used for oil, gas, or separate oil/gas/ devices are a single

sulphur drilling, water, and other facility if the

production, or similar facilities installations or

related activities. for which the MMS devices are at a

It also includes does not have single site'' (Sec.

facilities for jurisdiction. Also 250.105).

product measurement the MMS does not have

and royalty jurisdiction over the

verification (e.g., State Agencies that

LACT units, gas already perform these

meters) of OCS functions. The

production located on recommended change

installations not on clarifies that

the OCS. Any group of facilities are on the

OCS installations OCS.

that is

interconnected with

walkways, or any

group of

installations that

includes a central or

primary installation

with processing

equipment and one or

more satellite or

secondary

installations, is a

single facility

unless the Regional

Supervisor determines

that the complexity

of the individual

installations

justifies their

classification as

separate facilities.

Lessee means a person Clarification......... We made the suggested

who has entered into changes and expanded

a lease, [or who is the definition (Sec.

the MMS-approved 250.105).

assignee of, a lease]

with the United

States to explore

for, develop, and

produce the leased

minerals. The term

lessee also includes

an owner of operating

rights for that lease

and the MMS-approved

assignee of that

lease.

[[Page 72762]]

[Of] Archaeological The words ``capable We did not make the

interest means that of'' are unclear when suggested changes

it directly leads to used in the context except to delete the

[capable of] of this definition word ``of'' to be

providing scientific and can be consistent with 30

or humanistic misinterpreted. The CFR part 251. We

understanding of past proposed words defined the terms

human behavior. provide clarification. ``Archaeological

resource, Of

archaeological

interest, Material

remains, and

Significant

archaeological

resource'' in a final

rule published on 10/

21/94 (59 FR 53091).

The National Trust

for Historic

Preservation and the

Office of the

Department Consulting

Archaeologist both

commented that we

define the term

``archaeological

resource'' to be

consistent with the

definition provided

in the implementing

regulations for the

Archaeological

Resources Protection

Act of 1979 (16

U.S.C. 470, aa-mm, 43

CFR 7.3) (Sec.

250.105).

Operating rights means By including borehole We made the suggested

any interest held in in this definition, changes (Sec.

a lease with right to the proposed language 250.105).

explore for, develop, is too specific.

and produce leased There are more cases

substances. Any when operating rights

assignment or are assigned or

transfer of operating transferred to a

rights may specify stratigraphic depth

the depth [of the or other point,

borehole down] to without a borehole

which the operating descriptor.

rights extend.

Producing in paying Two separate sets of We deleted this

quantities means tests have been definition (Sec.

[that] a well is specified which will 250.105).

producing in paying lead to ambiguity.

quantities when it The proposed

meets the criteria definition suggests

set out in Section an economic test.

250.9 [able to Section 250.9

produce oil, gas, or suggests specific

both in a cost- tests which in most

effective manner. cases lead to

This means that the economic production.

production quantities However, there is no

must yield a greater guarantee that the

return than the total two definitions will

costs, including well- always be equal and

completion costs, of overlap. This may

producing the lead over time to

hydrocarbons at the great confusion in

wellhead]. administering minimum

royalty payment and

in determining lease

status for possible

suspension.

Production Areas are Need to add We made the suggested

those areas where clarification. changes (Sec.

flammable petroleum Definition is from 250.105).

gas and volatile API RP 500.

liquids are produced,

processed (e.g.

compressed), stored,

transferred (e.g.

pumped), or otherwise

handled prior to

entering the

transportation

process.

Sensitive reservoir The word ``initially'' We made the suggested

means a reservoir in in this definition is changes (Sec.

which high reservoir ambiguous. The 250.105).

production rates will classification of a

decrease ultimate sensitive reservoir

recovery. For the can be defined in the

submittal of the first MER and if

first MER necessary, the MMS

[Initially], all oil can determine after

reservoirs with an that point if the

associated gas cap treatment as a

are classified as sensitive reservoir

sensitive. should continue.

Suspension means a Clarification......... We made the suggested

[granted or directed changes with minor

deferral of the modifications (Sec.

requirement] deferral 250.105).

granted at the

request of the lessee

or directed by the

MMS of the

requirement to

produce (Suspension

of Production (SOP))

or to conduct

leaseholding

operations

(Suspension of

Operations (SOO)).

