HPHT 2018: Industry and BSEE work together to further U.S. offshore development

November 09, 2018

HOUSTON – Recently, at World Oil’s HPHT Drilling, Completion and Production Conference, National Ocean Industries Association (NOIA) President Randall Luthi said in a keynote address that his Washington, D.C.-based lobbying group is committed to providing the oil and gas industry with reliable access to the nation’s government officials. He stressed that NOIA strives to ensure fair regulatory and economic environments for offshore operators.

“A noticeable attitude change occurred immediately after Donald Trump took office,” Luthi continued. “The Trump administration repealed old legislation and re-instated permit requests for new seismic work along the Atlantic Coast. Additionally, White House officials have been in contact with the organization continually since the new administration took office, something that seldom happened during the Obama era.”

Since the vast majority of the world’s HPHT work takes place in the Gulf of Mexico (GOM), Luthi said “to increase offshore activity, operators need to focus on reducing costs, embracing competition and have the confidence that deep water will be able to compete with U.S. onshore shale fields within the next five years.” Deepwater break-even costs have declined steadily since 2014, and the major GOM players have said that the offshore can thrive again, if crude prices remain above $65/bbl. EIA estimates that new offshore acreage, made available by Interior Secretary Ryan Zinke, contains recoverable reserves of up to 45 Bbbl of oil and 185 Tcf of natural gas.   

NOIA is working with the Trump administration on dialing back regulations without reducing safety or environmental benefits. Also, officials are considering reducing the federal royalty rate. The rationale is that promoting an increase in drilling activity will boost revenue more than raising the fee that operators pay on each barrel of crude that they produce. There also is relief being considered for end-of-well-life and the well-control rule.

Panel discussion: New processes for equipment validation and testing in HPHT environments. After the keynote, a panel of industry experts convened to discuss critical regulatory issues that involve independent third-party/BSEE review of HPHT tool development. The panelists included Jim Raney, Anadarko Petroleum; Greg Kusinski, Chevron; Austin Freeman, API; Dr. Jim Kaculi, Dril-Quip; and Tim Bartlett, TechnipFMC.

The topic of discussion was “How do operators optimize the approval process for HPHT tool development by the federal government?” The OOC HPHT group was formed about two years ago, and it has provided feedback on BSEE’s HPHT guidelines. Kusinski stated that the industry now has a good understanding of BSEE’s expectations regarding the role of an independent third-party (I3P) to review equipment technical specifications, including review of fitness for purpose of equipment for project conditions, as well as the demonstration required by the  operator of fitness for service in seeking BSEE  approval of HPHT projects. 

The panel concluded that BSEE’s non-site-specific equipment review and acceptance process is a very valuable improvement. Panelists shared that BSEE’s early review of equipment qualification, verification and validation documentation creates efficiencies for future projects that require HPHT technology. They also discussed that there is an opportunity for BSEE to work with industry and I3Ps to further define the appropriate level of detail needed for these reports..

A BSEE representative attending the conference said it’s better for the industry to select an I3P than have BSEE attempt the process. However, BSEE is considering removing non-site-specific testing in the future—but has no plans to change site-specific testing regulations.

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