[Federal Register Volume 75, Number 6 (Monday, January 11, 2010)]
[Rules and Regulations]
[Pages 1276-1280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-124]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250

[Docket ID MMS-2007-OMM-0066]
RIN 1010-AD45


Requirements for Subsurface Safety Valve Equipment

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Final rule.

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SUMMARY: The MMS is incorporating by reference the Eleventh Edition of 
the American Petroleum Institute's Specification for Subsurface Safety 
Valve Equipment (API Spec 14A) into its regulations. The MMS is 
incorporating the Eleventh Edition of API Spec 14A because it updated 
the design validation and functional testing requirements, incorporated 
new design changes, and corrected ambiguous areas open to 
misinterpretation. These changes will ensure that lessees and operators 
use the best available and safest technologies while operating in the 
Outer Continental Shelf. The rule will also require that lessees and 
operators provide supporting design verification information for 
subsurface safety valves intended for use in high pressure high 
temperature environments.

DATES: Effective Date: This final rule is effective on February 10, 
2010. The incorporation by reference of the publication listed in the 
regulation is approved by the Director of the Federal Register as of 
February 10, 2010.

FOR FURTHER INFORMATION CONTACT: Wilbon Rhome, Office of Offshore 
Regulatory Programs, Regulations and Standards Branch at (703) 787-
1587.

SUPPLEMENTARY INFORMATION: The MMS uses standards, specifications, and 
recommended practices developed by standard-setting organizations and 
the oil and gas industry as a means of establishing requirements for 
activities on the OCS. This practice, known as incorporation by 
reference, allows us to incorporate the provisions of technical 
standards into the regulations. The legal effect of incorporation by 
reference is that the material is treated as if the entire document 
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/lessees accountable for complying with the documents 
incorporated by reference in our regulations. We currently incorporate 
by reference 97 private sector consensus standards into the offshore 
operating regulations. The regulations at 1 CFR part 51 govern how we 
and other Federal agencies incorporate various documents by reference. 
Agencies may only incorporate a document by reference by publishing the 
document title and affirmation/reaffirmation date in the Federal 
Register. Agencies must also gain approval from the Director of the 
Federal Register for each publication incorporated by reference. 
Incorporation by reference of a document or publication is limited to 
the specific edition, supplement, or addendum cited in the regulations.
    This rule adds the following API document to those currently 
incorporated by reference in MMS regulations:
    ANSI/API Specification 14A, Specification for Subsurface Safety 
Valve Equipment, Eleventh Edition, October 2005, Effective Date: May 1, 
2006; also available as ISO 10432: 2004, Product No. GX14A11.
    The MMS has reviewed this document and determined that 
incorporating it into regulations ensures that industry uses the best 
available and safest technologies for downhole safety valves.
    This final rule updates the requirements for subsurface safety 
valves operating in high pressure, high temperature (HPHT) environments 
in 30 CFR part 250 Subpart A--General and Subpart H--Oil and Gas 
Production Safety Systems. Subpart A is amended to incorporate by 
reference ANSI/API Specification 14A, Specification for Subsurface 
Safety Valve (SSSV) Equipment. The MMS is also adding a new section (30 
CFR 250.807) to Subpart H that identifies additional safety valve 
information requirements for HPHT environments.
    The Eleventh Edition of API Spec. 14A contains significant 
technological and design changes that will increase the safety of 
downhole operations in the Outer Continental Shelf (OCS). The updated 
API Spec. 14A is an improvement over the current API Spec. 14A, Tenth 
Edition, incorporated in the regulations because it does the following:
    <bullet> Strengthens the guidelines for preparation of a functional 
specification by the user/purchaser to submit to the manufacturer/
supplier when ordering equipment addressed by this standard. Functional 
characteristics in the specification must include, but are not limited 
to, well parameters, operational parameters, environmental