Well bay is the Clarification. Since a perimeter is

perimeter of the Definition was from just an outer border,

outer most wellheads. an MMS workshop in we modified the

conjunction with the suggested definition

implementation of to read: ``Wellbay is

regulations in 1988. the area on a

platform within the

perimeter of the

outermost wellheads'

(Sec. 250.105)

[[Page 72763]]

250.3................................... (b) Prevent loss of Suggested changes We inserted ``injury

life. include the word or'' before ``loss of

(c [b]) Prevent unreasonable when life.'' We did not

unreasonable damage considering damage to add the word

to or waste of any natural resources, ``unreasonable' (Sec.

natural resource, property, or 250.106).

property, or the environment

environment; and. recognizing that oil

(d [e]) Cooperate and and gas developments

consult with affected can not avoid some

States, local minimal amount of

governments, other damages.

interested parties, Prevent losses of life

and relevant Federal does not have the

agencies. unreasonableness test.

250.5................................... What standards must There is no technical We agree and deleted

crane operations or safety the paragraph on the

meet? justification for Pacific Region

To ensure the safety requiring more requirements. We also

of the facility stringent completed the section

operations, you must requirements in the so that it is a

meet the requirements Pacific Region. performance-based

of paragraph (a) of Varying regulatory regulation (Sec.

this section. [If requirements for 250.108).

your facility is operating areas

located in the creates confusion

Pacific OCS Region, with no measurable

you must also meet value.

the requirements of

paragraph (b) of this

section.].

[(b)This paragraph

applies if your

facility is located

in the Pacific OCS

Region. You may use .

* * * ].

250.6(a)................................ You must submit a It should not be We reworded the

Welding, Burning, and necessary to keep a paragraph. It is

Hot Tapping Safe copy of the plan and important for the

Practices and approval letter at welder on each

Procedures Plan to all facilities and facility to be

the District drilling rigs for familiar with the

Supervisor before you their life. A copy in plan. We changed the

begin drilling or the field, similar to wording to be clear

production activities the requirement for that the plan is

on a lease. You may H2S Contingency needed at the site

not begin welding Plans, should be where welding occurs.

activities until the sufficient.

District Supervisor

has approved your

plan. A copy of the

plan and its approval

letter must be kept

in the field

[available at the

facility for the life

of the facility

(platform or drilling

rig).].

(b)(4).............................. [Drawings showing any Drawings of safe- We have reworded the

d] Designated safe- welding areas of all paragraph and have

welding areas; facilities covered by addressed the

drawings showing the plan should not commenter's concern.

designated safe- be required in the

welding areas shall plan. A drawing

be maintained on the showing the

facility; and designated safe-

welding area

developed by

following the

procedures identified

in the plan should be

maintained on the

facility and should

not be required with

the plan. This is

consistent with

existing regulations.

(e)................................. Before you weld, you Clarification......... We made the suggested

must move any changes (Sec.

equipment containing 250.113(a)).

hydrocarbons or other

flammable substances

at least 35 feet

horizontally from the

welding area [work

site. * * *].

(g)(1).............................. You may not begin Including welding We made the suggested

welding until the supervisor is changes (Sec.

welding supervisor or consistent with 250.113(c)).

designated person-in- 250.6(c).

charge has authorized

in writing that it is

safe to proceed with

the welding activity.

Before beginning

welding, the

designated person-in-

charge and the

welder(s) must

inspect the work area

and areas below the

work area for

potential fire and

explosion hazards.

(g)(4).............................. You may not weld [in, Provides clarification We made the suggested

or] within 10 feet of shut-in changes (Sec.

of[,] a well-bay [or requirements. 250.113(c)).

production area]

unless you have shut

in all producing

wells in that [area]

wellbay. You may not

weld within 10 feet

of a production area,

unless you have shut-

in that production

area.

[[Page 72764]]

(g)(5).............................. You may not weld while Clarification......... We made the suggested

you drill, complete, changes and added the

workover, or conduct words ``either by

wireline operations mechanical means or''

unless the fluids in (Sec. 250.113(c)(6))

the well are .

noncombustible and

you have precluded

the entry of

formation

hydrocarbons into the

wellbore by a

positive overbalance

toward the formation.

This does not apply

to welding in an

approved safe-welding

area.

250.7................................... What requirements Recognizes the latest We are proposing a

apply to electrical edition of API RP500 rule to incorporate

equipment? The APIRP 505 as an by reference API RP

requirements in this alternative. 505, first edition.

section apply to all Distribution systems We made most of the

electrical equipment are just one of many suggested change to

on all platforms, parts of the (b) and (d) (Sec.

artificial islands, electrical system and 250.114).

fixed structures, and do not need to be

their facilities. separately identified.

(a) You must classify ......................

all areas in

accordance with

either API RP 500,

Recommended Practice

for Classification of

Locations for

Electrical

Installations at

Petroleum Facilities

Classified as Class

I, Division 1 and

Division 2, or API RP

505, Recommended

Practice for

Classification of

Locations for

Electrical

Installations at

Petroleum Facilities

Classified as Class

I, Zone 0, Zone 1 and

Zone 2.

