(51d) Deepwater Drilling Regulations In the Gulf of Mexico

The Deepwater Horizon incident (DWH) of April 2010 led to many changes in deepwater operations in the Gulf of Mexico. Not the least of those changes were to do with regulations.

In the three months following DWH two important changes to the regulatory regime were made. First, the agency that had the primary responsibility for offshore safety, the Minerals Management Service (MMS), was renamed the Bureau of Environmental Management and Regulatory Enforcement (BOEMRE). The revenue collection and safety enforcement functions of the old MMS were split away from the safety management role so as to avoid perceived conflict of interest problems. Associated with this change was the installation of new senior management.

The second short-term consequence of DWH was that BOEMRE put in place a drilling moratorium. At the time of writing (April 2011) the moratorium has been lifted, but very few licenses for drilling have yet been issued. This restriction continues to be a continuing source of tension between industry and the agency.

Not only did DWH generate short-term regulatory initiatives, it also led to the creation of longer term rule changes such as the Safety and Environmental Management Standard (SEMS) which requires that all offshore facilities (drilling, production and covered pipelines) implement a Process Safety Management system. In addition, new drilling rules and standards are being developed and implemented.

This paper will discuss some of the above regulatory changes — recognizing that many of the changes are on-going, and that it is difficult to predict how the regulatory environment will look at the time of this paper’s presentation: October 2011.