[[Page 1277]]

compatibility, and compatibility with related well equipment.
    <bullet> Adds new design verification and validation guidelines.
    <bullet> Clarifies procedures in areas such as design methodology 
and verification.
    <bullet> Introduces state-of-the-art technological advances to 
improve downhole performance.
    Comments on the proposed rule: On June 12, 2008, MMS published a 
rule proposing to incorporate the Eleventh Edition of API Spec 14A and 
to add a new section to the regulations identifying additional safety 
valve information requirements for HPHT conditions (73 FR 33333). The 
public comment period ended on August 11, 2008. The MMS received only 
two comments on the proposed rule; one comment was received from Baker 
Oil Tools and the other comment was received from the Offshore 
Operators Committee (OOC). You may view these comments on MMS's Web 
site at: http:[sol][sol]www.mms.gov/federalregister/PublicComments/
AD45ReqSubsurfaceSafetyValveEquip.htm.

Discussion of Comments

    Comment: Baker Oil Tools (Baker) supports MMS's proposal to 
incorporate API Spec 14A into the regulations. The comment stated that 
Baker supports the proposal to revise 30 CFR Sec.  250.806 to accept 
the Eleventh Edition of API Spec14A (and its specified functional test 
provisions) for safety valves in use in OCS waters. Baker also supports 
the proposal to require that Operators provide new information when 
submitting an Application for Permit to Drill (APD), an Application for 
Permit to Modify (APM), or a Deepwater Operations Plan (DWOP) that 
demonstrates the SSSV and related equipment are fit-for-service for 
performing in HPHT environments. Baker believes that the current design 
verification and validation activities specified in the Eleventh 
Edition of API Spec14A, which has been in effect since May 1, 2006, 
have and will continue to reasonably ensure that products are fit-for-
service in all pressure and temperature environments.
    Response: The MMS fully agrees with the comment by Baker supporting 
the incorporation of API Spec 14A and the requirement for new 
information that demonstrates the SSSV is fit-for-service.
    Comment: The Offshore Operators Committee (OOC) wanted MMS to 
delete or clarify HPHT condition No. 1 in Sec.  250.807, Additional 
requirements for subsurface safety valves installed in HPHT. The OOC 
stated that condition No. 1, which describes the ``HPHT environment,'' 
is confusing as it is currently worded. The commenter asked what does 
condition No. 1 cover that environment condition No. 2 does not already 
cover? The OOC further stated that basing the rule on ``HPHT 
environment'' (defined as the pressures and temperatures at the 
wellhead whether a surface wellhead or subsea wellhead) is not 
necessarily appropriate for the ``related'' equipment, including the 
SSSV. The OOC suggested that it will be more appropriate to define 
``HPHT environment'' by the anticipated worst case service conditions 
at each piece of related equipment. When the significant physical 
distance between the related equipment and the wellhead is combined 
with the anticipated fluid gradients and temperature gradients, it can 
result in conditions that push related equipment into greater than 
15,000 pounds per square inch gauge (psig), or greater than 350 degrees 
Fahrenheit--conditions in wells that may not be considered an HPHT 
environment by the current wording. Wells/environments that will not 
fall into the categorization of HPHT, as the rule is currently drafted, 
could actually need related equipment that is greater than 15,000 psig, 
or 350 degrees Fahrenheit rated working pressure. As written, the rule 
could be interpreted such that, in these applications, it will not be 
necessary for operators to supply supporting design verification for 
this related equipment (greater than 15,000 psig, or 350 degrees 
Fahrenheit rated working pressure equipment), unless the pressures or 
temperatures at the wellhead are deemed to be an HPHT environment. If 
it is intended that operators planning to use related equipment greater 
than 15,000 psig, or 350 degrees Fahrenheit working pressure provide 
design verification, then this should be clearly conveyed.
    Response: The MMS revised the language in Sec.  250.807 based on 
OOC's comment to add clarity and specificity to condition No. 1 that 
describes the ``HPHT environment.''