(b)You must use ......................

trained and

experienced personnel

to maintain your

electrical systems.

They must have

expertise in area

classification,

[distribution

systems,] and the

performance

characteristics and

operation of

electrical equipment,

as well as [and]

associated hazards.

(c) You must install ......................

all electrical

systems in accordance

with API RP 14F,

Recommended Practice

for Design and

Installation of

Electrical Systems

for Offshore

Production Platforms.

You do not have to

comply with Sections

7.4, Emergency

Lighting, and 9.4,

Aids to Navigation

Equipment.

(d) On each engine

that has electric

ignition system,

[Y]you must use an

[low tension]

ignition system [on

each engine that has

electric ignition.

You must.] that is

designed and

maintained [the

ignition system] to

minimize the release

of electrical energy.

250.8................................... (b) Whenever Adds flexibility We made the suggested

practicable, y[Y]ou consistent with changes and further

must use BAST on existing regulations. clarified the

existing operations language (Sec.

to avoid failure of 250.107(c)).

equipment that would

have a significant

effect on safety,

health, or the

environment if the

Director determines

that:

[[Page 72765]]

250.9................................... To determine whether a This is consistent We made the suggested

well is capable of with the present change of alternative

producing in paying regulation found in determination of well

quantities, submit a Section 250.11(b). producibility to

written request to The intent is to apply to the GOM

the District provide an region. We rewrote

Supervisor. You must alternative this section for

then meet the mechanism, not to clarity with no new

criteria in require additional requirements. Another

paragraphs (a) and requirements. If a change is that the

(b) of this section. well test is written request for

Once a lease has a unavailable, the determining well

well that MMS operator can submit producibility must be

determines is capable data; it is not submitted to the

of producing in necessary to have Regional Supervisor.

paying quantities, no both a well test and The District

further determination data. The present Supervisor will

of well producibility regulation states continue to carry the

will be made on the ``In the Gulf of function of

lease. A Mexico OCS Region, witnessing tests

determination of well the following shall (Sec. 250.116).

producibility invokes also be considered

minimum royalty collectively as

status on the lease reliable evidence

as provided in 30 CFR that a well is

202.53. If your well capable of producing

is located in the oil and gas in paying

Gulf of Mexico (GOM), quantities.''

you [must also] may

alternatively meet

the requirements of

paragraph (c) of this

section.

250.9(c)(1)............................. [The producible The reason for the We did not delete the

section must not deletion is that all sentence that ensures

include any interval reservoir rocks are that several thin

which appears to be to some extent water sands with a water

water saturated.] saturated. This would contact are not

disqualify all grouped into a

reservoir rocks. producible interval

(Sec. 250.116(c)).

250.9(c)(1)(iii)........................ A minimum true This would clarify We made the correction

resistivity ratio of this definition which (Sec. 250.116(d)(1))

the producible has been incorrect in .

section to the the existing

nearest clean or regulations.

water-bearing sand of

at least 5:1.

250.9(c)(4)............................. A wireline formation This language which We did not make the

test and/or mud- was left out in the suggested changes. We

logging analysis rewrite is very do not agree with the

which indicates that critical and should suggestion. We

the section is be included. It is deleted the language

capable of producing not unusual for in the proposed rule

oil or gas or wildcat/exploratory because the wording

evidence that an wells to have hole- was very vague. We

attempt was made to problems when pay is use several ways to

obtain such tests. exposed. qualify a well using

standard practices.

Keeping this wording

would dilute the

qualification process

and make it a rubber

stamp exercise (Sec.

250.116 (b)(3)).

250.11.................................. (1) MMS conducts a Operating properly We made the suggested

scheduled onsite needs further change. Also, in Sec.

inspection of each definition to 250.130(b), we

offshore facility preclude differing removed the words

that is subject to interpretations. The ``at least once a

environmental or current language in year'' as this limits

safety regulations Subpart A clarifies the scope of

under the Act at that operating scheduling and added

least once a year. properly means in the words ``according

The inspection accordance with the to the

determines whether requirements of this requirements.'' In

environmental part. This current Sec. 250.132(a) we

protection and safety language should be removed the words

equipment designed to maintained. ``at all reasonable

prevent or ameliorate times'' as the phrase

blowouts, fires, is subjective and not

spillages, or other necessary (Sec.

major accidents has 250.130).

been installed and is

operating properly in

accordance with the

requirements of this

part.

250.12.................................. Delete this section... The MMS proposed We disagree with the

language is opinion that the

inconsistent with the language is

OCS Lands Act and inconsistent with the

should be deleted. If OCSLA. We explained

MMS plans to include the disqualification

this section in the process in the

final rulemaking, preamble of this

then it should rule. In response to

include the criteria the comment, we added

for determining the sentence ``MMS

disqualification as will provide adequate

well as the specific notice and

procedures which opportunity for a

includes prior notice review by MMS

and opportunity for a officials before

hearing. imposing a

disqualification

procedure'' (Secs.

