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Game Changer: Deepwater

The Deepwater Horizon incident in April 2010 dra- matically changed the regulatory landscape, leading to the

BSEE’s implementation of the fi rst mandatory SEMS rule for oil and gas operators in the OCS. Also known as the

Workplace Safety Rule, it required all OCS lessees to have a well-documented SEMS program in place by November 15, 2011. These SEMS outlined safety and environmental management procedures for routine work processes, un- safe incidents, and emergencies.

To be SEMS-compliant, operators must have their pro- grams monitored and, if necessary, updated every three years through a comprehensive auditing process that includes submission of an audit plan, a thorough review of all aspects of the program, and reporting of audit fi ndings via a formal report to BSEE. On November 15, 2013, all operators with facilities in OCS waters of the GOM were required to have a

SEMS audit and many offshore operators successfully com- pleted their fi rst round of audits to meet this deadline.

Missing a Key Market Segment

The current SEMS rule mainly focuses on oil and gas leaseholders, i.e., the operators. However, the fi rst round of audits made it clear that marine operators, who play a large and signifi cant role in OCS activities, were underserved.

Marine operators include contractors that transport ma- terials, personnel, and other resources to support oil and gas operations. On any given day in the OCS, there are many instances when marine support operations—includ- ing fl oating offshore installations (FOI) that produce oil and gas, mobile offshore drilling units (MODU) that drill wells, and other service vessels that provide well stimula- tion and logistical support—expose their workers to the same hazards as the operators. It therefore follows that these contractors should adhere to many of the same elements of SEMS to manage workers’ health and safety and the en- vironmental sustainability of operations. In fact, the SEMS regulation states that operators must have “procedures for verifying that contractor personnel engaged in well control, deepwater well control, or production safety operations can perform their assigned duties.” However, this requirement needs to be given greater depth and specifi city for a frame- work that takes full account of contractors’ activities.

Many oil and gas operators agree, particularly because their SEMS compliance is so closely tied to the operations and services that contractors provide. To that end, operators have been auditing support staff and contractors for the con- formance and robustness of their SEMS programs. This has led to the problem of “audit fatigue,” with contractors being audited on their SEMS programs by each separate operator – up to 25 audits per year, in some of the more extreme cases.

By achieving SEMS certifi cation, contractors can stream- line the compliance process, which could ultimately lead to a reduction in the number of audits they must undergo.

Operators also gain assurance that their contractors meet all

SEMS requirements in the Workplace Safety Rule, which frees them up to allocate less time for multiple audits.

This need has prompted the Center for Offshore Safety (COS), an industry-sponsored organization dedicated to ad- vancing offshore safety in the GOM, to consider defi ning a specifi c guidance for auditing contractors against SEMS.

The COS requirements for third-party SEMS auditor, which have been incorporated into federal law under SEMS II (see sidebar), are currently being reviewed and may potentially be edited to refl ect the broader scope of GOM activities.

U.S. Coast Guard Gets Involved

On September 10, 2013, the US Coast Guard published a Federal Register Advance Notice of Proposed Rulemaking (ANPRM) to require vessels engaged in OCS activities to develop, implement, and maintain a vessel-specifi c SEMS.

Under this proposed rule, a vessel owner would be required to develop and implement a SEMS that is compatible with a lease operator’s SEMS required under BSEE regulations.

Vessel-specifi c SEMS would also incorporate procedures to ensure that the design, fabrication, installation, testing, in- spection, monitoring, and maintenance of equipment com- ply with all applicable safety and environmental regulations.

Guiding their decision process, the Coast Guard is cur- rently reviewing SEMS of the International Maritime Or- ganization (IMO), the International Association of Drill- ing Contractors (IADC), and the International Standards

Organization (ISO). It is also researching whether compli- ance with these management programs would be an ap- propriate alternative to API RP 75. This includes a review to determine which safe work practices are to be followed and how workers should best be trained to identify hazards and have the knowledge, skills, and abilities to perform the duties expected of them.

As part of this review, the Coast Guard solicited com- ments from the offshore E&P community – including operators, contractors, and agencies, such as the API – as well as all other interested stakeholders. Comments have related to the feasibility of implementing a SEMS that in- corporates API RP 75, the compatibility with BSEE SEMS regulations, potential methods of oversight, safety issues, costs and regulatory burdens, and more. Approximately sixty comments were received by the December 9, 2013

REGULATORY REVIEW

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