Final Rule Requirements

    The new Sec.  250.807 provisions will require the lessee or 
operator to provide additional information when SSSVs and related 
equipment are intended to be installed in an HPHT environment. The 
lessee or operator will be required to include such information in an 
APD, APM, or DWOP and must demonstrate that the SSSV and related 
equipment are fit-for-service for performing in HPHT environments. For 
the purpose of this rulemaking, HPHT exists in any of the following 
conditions:
    1. The completion of the well requires completion equipment or well 
control equipment with a pressure rating greater than 15,000 psig or a 
temperature rating greater than 350 degrees Fahrenheit;
    2. The maximum anticipated surface pressure or shut-in tubing 
pressure is greater than 15,000 psig on the seafloor for a well with a 
subsea wellhead or at the surface for a well with a surface wellhead; 
or
    3. The flowing temperature is equal to or greater than 350 degrees 
Fahrenheit on the seafloor for a well with a subsea wellhead or the 
surface for a well with a surface wellhead.
    Related equipment refers to wellheads, tubing heads, tubulars, 
packers, threaded connections, seals, seal assemblies, production 
trees, equipment associated with coiled tubing, snubbing, operations, 
chokes, well control equipment, and any other equipment that will be 
exposed to rated working pressures greater than 15,000 psig or 
temperatures greater than 350 degrees Fahrenheit.

Procedural Matters

Regulatory Planning and Review (Executive Order (E.O.) 12866)

    This final rule is not a significant rule and is not subject to 
review by the Office of Management and Budget (OMB) under E.O. 12866.
    (1) The final rule will not have an annual effect of $100 million 
or more on the economy. It will not adversely affect in a material way 
the economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities. The primary purpose of this final rule is to establish 
minimum acceptable requirements for SSSVs. The requirements apply to 
SSSVs, as well as all components that establish tolerance and/or 
clearances that may affect performance or interchangeability of SSSVs. 
This rule also will set minimum requirements for SSSVs and related 
equipment to conform to international standards. Finally, this rule 
will establish minimum fitness-for-service criteria for HPHT equipment 
operating over 15,000 psig or 350 degrees Fahrenheit and will require 
lessees and operators to provide information that demonstrates to the 
MMS that their SSSVs are properly designed to operate in HPHT 
environments.
    The oil and gas industry took the lead in revising API Spec 14A, 
Eleventh Edition. The industry and API have encouraged the promulgation 
of the final rule incorporating API Spec 14A. The API Spec 14A standard 
is now accepted as an industry standard both

[[Page 1278]]

domestically and internationally; consequently, the impact of this 
final rule on the oil and gas industry is expected to be negligible.
    The impact of the new requirements of Sec.  250.807 will also be 
negligible. A review of drilling activity indicates that, if the 
current trend continues, there may not be any HPHT wells that exceed 
15,000 psig at the wellhead drilled and completed in the next 3 years. 
However, there is activity in the Mobile Bay region and in the western 
Gulf of Mexico where the working environment for SSSVs and related 
equipment may reach over 350 degrees Fahrenheit, flowing tubing 
temperature. The MMS estimates that a maximum of 20 APDs or APMs that 
could be subject to the final rule may be submitted by lessees or 
operators over the next 3 years. These submittals will be required to 
provide additional information on SSSVs and related equipment for wells 
to be drilled and completed that may be classified as HPHT completions.
    Section 250.807 will require lessees and operators to provide 
supporting design verification information. This is the kind of 
information that a prudent operator should have available for operating 
in HPHT environments. Companies will be required to gather and present 
well data that should be readily available if requested by MMS for 
review. We estimate that the hourly burden to produce this data will be 
approximately 40 hours for each well at an hourly rate of $100 per 
hour, totaling $4,000 per well (40 hours x $100 per hour x 1 well = 
$4,000).
    The estimated cost to industry over the next 3 years, based on the 
high estimate of 20 APDs or APMs per year, will be approximately 
$80,000 ($4,000 per well x 20 wells = $80,000). This additional cost 
associated with implementing these new requirements will be negligible 
in relation to the overall cost of offshore oil and gas production. 
Additional costs could be incurred if a lessee engages an independent 
consultant to prepare the fitness-for-service report for the 
application to install SSSVs and related equipment in an HPHT 
environment with readily available information. However, these costs 
are very small when compared to the cost of drilling a well in an HPHT 
environment, which can cost over $150 million.
    (2) The final rule will not create a serious inconsistency or 
otherwise interfere with action taken or planned by another agency.
    (3) This final rule will not alter the budgetary effects of 
entitlements, grants, user fees, or loan programs or the rights or 
obligations of their recipients.
    (4) This final rule will not raise novel legal or policy issues. 
The final rule simply seeks to improve MMS safety regulations by 
updating them with improved oil and gas industry standards and requires 
lessees and operators to demonstrate that SSSVs and related equipment 
are fit-for-service in HPHT environments.