250.135 and 250.136).

250.14(c)............................... Approval for Clarification......... We made the suggested

departures. If changes (Sec.

certain aspects of 250.142).

your operations

deviate from

[proposed procedure

or equipment deviate

from or are not

covered by] MMS

regulations, MMS may

prescribe or approve

exceptions from the

operating

requirements of this

part.

[[Page 72766]]

250.15(a)............................... You must provide the The existing We did not make the

Regional Supervisor regulation in 250.8 suggested change.

an executed allows the designated With the move towards

Designation of operator to begin performance based

Operator form unless operations on the regulations, we are

you are the only lease after the responsible for

lessee and are the Regional Supervisor ensuring that

only person ``receives'' the designated operators

conducting lease designation of are acceptable (Sec.

operations. When operator. The revised 250.143).

there is more than version contained in

one lessee then the 250.15(a) does not

Regional Supervisor allow operations to

must receive [and begin until after the

approve] the Regional Supervisor

Designation of has ``received and

Operator form from approved'' the

each lessee before designation. Thus,

the designated the new version

operator may commence appears to have

operations on the imposed an additional

leasehold. requirement on

lessees. In addition,

the MMS may typically

be delayed in

processing these

approvals and would

delay changes which

should take place as

soon as the operators

are ready.

250.15(a)(2)............................ When you are no longer It is recommended that We made the suggested

the designated this requirement not change (Sec.

operator, you must be included in this 250.146).

immediately provide section and be placed

in writing the in the Royalty

termination of your Management Program

Designation of part of the MMS

Operator to the regulations, since

Regional Supervisor. the royalty payment

If you are also a staff of operators do

designated royalty not look at this 30

payor and will not CFR 250 which is an

continue to be in the operational

future, you must also regulation.

notify the Royalty

Management Program of

the termination of

your Designation of

Operator.

250.15(d)............................... Whenever the As written, this We did not make the

regulations in 30 CFR section overstates suggested changes as

parts 250 to 282 the obligations of paragraphs (a), (b),

require the lessee to the co-lessee. and (c) are needed to

meet a requirement or Subpart (b) of the clarify the various

perform an action, same section already conditions when

all persons who makes the co-lessee responsibility needs

conduct lease responsible for to be spelled out

activities on behalf fulfilling the (Sec. 250.146).

of the lessee or obligation of the

operator must also lessee in case of

comply with the failure by the

regulations. [the operator. The

lessee, operator (if recommended language

one has been adds clarification

designated), and the that is consistent

person actually with the intent of

performing the the preamble.

activity to which the

requirement applies

are jointly and

severally responsible

for compliance with

the regulation.].

250.16.................................. Naming and Identifying The word ``platform'' We made the suggested

[Platforms] implies a multiple changes. For detailed

Facilities and Wells legged fixed descriptions on

(does not include structure. With the naming and numbering

MODUS). use of caissons, wells for reporting,

How do I name spars, TLP's and operators should

[platforms] FPS's a more refer to the Notice

facilities and wells? appropriate term to Lessees (NTL) No.

would be 97-2N (issued on 8/1/

``facilities.'' An 97) ``Well Naming and

alternative to this Numbering Standards''

recommended change and to any later

would be to include revisions of this

an applicable NTL. We will issue

definition of another NTL to

platform. This provide more

section should not instructions for the

apply to MODUs that well naming and

may be considered a numbering to be used

facility when for reports and

attached to the sea digital data (Secs.

floor. 250.150 through

250.153).

250.16(a)............................... In the Gulf of Mexico The word ``platform'' We made the suggested

Region: (1) Assign was changed to changes (Sec.

each [platform] ``facility'' for 250.150)

facility a letter consistency (see

designation except above rational [sic])

for those types of for the recommended

facilities identified change). Furthermore,

in paragraph the statement

(a)(3)(i) of this ``except for those

section. For example, type facilities

A, B, CA, or CB. identified in

paragraph (a)(3)(i)

of this section'' was

added in the

recommended changes

because Sec.

250.16(a)(3)(I)[i]

allows a numeric

representation of

single well caissons

without production

facilities.

