# Presentation: 661886

## Regulatory Process for Improving HSE Performance in the Gulf of Mexico

- Joe Gordon
- Minerals Management Service
-  Chief, Office of Safety Management
- Gulf of Mexico OCS Region

## Outline

- GOM Statistics
- Activity levels
- Compliance results and trends
- Accident/Incident trends
- Evolving Direction
- Regulatory initiatives
- SEMP & Performance Measures

## Lease Inventory

- 7744 active leases
- 1563 leases producing
- 50% of total in WD>400m; 40% in WD>900m
- WD>400 meters?
- 1994: 1200 leases
- 1999: 3715 leases

**Notes:**
- Chart shows the heavy emphasis in recent years on acquiring deepwater acreage
- Leases in WD > 900 meters have 10 year lease terms

- Deepwater has been fueled by continued successes (finding rates and production rates); royalty relief also playing a role in the deepwater push

## Gulf of Mexico OCS Activities

- Producing: 3254 oil wells; 3176 gas wells
- OSI - 3687; GSI - 4817
- 100+ discoveries in WD>1000 ft
- 10 discoveries beyond 6000 ft WD
- 3974 active platforms
- 29,000 miles of pipelines (total)

**Notes:**
- Statistics current as of November 1999
- BP-Amoco and Shell account for all 9 discoveries in WD>6000 feet of water; all are located in Green Canyon, Mississippi Canyon, and Atwater areas
	BP-Amoco:	E. Anstey		Atlantis
		Crazy Horse		Hostein
		King’s Peak		Mad Dog
		Metallica		Neptune
	Shell:	Coulomb 		Herschel
- Note: Coulomb discovery in MC 657 is deepest - 7500 feet of water
- New platform installations are currently outpacing the removals; this is a trend reversal from previous years

## GOM OCS Production

- GOM OCS
- 1.2 MM bbl/day - oil
- 13.8 Bcf/day - gas
- Deepwater
- 40 producing fields
- 8 fixed platforms
- 6 jackets; 2 towers
- 11 floating systems
- 8 TLPs; 1 FPS; 2 Spars
- 20 subsea

**Notes:**
- Continued increasing contribution of production from deepwater
- Expect a flatter profile for gas production than for oil; there are several significant deepwater gas developments (Mensa, Gemini) but trend appears to be toward developing oil reserves first; another possible explanation is that to date the deepwater GOM is an oil dominated play.
- Deepwater production is expected to contribute up to 65% of the total GOM OCS production (barrels of oil equivalent) by 2001--- (MMS 99-0016: Gulf of Mexico OCS Daily Oil and Gas Production Rate Projections from 1999-2003)

## Slide 6

**Notes:**
- Graphic shows the projected first production for discoveries
- There are numerous other known discoveries w/o start-up dates identified
- Key to note here from this graphic is the fact that infrastructure continues to move further from shore and into deeper water; represents good opportunities for continued success for the GOM deepwater

## GOM OCS Drilling

- ~30% decrease in total rigs drilling since 1997
- Deepwater rig use remains high
- 40 operators have drilled deepwater wells
- 70% by Shell, Exxon, BPAmoco, Chevron, Kerr-McGee

**Notes:**
- 30% decrease in overall GOM rig use since 1997; with increasing oil prices and large number of leases expiring during the next 2 years, this trend should reverse.
- Past several years have seen increased activity by smaller GOM operators in deepwater; companies like Vastar, Elf, Walter, Union Pacific, Mariner, British-Borneo, Murphy, Maxxus, Spinnaker now drilling in deepwater GOM
- Approximately 1100 wells have been drilled in GOM OCS WD>1000 feet; (50 in WD>5000 feet)
- As a percent of the total wells drilled, deepwater drilling has increased from 5 percent in 1993 to 17 percent in 1999.

## Inspection Statistics

- Source: TIMS database as of December 6, 1999

## INC Statistics

- Source: TIMS database as of December 6, 1999

## Top 5 Rig Activity INC’s

**Notes:**
Top 5 Rig Activity INC’s
#1 - Safe and Workmanlike Operations
#2 - BOP components were not successfully tested to a low pressure of 200 PSI to 300 PSI prior to conducting the high pressure test 
#3 - Electrical Installations not in accordance with API RP’s 500B and 14F
#4 - Skid mounted equipment, portable containers, spools, and drums were not marked with the owner’s name
#5 - The facility was not equipped with the necessary curbs, gutters and drip pans to collect all contaminants not authorized for discharge

## Rig Activity INC’s

## Top 5 Production INC’s

**Notes:**
Top 5 Rig Activity INC’s
#1 - Safe and Workmanlike Operations
#2 - BOP components were not successfully tested to a low pressure of 200 PSI to 300 PSI prior to conducting the high pressure test 
#3 - Electrical Installations not in accordance with API RP’s 500B and 14F
#4 - Skid mounted equipment, portable containers, spools, and drums were not marked with the owner’s name
#5 - The facility was not equipped with the necessary curbs, gutters and drip pans to collect all contaminants not authorized for discharge

## Production INC’s

## INC/Inspection Ratio

- Source: TIMS database as of December 6, 1999

**Notes:**
- One of the statistics used by MMS is to track the ratio of the number of Incidents of Noncompliance issued to the number of inspections performed during the year for 4 broad operations:  drilling; completion; workovers; and abandonments
- Similar efforts can be done by operator, facility, District, etc.