Regulatory Flexibility Act

    The Department of the Interior certifies that this final rule will 
not have a significant economic effect on a substantial number of small 
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
    The new API Spec 14A will affect lessees and operators of oil and 
gas leases in the OCS. This includes approximately 130 active Federal 
oil and gas lessees. Lessees that conduct business under this rule are 
coded under the Small Business Administration's (SBA) North American 
Industry Classification System (NAICS) codes 211111, Crude Petroleum 
and Natural Gas Extraction, and 213111, Drilling Oil and Gas Wells. For 
these NAICS code classifications, a small company is defined as one 
with fewer than 500 employees. Based on this criterion, an estimated 70 
percent of these companies are considered small. Therefore, this final 
rule will affect a substantial number of small entities. This final 
rule will not, however, have a significant economic effect on a 
substantial number of small companies because the revised API Spec 14A 
will not impose significant costs or burdens on any lessees or 
operators.
    With respect to the new Sec.  250.807, the MMS has determined that 
it is unlikely that a substantial number of small companies are 
currently involved with HPHT wells in the OCS due to the expense and 
the advanced technical expertise needed for drilling, completing, and 
producing HPHT wells. Because very few, if any, small companies will be 
involved in the activities that will require compliance with these 
additional requirements for HPHT wells, the costs of the additional 
requirements will not have a significant economic effect on a 
substantial number of small companies. Furthermore, as mentioned 
previously, the costs of complying with these final requirements are 
very small when compared to the cost of drilling an HPHT well, which 
can cost over $150 million.
    Your comments are important. The Small Business and Agriculture 
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were 
established to receive comments from small business about Federal 
agency enforcement actions. The Ombudsman will annually evaluate the 
enforcement activities and rate each agency's responsiveness to small 
business. If you wish to comment on the enforcement actions of the MMS, 
call toll-free 1-888-734-3247. You may submit comments to the Small 
Business Administration without concern for retaliation. Allegations of 
discrimination/retaliation filed with the Small Business Administration 
will be investigated for appropriate action.

Small Business Regulatory Enforcement Fairness Act

    The final rule is not a major rule under 5 U.S.C. 804(2) of the 
Small Business Regulatory Enforcement Fairness Act. This final rule:
    a. Will not have an annual effect on the economy of $100 million or 
more. The final rule will not impose any significant costs to lessees 
or operators. The main purpose of this rule is to update an industry 
standard that will ensure lessees use the best available and safest 
technologies for downhole safety valves. The costs associated with the 
final rule will involve the cost of the new document (API Spec 14A), 
and any cost associated with gathering and presenting the well data 
required by the new Sec.  250.807 to MMS. As mentioned previously, the 
costs of complying with these requirements are very small when compared 
to the cost of drilling an HPHT well, which can cost over $150 million.
    b. Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions.
    c. Will not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises.

Unfunded Mandates Reform Act of 1995

    This final rule will not impose an unfunded mandate on State, 
local, or tribal governments or the private sector of more than $100 
million per year. The final rule will not have a significant or unique 
effect on State, local, or tribal governments or the private sector. A 
statement containing the information required by the Unfunded Mandates 
Reform Act (2 U.S.C. 1501 et seq.) is not required.