[[Page 72767]]

250.16(a)(i)............................ After a [platform] The word ``platform'' We made the suggested

facility is was changed to changes (Sec.

installed, rename ``facility'' for 250.150(a)(1)).

each pre-drilled well consistency (see

that was assigned above rational [sic])

only a number and was for the recommended

temporarily suspended change). The word

at the mudline or at ``template'' would

the surface. [drilled only account for

through a template those wells drilled

and was assigned a through a drilling

number.] Use a letter template, when in

and number fact, most pre-

designation. The drilled wells are

letter used should be suspended at mudline

the same as that of as casing stubs, or

the production suspended as a

facility and number caisson at the

used should surface, while

correspond to the awaiting platform

order which the well installation. The

was completed, not recommend change

necessarily the would account for all

number assigned when pre-drilled wells.

it was drilled. For The wells drilled,

example, the first for completion as

well completed for producers, are not

production on necessarily the first

Facility A would be wells drilled on a

renamed Well A-1, the lease and would have

second would be Well an assigned number

A-2, and so on [For higher than one (1).

example, rename Well Therefore, to account

No. 1: A-1, B-1, or C- for this, we

1]; and. recommended that the

well be assigned the

sequential number

given in the order it

was completed for

production, after the

facility is

installed, starting

with the number one

(1).

250.16(a)(ii)........................... When you have more See comments for We made the suggested

than one [platform in 250.16(a)(iii). changes (Sec.

a field (excluding 250.150(a)(2)).

complexes), include

the designations for

the field and use a

different letter

designation for each

platform.] facility

on a block, each

facility installed,

and not bridge-

connected to another

facility, should be

named using a

different letter in

sequential order. For

example, [EC 221-A,

EC 222-B, EC 223-C]

EC222A, EC222B,

EC222C.

250.16(a)(iii).......................... ADD: (iii) When you The proposed draft We made the suggested

have more than one only addresses more changes (Sec.

facility on multiple than one facility on 250.150(a)(3)).

blocks in a local multiple blocks or in

area that are being a field. However, the

co-developed, each recommended change

facility installed, accounts for multiple

and not connected facilities on a

with a walkway to single block. We

another facility, recommend that a

should be named using separate paragraph be

a different letter in added to address this

sequential order with scenario. The word

the block number ``field'' and the

corresponding to the word ``complexes''

block on which the have very broad

platform is located. definitions.

For example, EC 221 Therefore, we

A, EC 222 B and EC recommend the

223 C. language change or an

accurate definition

of these terms as

they apply to this

section be added to

this subpart.

250.16(a)(3)(i)......................... For single well Clarification......... We made the suggested

caissons that are not change (Sec.

attached to a 250.150(c)(1)).

[platform] facility

with a walkway, use

the well designation.

For example, Well No.

1;

250.16(a)(3)(ii)........................ For single well Clarification......... We made the suggested

caissons that are change (Sec.

attached to a 250.150(c)(2)).

[platform] facility

with a walkway, use

the same designation

as the platform. For

example, rename Well

No. 10 as A-10; and

250.16(a)(3)(iii)....................... For single well The intention of this We made the suggested

caissons with paragraph is to use changes (Sec.

production equipment the letter 250.150(c)(3)).

use a letter designation for those

designation for the caissons with

facility name and a substantial

letter plus number processing equipment.

designation for the Furthermore, this

well. For example, requirement should

the Well No. 1 not only outline the

caisson would be requirement for well

designated as naming but also the

Facility A, and the facility name. As

well would be Well proposed, the caisson

[as] A-1. would be named Well A-

1, not Facility A.

[[Page 72768]]

250.16(d)............................... ADDITION: All Due to the enormous We made the suggested

facilities installed administrative and changes and added

and wells drilled economic burden that ``unless required by

prior to the would be placed on the Regional

effective date of the industry and the Director'' to the end

this revision do not MMS, existing of the sentence. This

need to be renamed if structures should be gives the Regional

they do not meet the allowed to retain Director the

naming criteria their current names, discretion to require

outlined in this if they do meet the renaming in case of a

section. requirements outlined well numbering

herein. problem (Sec.

250.153).

250.17(a)............................... You must identify all Clarification......... We made the suggested

facilities change (Sec.

[platforms, 250.154).

structures],

artificial islands,

and mobile drilling

units with a sign.

250.17(a)(2)............................ (2) When helicopter Weight capacity is not We responded to this

landing facilities necessary for suggestion by adding

are present, you must platform the words ``unless

display an additional identification and noted on the top of

identification sign would not be visible the helipad'' after

that is visible from on the signs. Weight the words ``and must

the air. The sign capacity is also display the

must use at least 12- customarily noted on weight capacity of

inch letters and the top of the the helipad (Sec.

figures[, and must helipad. 250.154(a)(2))

also display the

weight capacity of

the helipad]. If this

sign is visible to

both helicopter and

boat traffic, then

the sign in paragraph

(a)(1) of this

section is not

required.