- This table shows a dramatic improvement in the ratio, indicating an improved level of compliance (fewer INCS written in all categories; drilling INC’s down by an estimated 55% from 1999)
- Note:  the number of inspections for 1999 (1300 total inspections through September; 1032 of those were drilling related) is on schedule to meet or exceed 1998 effort (1600 total)]

## Civil Penalty Cases

- Fines can range up to $25k/violation/day
- Since 1994
- $6.1MM assessed
- largest: $165,000
- $3.2MM collected
- Currently 64 cases under review

**Notes:**
Top 5 INC’s Referred to Civil Penalty Action
#1 - Bypassed surface and subsurface safety devices
#2 - Safe and workmanlike operations
#3 - Tubing plug not checked every 6 months as required
#4 - SCSSV not checked every 6 months for leakage as required
#5 - Each PSV not tested for operation every 12 months as required

- 64 civil penalty cases currently undergoing review
- MMS can assess a fine up to $25,000 per violation per day depending on the severity of the violation
- Since 1994, MMS has assessed $6.1MM in civil penalties, collecting $3.2MM

## Rig Activity INC’s Referred for Civil Penalty

## Production INC’s Referred for Civil Penalty Review

## Uses of INC and Civil Penalty Data

- Decisions
- compliance history dictates inspection frequency
- SAFE Awards
- suspensions and debarment
- Performance Reviews
- performance measures
- Public Information
- includes lessees that are potential buyers

**Notes:**
- There are numerous uses of data generate from MMS inspections
- Historical data is used to dictate how frequent an operator and/or facility will be inspected
- Trends established from the data gathered in GOM Region’s 5 District offices help focus inspections on certain activities and components
- Results are reviewed with operators at least annually
- Potential buyers of properties can benefit from the compliance history of a facility; helping guide them in decisions

## OCS Events by Category: 1995-99 YTD

- Source: TIMS database as of December 6, 1999

**Notes:**
- After significant increases in nearly every category of event tracked by MMS, there has been a more favorable trend during the past 2 years
- IMPROVEMENTS NEED TO CONTINUE!!!!! Regardless of whether there is an increase in activity levels
- Crane Safety is one area that has been a concern, with 4 fatalities and numerous other serious injuries occurring in 1998; 12 past Safety Alerts were issued during the timeframe 1975 to 1996
- Concern also exists for a high rate, sustained blowout in deepwater; such an incident would have a serious affect on the OCS program in general, and deepwater specifically; all the projections for increased production and activity levels are conditioned on a no-blowout scenario

- 3 blowouts in 1999 attributed to Newfield, Union Pacific, and Freeport
- 5 fatalities in 1999 summarized as follows:
	1 - diving accident
	1 - electrical shock from ROV unit
	1 - fire
	1 - lift boat collapse
	1 - entangled in umbilical

## SEMP

- MMS Cooperative reviews (audits)
- 7 conducted to-date
- contractor audit as part of the operator audit?
- API RP 75
- Latest edition attempts to “bridge” gap between operators’ SEMP and contractors Safety Management Program

## Performance - Based Regulations

- MMS Regulatory Goal = Safe and Clean OCS Operations
- Goals Must Coincide - Not Necessarily the Routes to the Goals
- Increased Focus on Systems

## Performance Based TrainingSubpart “ O “

## Key Elements of Proposal

- MMS will no longer accredit individual training schools
- Lessees and contractors are responsible for training their employees
- Lessees ultimately responsible for all activities on lease
- Companies free to develop training programs based on requirements in the proposed rule

## Training Plan Contents

- Procedures for evaluating contractors
- Training and job qualification requirements for certain employees
- Audit procedures
- Procedures for maintaining, verifying, and enhancing skills of employees
- Training in operational procedures, safe work practices, and emergency response
- Recordkeeping and documentation procedures

## 	Regulatory Update  		

- Delete obsolete/burdensome language
- Subpart A - Postlease Operations
- Final Rule in December 1999
- Subpart B - POE’s/DOCD’s
- Proposed Rule in March 2000
- Emergency Well Control Operations
- interim requirements via NTL 99-G01
- Subpart D - Drilling Requirements
- Proposed Rule in February 2000?

**Notes:**
Subpart A - General
- addressing the authorities, peformance requirements, documents incorporated by reference, etc.

Subpart B - POE’s/DOCD’s
- information requirements, submittal and approval processes for POE’s, DOCD’s and DWOP’s
- draft rule to be published in March 2000;
- revised Subpart B streamlines and clarifies the requirements for plans
- Deepwater Emergency Well Control Operations (interim requirements were listed in Notice to Lessees 99-G01) incorporated into Subpart B; this provision requires the operator to demonstrate capability to drill a deepwater relief well, logistically and financially

Notice to Lessees and Operators (NTL)
- Numerous NTL’s are undergoing review; eliminating those not needed and updating the provisions of others; OBM approval

## MMS/USCG MOU

- Defines agency responsibilities
- MODUs, Fixed Facilities, FPSO’s
- Minimizes duplication
- Promotes consistency between agencies

**Notes:**
- MMS and USCG signed the MOU in 1999
- intended to clarify the roles/responsibilities for each of the agencies regarding offshore activities and facilities
- MMS continues to engage the USCG in a dialogue about implementation of the MOU at both Region (USCG District 8 ) and HQ levels

## MMS Website

- http://www.gomr.mms.gov
- Wide range of information available:
*About the GOM Region*
*Environmental Information*
*News Releases, Papers, Publications*
*Offshore Information and Statistics*
*Deepwater*
*Civil Penalty Data*

**Notes:**
- Excellent source of information