Takings Implication Assessment (E.O. 12630)

    Under the criteria in E.O. 12630, this final rule does not have 
significant takings implications. The final rule is

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not a governmental action capable of interference with constitutionally 
protected property rights. A Takings Implication Assessment is not 
required.

Federalism (E.O. 13132)

    Under the criteria in E.O. 13132, this final rule does not have 
federalism implications. This final rule will not substantially and 
directly affect the relationship between the Federal and State 
governments. To the extent that State and local governments have a role 
in OCS activities, this final rule will not affect that role. A 
Federalism Assessment is not required.

Civil Justice Reform (E.O. 12988)

    This rule complies with the requirements of E.O. 12988. 
Specifically, this rule:
    (a) Meets the criteria of section 3(a) requiring that all 
regulations be reviewed to eliminate errors and ambiguity and be 
written to minimize litigation; and
    (b) Meets the criteria of section 3(b)(2) requiring that all 
regulations be written in clear language and contain clear legal 
standards.

Consultation With Indian Tribes (E.O. 13175)

    Under the criteria in E.O. 13175, we have evaluated this final rule 
and determined that it has no substantial effects on federally 
recognized Indian tribes. There are no Indian or tribal lands in the 
OCS.

Paperwork Reduction Act (PRA)

    The final revisions to 30 CFR 250, subpart H regulations (Sec.  
250.807) will specify that lessees and operators must submit a detailed 
description in their APD, APM, or DWOP when SSSVs and related equipment 
are intended to perform in HPHT environments. The information that will 
be required by the final rule should be readily available since a 
prudent operator will already possess this information for daily 
operations. Lessees and operators must then provide this existing 
information as part of their APD, APM, or DWOP submissions. The MMS has 
determined that the number of hours of paperwork burdens currently 
approved for preparation of APDs (3,135 annual burden hours) and APMs 
(9,900 annual burden hours) pursuant to the requirements set forth in 
30 CFR 250, subpart D (OMB Control Number 1010-0141) and for DWOPs 
(51,000 annual burden hours) in 30 CFR 250, subpart B (OMB Control 
Number 1010-0151), are more than enough to accommodate this minor 
addition to existing submissions. Therefore, due to the fact that the 
burden hours are effectively included under currently approved OMB 
information collections, the final rule does not require a submission 
to OMB for review and approval under section 3507(d) of the PRA (44 USC 
3501 et seq.).
    The PRA provides that an agency may not conduct or sponsor a 
collection of information unless it displays a currently valid OMB 
control number. Until OMB approves a collection of information and 
assigns a control number, you are not required to respond. The OMB 
approved the referenced information collection requirements for 30 CFR 
250, subparts B, D, and H under OMB Control Numbers 1010-0151 (321,817 
hours; expiration 7/31/08), 1010-0141 (163,954 hours; expiration 8/31/
08) and 1010-0059 (17,598 hours; expiration 2/28/09).

National Environmental Policy Act of 1969

    This rule does not constitute a major Federal action significantly 
affecting the quality of the human environment. The MMS has analyzed 
this final rule under the criteria of the National Environmental Policy 
Act and implementing regulations. This final rule meets the criteria 
set forth in 516 Departmental Manual 15.4(C)(1) for an MMS 
``Categorical Exclusion'' in that its impacts are limited to 
administrative, economic, or technological effects. Further, the MMS 
has analyzed this final rule to determine if it involves any of the 
extraordinary circumstances that would require an environmental 
assessment or an environmental impact statement as set forth in 43 CFR 
Sec.  46.215 and concluded that it does not.

Data Quality Act

    In developing this rule, we did not conduct or use a study, 
experiment, or survey requiring peer review under the Data Quality Act 
(Pub. L. 106-554, app. C Sec.  515, 114 Stat. 2763, 2763A-153-154).