250.17(a)(3)(ii)........................ In the GOM OCS Region, This requirement We made the suggested

list the area applies to both change (Sec.

designation or mobile drilling units 250.154(a)(3)(ii)).

abbreviation and the and all facilities.

block number of the

[platform] facility

location as depicted

on OCS Official

Protraction Diagrams

or leasing maps;

250.17(b)(2)............................ For wells with We recommend the We made the suggested

multiple completions, inclusion of downhole changes (Sec.

downhole splitter splitter wells and 250.154(c)(3)(ii)).

wells, and multilateral wells

multilateral wells, which are unique

identify each completions

completion in identified by the MMS

addition to the well in NTL 97-2N.

name and lease number Furthermore, we

individually on the believe the lease and

well flowline at the well name need to be

wellhead; and identified in

addition to the

completion code on

the flowline of each

completion.

250.17(b)(3)............................ For subsea [wellheads] The recommended change We made the suggested

wells which flow lends clarity to changes (Sec.

individually into situations where 250.154(b)(3)).

separate pipelines, numerous subsea wells

affix the required flow into a single

sign on the pipeline pipeline.

or surface flowline Furthermore, we

that [connects to the believe it is not

pipeline] is practical to

dedicated to that separately identify

subsea well at a each subsea well

convenient location flowing into a single

on the receiving pipeline.

platform. For

multiple subsea wells

which flow into a

common pipeline or

pipelines, no sign is

required.

250.17(c)............................... Each identifying sign Redundant............. We deleted this

[must be visible to section.

approaching traffic

and] maintained in a

legible condition.

250.18(a)(1)(ii)........................ Used for conducting Limiting the right-of- We made the suggested

exploration, way and easement to change. It is noted

development, and an owned lease is too that the comment uses

production activities limiting. In deep the term ``right-of-

or other operations water subsea way'' (as in pipeline

[on your lease]. projects, development right-of-way) whereas

may dictate that the section referred

several leases flow to (Sec. 250.18)

to a single platform. related to granting a

Under these ``right-of-use and

circumstances, the easement.''

right-of-way may

continue and be

needed even after the

platform owner has

ceased production.

250.19(i)............................... MMS must receive the The way that this We did not make the

request before the subsection was suggested change

lease term ends reworded, this since a suspension

unless the lease is existing provision would not be needed

held by operations. was omitted. It is if the lease were

possible to have a held by operations.

lease that is about We further clarified

to expire held by the sections

operations (such as (``Suspensions''

drilling) which sections).

automatically extends

the term of the lease

until that period

ends.

[[Page 72769]]

250.19(j)(1)............................ (6) When needed to In recent times, We did not make the

comply with a Presidential decrees suggested change

Presidential decree have required since a Presidential

or directive. cessation of activity decree or directive

on the West Coast, would be implemented

portions of Offshore via a policy

Florida, and the East statement from the

Coast. When the Director

Executive Department (''Suspensions''

requires this, it sections).

should be included as

a cause for an MMS-

directed suspension

which extends the

lease term.

250.19(j)(2)............................ When activities pose a This requirement to We did not make this

threat of serious, perform an on-site change. This is not a

irreparable, or specific study should new requirement, and

immediate harm. This be founded on we are retaining this

would include damage something other than authority so that we

to life (including the discretionary can require a study

fish and other authority of the MMS when it is necessary

aquatic life), to grant a (``Suspensions''

property, any mineral suspension. The cost sections).

deposit, or the of on-site surveys

marine, coastal, or can be quite high,

human environment. often benefit the

[MMS may require you entire area as

to do a site-specific opposed to an

study (see Sec. individual lease, and

250.19(o)(1));] MMS has demonstrated

no statutory

authority to impose

such excess costs as

a condition of

exercising leaseholds

rights granted under

the lease.

250.19(l)............................... The Regional This change is We did not add the

Supervisor may grant necessary in order to words ``and/or an

or direct an SOP and/ correctly mirror SOO'' because SOOs do

or an SOO when: the current 30 CFR 250.10 not apply to this set

suspension is in the which provides for of regulations. We

national interest; not only suspension deleted the phrase

[you have exercised of production but a ``you have exercised

diligence in pursuing suspension of diligence in pursuing

production]; the operations as well. production.'' Since

lease was drilled and The requirement to diligence is not

a well was determined exercise diligence in easily defined, we

to be producible in production appears to place more emphasis

accordance with 30 already have been met on the lessee's

CFR 250.9 or 250.253; by the requirement to commitment to

and it is necessary have the producible production and a

because the well present. No sound activity

suspension will meet criteria have been schedule when

one of the following identified to analyzing SOP

criteria: determine diligence requests

in production. Once (''Suspensions''

the lease is in a sections).

producible status, by

declaration of a

producible well, this

criteria seems to

have already been met.

