House panels pass bills directed at deepwater drilling

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, July 20 -- Two US House committees passed bills after returning from Congress’s Independence Day recess in response to the Gulf of Mexico deepwater well blowout, rig explosion, and oil spill. The measures addressed workplace safety and environmental issues and included amendments from both Republicans and Democrats.

The Energy and Commerce Committee passed its measure centered on deepwater well equipment, well design, and cementing on July 15. The Science and Technology Committee approved two bills setting priorities for offshore oil spill prevention and cleanup research, and establishing research into safer drilling technologies a day earlier.

Approval of the Energy and Commerce bill in a 48-0 vote with one abstention followed extended negotiations concluding only that morning, ranking minority member Joe Barton (D-Tex.) said. “The requirements in this bill are tough,” he maintained. “[They] will materially improve safety and environmental protection and materially increase the probability that never again will this committee, Congress or the president have to deal with a disaster of the proportion that we have now in the gulf.”

The bill would require use of blowout preventers with new minimum standards, including a requirement that each BOP have two sets of blind shear rams and redundant emergency backup systems which could be activated if communications from the rig are severed. At least three barriers would be required across any risky well’s hydrocarbon flow path, along with pressure-tested lockdown devices, adequately centralized casing, circulated drilling fluids prior to cementing, and cement bond logs for all cementing activities intended to stop hydrocarbon flow.

New standards also would require steps to minimize the risk of hydrocarbons igniting during a blowout or well control event. Companies also have to maintain a team of qualified, experienced engineers as safety advisors, according to a summary issued by the committee.

Certification provision
The bill also would require independent, third-party certification of BOPs, well designs, and cementing procedures by inspectors selected by the federal regulator instead of the producer. It would protect whistleblowers that raise safety concerns and establish requirements for well operators and contractors to stop work when there are conditions indicating an immediate risk of a blowout.

It would establish significant criminal and civil penalties, including fines up to $10 million/day for knowing and willful violations. The measure also would establish an independent well control technical advisory committee to review proposed regulations, respond to federal officials’ requests for advice, assess implementation, and periodically report on available well control technologies and practices.

Barton said changes included a sharpened focus on new wells instead of the thousands which already exist; preservation of state regulators’ existing authority; and designation of the US Interior and Energy departments as primary implementing agencies as the US Environmental Protection Agency retains its existing authority but does not get any new responsibilities.

He also noted that a company’s chief executive would have to attest in writing, and the appropriate federal official would have to certify that the attestation was correct, that the well design is safe, that there is a BOP with redundant safety systems, that there is an adequate spill response plan which will work promptly and properly, and that the applicant has the ability to begin drilling a relief well promptly and complete it expeditiously. “Those are new requirements that are not in current law,” said Barton.

In a July 15 statement following the committee’s approval of the bill, American Petroleum Institute Pres. Jack N. Gerard said he appreciated efforts to make it better but added that it still had problems. “We look forward to working with lawmakers to further improve the bill,” he indicated.

R&D emphasis
The bills passed July 14 by the Science and Technology Committee emphasized research and development of technologies to improve offshore oil and gas production workplace safety and oil spill prevention, containment, and cleanup. Chairman Bart Gordon (D-Tenn.) said the bills help to ensure “that all stakeholders—including the federal government, industry, and academia—are better equipped to prevent and respond to such accidents in the future.”

He said the first measure, HR 2693, the Federal Oil Pollution Research Act, actually was introduced in 2009 by committee member Lynn C. Woolsey (D-Calif.). “Her foresight in writing this legislation last year put us one step closer towards advancing a more robust federal research and development program on oil spill response,” Gordon said. “This bill provides for a more streamlined federal management structure, prioritized research and development, and more oversight and accountability.”

The measure, which was an amendment in the nature of a substitute (ANS) to the bill that the committee passed last year, aims to streamline the structure of the federal Interagency Coordinating Committee on Oil Pollution Research which was established under the 1990 Oil Pollution Act by providing better oversight, ensuring support of outside research grants, and strengthening participating federal agencies’ research roles. It would prioritize research efforts by modifying the research, development, and demonstrated authorized under OPA, according to the committee’s majority.

“We have been slow to develop new technologies to prevent, mitigate and clean up oil spills,” Woolsey said. “The fact that we are responding to the BP oil spill with basically the same technology that we used with the Exxon Valdez spill 20 years ago pretty much says it all. Our legislation will change this.”

Her ANS also would establish an oil pollution research advisory committee with at least 25 representatives from nongovernmental entities. It would be directed to review, advise, and comment on the oil pollution interagency committee’s activities. The final bill also included amendments from both sides of the aisle to clarify language, enhance oversight, and strengthen research capacity, the committee said.

Republican concerns
While supporting the bill’s intent, committee Republicans said they were concerned about its increased scope and a shift from the present law’s primary focus on technology development toward more research on environment impacts. “While I understand concerns that the interagency committee was unwieldy, we heard testimony that the current structure works,” ranking minority member Ralph M. Hall (R-Tex.) said. “So I am left wondering if this is a solution in search of a problem.”

GOP members of the committee also questioned whether proposed amendments directing the program to participate in the development of international cleanup standards were appropriate when limited resources could be used to improve technology instead.

They also questioned whether provisions in the other bill, HR 5716, the Safer Oil and Natural Gas Drilling Technology Research and Development Act, amending Section 999 of the 2005 Energy Policy Act, are necessary. “This is the only R&D program in the Federal government capable of ramping up activities quickly and effectively to address the renewed interest in drilling technology research in the wake of the Deepwater Horizon disaster,” said Hall, who played a major part in establishing the current program. It has been a target for elimination in the Obama administration’s last two budget requests, although Congress has kept it alive, he said. Other GOP committee members criticized administration efforts to eliminate other federal oil and gas R&D programs not related to global climate change or the environment.

But Gordon said deepwater drilling presents a unique set of challenges, including safety and accident prevention and mitigation. “It is our hope that with passage of this bill, activities conducted under Section 999 will better serve the nation’s needs for development of advanced environmental and worker safety technologies and practices, while also providing a federal resource for technical expertise in this field,” he maintained.

He said research under EPACT’s Section 999 is conducted by both the US Department of Energy and a public-private research consortium known as the Research Partnership to Secure Energy for America (RPSEA), which has members from industry, academia, nongovernment organizations, and government laboratories and programs. HR 5716 shifts the focus and funding of the program to research and development of technologies for safety and accident prevention, he indicated. All amendments offered by Democratic and Republican committee members were adopted before the bill’s passage, Gordon said.

Contact Nick Snow at nicks@pennwell.com.

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