Effects on the Energy Supply (E.O. 13211)

    This rule is not a significant energy action under the definition 
in E.O. 13211. A Statement of Energy Effects is not required.

List of Subjects in 30 CFR Part 250

    Continental shelf, Environmental protection, Incorporation by 
reference, Public lands--mineral resources, Reporting and recordkeeping 
requirements.

    Dated: December 24, 2009.
Ned Farquhar,
Acting Assistant Secretary--Land and Minerals Management.

0
For the reasons stated in the preamble, the Minerals Management Service 
(MMS) amends 30 CFR part 250 as follows:

PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER 
CONTINENTAL SHELF

0
1. The authority citation for part 250 continues to read as follows:

    Authority: 31 U.S.C. 9701, 43 U.S.C. 1334.


0
2. In Sec.  250.198(e), revise the entry for API Spec 14A to read as 
follows:


Sec.  250.198  Documents incorporated by reference.

* * * * *
    (e) * * *

 
------------------------------------------------------------------------
                                                        Incorporated by
                 Title of documents                      reference at
------------------------------------------------------------------------
 
                              * * * * * * *
ANSI/API Specification 14A, Specification for                       Sec.
 Subsurface Safety Valve Equipment, Eleventh              250.806(a)(3).
 Edition, October 2005, Effective Date: May 1, 2006;
 also available as ISO 10432: 2004, Product No.
 GX14A11............................................
 
                              * * * * * * *
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0
3. In Sec.  250.806, remove the last sentence in paragraph (a)(3), and 
add two sentences in its place to read as follows:


Sec.  250.806  Safety and pollution prevention equipment quality 
assurance requirements.

    (a) * * *
    (3) * * * All SSSVs must meet the technical specifications of API 
Specification 14A (incorporated by reference as specified in Sec.  
250.198). However, SSSVs and related equipment planned to be used in 
high pressure high temperature environments must meet the additional 
requirements set forth in Sec.  250.807.
* * * * *

0
4. Redesignate Sec.  250.807 as Sec.  250.808.

0
5. Add new Sec.  250.807 to read as follows:


Sec.  250.807  Additional requirements for subsurface safety valves and 
related equipment installed in high pressure high temperature (HPHT) 
environments.

    (a) If you plan to install SSSVs and related equipment in an HPHT 
environment, you must submit detailed information with your Application 
for Permit to Drill (APD), Application for Permit to Modify (APM), or 
Deepwater Operations Plan (DWOP) that demonstrates the SSSVs and 
related equipment are capable of performing in the applicable HPHT 
environment. Your detailed information must include the following:
    (1) A discussion of the SSSVs' and related equipment's design 
verification analysis;
    (2) A discussion of the SSSVs' and related equipment's design 
validation and functional testing process and procedures used; and
    (3) An explanation of why the analysis, process, and procedures 
ensure that the SSSVs and related equipment are fit-for-service in the 
applicable HPHT environment.
    (b) For this section, HPHT environment means when one or more of 
the following well conditions exist:
    (1) The completion of the well requires completion equipment or 
well control equipment assigned a pressure rating greater than 15,000 
psig or a temperature rating greater than 350 degrees Fahrenheit;
    (2) The maximum anticipated surface pressure or shut-in tubing 
pressure is greater than 15,000 psig on the seafloor for a well with a 
subsea wellhead or at the surface for a well with a surface wellhead; 
or
    (3) The flowing temperature is equal to or greater than 350 degrees 
Fahrenheit on the seafloor for a well with a subsea wellhead or at the 
surface for a well with a surface wellhead.
    (c) For this section, related equipment includes wellheads, tubing 
heads, tubulars, packers, threaded connections, seals, seal assemblies, 
production trees, chokes, well control equipment, and any other 
equipment that will be exposed to the HPHT environment.

[FR Doc. 2010-124 Filed 1-8-10; 8:45 am]
BILLING CODE 4310-MR-P