250.19(l)(3)............................ It will allow you a In today's gas We did not make the

reasonable amount of environment, the change as

time to enter a sales transportation transportation is

or transportation contract is as covered

contract for oil, important as a sales (``Suspensions''

gas, or sulphur. You contract; therefore sections).

must show that you the regulatory

are making a good language should

faith effort to enter include both.

into the contract(s);

250.19(o)(1)............................ [Conduct a site- This requirement to We did not make this

specific study(s);]. perform an on-site change. This is not a

specific study should new requirement, and

be founded on we are retaining this

something other than authority so that we

the discretionary can require a study

authority of the MMS when it is necessary

to grant a (``Suspensions''

suspension. The cost sections).

of on-site surveys

can be quite high,

often benefit the

entire area as

opposed to an

individual lease, and

MMS has demonstrated

no statutory

authority to impose

such excess costs as

a condition of

exercising leaseholds

rights granted under

the lease.

[[Page 72770]]

250.20.................................. Except for Definitions of We deleted the

requirements to accidents are accident reporting

report oil spills, inconsistent with table at proposed

delete all other those used in SEMP Sec. 250.120(a). We

reporting (NTL 98 -6N) and will propose a

requirements and those required by the separate rule to

incorporate USCG for similar establish a joint MMS-

recommendations of incidents. These USCG web-based

the USCG NOSAC proposed regulations reporting system for

Incident Reporting in many cases incidents that have

Subcommittee duplicate reporting to be reported to

established on April requirements of the either agency. We

22, 1998 consisting United States Coast retained the current

of MMS, USCG and Guard. At a meeting requirement at Sec.

industry personnel. of NOSAC (National 250.119(a) (Sec.

Offshore Advisory 250.191).

Committee) in

Washington on April

22, 1998, a

Subcommittee was

established to review

and recommend changes

to improve the

process of defining

and reporting

incidents to the MMS

and the USCG. This

effort was endorsed

by Carolita Kallaur,

Associate Director

for Offshore Minerals

Management.

Recommendations will

be completed by

October 1998.

Significant

administrative burden

would be added to all

operators if this

proposed regulation

was implemented. This

would be the most

expedient method to

resolve this issue

and avoid OMB and

other intervention in

adding this

administrative burden

to operators and

contractors.

250.20(a)............................... Industry has expressed To avoid uncertainty, We will propose a

concerns to the MMS the rule should separate rule on

that ``fires'' needs include the incident reporting

to be better defined definition, (see response to

since industry has especially when the previous comment).

confusion on what MMS is planning to The rule will give

needs to be reported. use fires as one of more guidance on

We recommend that the the criteria included thresholds for fires

MMS include a with the and factors that

description or disqualification impair safety.

definition for what a procedures found in

fire is and what this proposed rule in

types of fires they Section 250.12. The

expect to receive in preamble states that

the reports. more guidance will be

given in an NTL. We

prefer that the

language be included

in a rule.

The MMS should include The MMS should respect We will propose a

language that allows the confidentiality separate rule on

the Operator to and sensitivity of incident reporting

submit this information marked (see response to

information marked ``Confidential'' as previous comment) and

``Confidential'' and they do with other consider the comment

the MMS to maintain information they in that rulemaking.

it in such a way receive from

without divulging the operators.

details that may be

involved in legal

action.

250.20(a)(1)............................ We recommend that this It would be impossible We made the suggested

subsection qualify for a pipeline right- changes (Sec.

that the operation of-way owner to be 250.191(b)).

must be related to aware of any

the exercise of the accidents which might

easement, right-of- happen to occur

way, or other permit. within the pipeline

right-of-way corridor

which did not

directly influence or

impact the exercise

of the right-of-way

itself.

250.20(a)(2)............................ We recommend that the The cited portions of We made the suggested

final rule qualify the OCS Lands Act changes (Sec.

the investigative specify that either 250.191(c)).

authority so that it the Secretary or the

is not exercised by U.S. Coast Guard may

both the Department institute

of Transportation's investigations but

United States Coast not both. This

Guard and the limitation must be

Department of [the] contained in the

Interior's MMS. regulations in order

for them to be lawful.

[[Page 72771]]

250.20(a)(2)............................ We recommend that the This provision We did not make the

striking of the violates the suggested changes.

provision which only provisions of Section However, since

allows panel members 22(f) of the OCS commenters have

and panel experts to Lands Act which objection to the

address questions to requires that the proposed wording, we

the person giving production of used the wording

testimony. documents and the exactly as it is in

handling of testimony our current

and witnesses be regulations (Sec.

analogous to the 250.191(c)).

Federal Rules of

Civil Procedure. The

Federal Rules Of

Civil Procedure give

the party at risk for

citation the

opportunity to

participate in

questioning of

witnesses in the

course of any hearing.

