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US Interior Department proposes reducing offshore-drilling safety regs

Houston — The Trump administration's Interior Department proposed Fridayregulations that would scale back some of the safety regulations for offshoredrilling put into place by the previous administration in the wake of the 2010Deepwater Horizon disaster.

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The Bureau of Safety and Environmental Enforcement, which regulatesoffshore drilling, published in the Federal Register a revision of the ruleaddressing production safety systems, subsurface safety devices and safetydevice testing.

Among other things, the proposed new rule would rescind the provisionthat would require operators to submit safety devices such as blowoutprotectors for certification to third parties before installation.

The proposed change is part of the Interior Department's efforts to rollback Obama-era safety and environmental regulations on the oil and gasindustry as part of the Trump administration goal of achieving "energydominance without sacrificing safety," BSEE Director Scott Angelle said ina statement.

Earlier in the week Interior's Bureau of Land Management had rescinded arule promulgated under President Barack Obama to regulate hydraulic fracturingon onshore federal and Indian lands.

In another federal action favorable to oil and gas development unveiledbetween Christmas and New Year's, BLM released new guidelines affectingmanagement of sage grouse habitat Friday.

OFFSHORE DRILLING REGULATIONS CONTROVERSIAL

Under Obama, the Interior Department had instituted the offshoreProduction Safety Systems Rule as part of an overhaul of the offshore safetyregulations the department launched in the wake of the offshore explosion andsinking of the Deepwater Horizon oil production platform in April 2010.

Eleven workers died and millions of gallons of oil were spilled in theGulf of Mexico as a result of that disaster.

In its filing in the Federal Register, the Interior Department statedthat since the original rule took effect in November 2016, "BSEE has becomeaware that certain provisions in that rulemaking created potentially undulyburdensome requirement to operators ... without significantly increasingsafety of the workers or protection of the environment."

According to BSEE's initial regulatory impact analysis, the revision ofthe rule would save the offshore industry about $228 million in compliancecosts over 10 years.

Under the proposed revision, rather than submitting safety devices tothird-party inspectors, offshore operations instead would be required toensure that the devices complied with industry standards established by theAmerican Petroleum Institute.

Energy industry groups reacted favorably to the proposed revision.

In an interview, National Ocean Industries Association President RandallLuthi said by ensuring that safety equipment has to meet API standards, therule revision will save the industry the cost of hiring third-partyinspectors, while not sacrificing safety.

He said that in revising the safety equipment rule, BSEE simply wastaking "a second crack" at tweaking the regulations proposed under the Obamaadministration.

The revision to the safety device regulations is expected to the first ina series of revisions that BSEE is expected to propose to Obama-era offshoreregulations.

The agency is expected to unveil a proposed revision to regulationsregarding blowout preventers sometime in the first quarter of 2028, Luthisaid. The blowout preventer rule is currently under review by the White HouseOffice of Management and Budget.

A faulty blowout preventer was identified as the proximate cause of theDeepwater Horizon explosion.

BSEE is also working to revise safety and environmental rules regardingoffshore exploration in the Arctic region, Luthi said.

Environmental groups reacted to the proposed offshore safety regulationswith alarm.

"We do think the proposed changes will have a negative impact on theenvironment and worker safety," Kristen Monsell of the Center for BiologicalDiversity, said in an interview Friday.

She said the rule revision would return the offshore production industryto the era of "lax regulatory oversight" that preceded the Deepwater Horizondisaster.

By removing the provision that safety equipment should be inspected bythird parties, the rule revision would reverse a recommendation made by acommission Obama had established "to prevent future spills to try to makeoffshore drilling safe," Monsell said.

"It's the fox guarding the henhouse," she said.

The offshore industry has long contended that regulations promulgated inthe wake of the Deepwater Horizon disaster have had the impact of discouragingoffshore oil and gas production. Production data from BSEE shows thatproduction has declined in the wake of new regulations, but the connection isstill debated. Other factors may be at play, such as the rise of moreeconomical onshore shale plays.

BSEE said it would accept comments on the proposed changes to the safetydevices rule until January 29.

--Jim Magill, jim.magill@spglobal.com

--Edited by Derek Sands, derek.sands@spglobal.com