250.20(b)............................... The MMS should clarify The MMS should clarify We listed evacuation

that they want to get what they need since statistics needs as

personnel evacuation the word the following:

numbers only, to ``statistics'' is not facilities and rigs

avoid uncertainty. defined. In addition, evacuated and the

Also, the MMS should the MMS needs to amount of production

add the words ``as understand the shut-in for oil and

conditions allow'' critical nature and gas. We inserted ``as

immediately after plans that require conditions allow''

(b)(2) after ``11 full operator (Sec. 250.192).

AM'' in this sentence. attention for safe

evacuation of

personnel, ensuring

the operations are

safely and

environmentally shut-

in, housing the

evacuated personnel,

and ensuring the

safety of office

management/staff.

This process must

have higher priority

than reporting

``statistics'' by 11

AM during the period

of shut-in and

evacuation. MMS

offices are also

evacuated when

natural events such

as hurricanes

approach populated

areas, so the

``statistics'' would

probably not be

accessible.

250.21.................................. Any person may report This will prevent the We have not made the

to MMS an apparent MMS from being forced changes because MMS

violation or failure to investigate procedures will

to comply with any frivolous or baseless determine the

provision of the Act, allegations which are validity (Sec.

any provision of a apparent on their 250.193).

lease, license, or face.

permit issued under

the Act, or any

provision of any

regulation or order

issued under the Act.

When MMS receives a

report of an apparent

violation, or when an

MMS employee detects

an apparent

violation, after

making a

determination of the

validity, MMS will

investigate in

accordance with its

procedures.

[[Page 72772]]

250.23(a)............................... Your lease expires at Ordinary oil and gas We deleted the word

the end of its principles extend a continuous from this

primary term unless lease provided a section (Sec.

you are producing in continuous 250.180).

paying quantities or exploratory drilling

conducting drilling program is in

or well-reworking operation. The

operations on your present wording does

lease (see 30 CFR not appear to include

part 256). The this fact, but

objective of the instead focuses

drilling or well- solely on production

reworking operations or the re-institution

must be to establish of production itself.

continuous production A lessee could

on the lease. For maintain a lease by a

purposes of this continual and

section, the term diligent exploratory

operations means program through

[continuous] continuous drilling

production, drilling, activity. This

or well-reworking. concept is missing in

the proposed rule. In

addition, the last

sentence as is will

cause confusion and

it contradicts the

remainder of Section

250.23. It is

possible during

drilling or well-

reworking to start

and stop operations

within the 180-day

clock, such as to get

different equipment,

personnel, other

operations on the

platform, etc. As

long as the word

``continuous'' is

there, it can be

interpreted as being

on-going and not

allowing for start

and stops. This is

unrealistic with

regard to how

offshore operations

take place.

250.25.................................. When will MMS Since the We made Sec. 250.195

reimburse me for reimbursement parallel to 30 CFR

reproduction, provision is for part 251. This

processing, and other other areas than section only refers

costs? reproduction, it will to reimbursements for

be easier for the G&G data and

operator to find this information.

section.

250.27(b) Table......................... When your lease Ten years is not We have not made the

terminates or [10] 15 enough in the case of suggested change. To

years after the date deepwater leases change the release

you submit the data (deep water leases time for these data

whichever is earlier. have a 10 year would make releasing

[10] 15 years after primary term) where data and information

the date you submit an exploratory well more complicated and

it. is drilled, an SOP make it extremely

obtained pending difficult to track

development. Same as properly. Following

above. In addition, our current

there could exist regulations, we have

open acreage next to already released deep-

a lease that has not water data. The

been fully developed suggested change

since operations in would not enhance our

deep water tend to be ability to get fair

more complex. market value for

leases (Sec.

250.196).

MMS will disclose Operator should have We did not make this

information not the opportunity to change. This change

collected on MMS review the current would mean that we

forms in accordance situation and decide would have to go to

with the following whether or not the lessee before we

table: if--The release of the data transfer proprietary

director determines would jeopardize its data and information

that data and competitive position. (paleo reports, etc.)

information are to anyone doing work

needed for specific on our behalf. This

scientific or is not a good idea.

research purposes for It limits our ability

the Government MMS and rights to do

will release-- research and detailed

Geophysical data, studies (Sec.

geological data, 250.196).

interpreted G&G

information,

processed and

reprocessed

geophysical

information, analyzed

geological

information. At this

time--Anytime

Additional

provisions--MMS will

release data and

information with the

review and consent of

the lessee only if

release would further

the national interest

without unduly

damaging the

competitive position

of the lessee.

[[Page 72773]]

[2] 10 years after you Two years is not We have not made the

submit it or 60 days enough in the case of suggested change. To

after a lease sale if deepwater leases change the release

any portion of an (deep water leases time for these data

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