Post-Deepwater-Horizon Regulations Get Rolled Back

“They’re blocking research into the risks. What is Secretary Zinke afraid of?”

By Nick Cunningham, Oilprice.com:

The Trump administration is hoping to slash regulations on offshore oil drilling that were implemented after the 2010 Deepwater Horizon disaster that killed nearly a dozen people and led to an oil leak that spewed for months.

According to the Wall Street Journal, the Bureau of Safety and Environmental Enforcement (BSEE), which is the agency housed in the Interior Department that regulates offshore oil drilling, is proposing a rollback of a series of changes made after the 2010 disaster.

BSEE says that the cuts will save the oil industry $900 million over ten years. The proposal has not been made public, but the WSJ reports that some of the changes include easing rules that require the streaming of real-time data of oil production operations to facilities onshore, which allows regulators to see what is going on. Another rule that would be removed requires third-party inspectors of equipment, such as the blowout preventer, to receive certification by BSEE.

Another example includes alterations to the “well-control rule,” one of the signature regulations that was implemented by the Obama administration after years of review following BP’s oil spill. The well-control rule required the use of certain safety equipment and operations intended to reduce the risk of another disaster.

But the Trump administration, in a nod to the oil industry, has proposed deleting the word “safe” from a section of the rule, the WSJ reports, which would restrict BSEE’s ability to withhold permits. “Based on BSEE experience during the implementation of the original [well control rule], BSEE has concluded that the term ‘safe’ creates ambiguity in that it could be read to suggest that additional unspecified standards, beyond those expressly stated, may be imposed in the approval of proposed drilling margins,” BSEE wrote in a justification of the rule change, according to the WSJ.

The upshot is a weaker regulatory regime over offshore oil and gas drilling and it comes at a time that Trump’s Interior Department is also moving to expand drilling not just in the Gulf of Mexico, but eventually in the Atlantic and Arctic Oceans.

The current head of BSEE said earlier this year that the Obama administration overstepped when it put in place regulations on drilling. “It was obvious to me that back then there was a conclusion that it was a systemic problem, and yet I don’t believe there was evidence at the time that it was a systemic problem,” Scott Angelle, the director of BSEE, said in June.

BSEE now argues that the oil industry has learned from its mistakes, and has incorporated changes since the 2010 incident, and thus, does not need heavy government oversight.

Meanwhile, BSEE also sent a stop-work order on a study that would evaluate how the agency inspects offshore oil and gas operations. The study, to be conducted by the National Academies of Sciences Engineering, and Medicine, was initiated last year and was intended to figure out ways to improve inspections.

Environmental groups are crying foul. “The Department of the Interior, whose job it is to make sure offshore drilling is safe, should welcome a serious investigation into the best way to carry out that job, especially as the administration pushes to expand drilling even further in the Atlantic and the Arctic,” Andrew Rosenberg, director of the Center for Science and Democracy at the Union of Concerned Scientists, said in a statement. “Instead, they’re blocking research into the risks. What is Secretary Zinke afraid of?”

Interior is lining up a massive auction of offshore acreage, scheduled for March. The auction is expected to serve up 77 million acres for drilling, the largest offering ever held. The auction will include “all available un-leased areas on the Gulf’s Outer Continental Shelf,” the agency said in a statement a few months ago.

It is unclear how much interest there will be in offshore drilling, but the sector is looking to rebound several years after the market downturn. The EIA expects the U.S. Gulf of Mexico to add 344,000 bpd of new supply in 2018 from seven different projects, although many of those were planned years ago. By Nick Cunningham, Oilprice.com

PG&E, the utility tangled up in the Bay Area wildfires, goes for “cash conservation.” Now investors, not just rate payers, will foot the bill. Read…  PG&E Suspends Dividends, “Uncertainty Related to Causes” of Bay Area Wildfires. Shares Plunge Further

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  32 comments for “Post-Deepwater-Horizon Regulations Get Rolled Back

  1. WT Frogg
    Dec 27, 2017 at 2:08 pm

    What could possibly go wrong with less oversight and regulations especially when drilling in ecologically sensitive areas like the Arctic ??

    (Sarcasm intended)

    Seems like POTUS & his minions are hell bent on undoing anything (good, bad or otherwise) that has the previous administrations’ name on it. Must be the political equivalent of “penis envy”.
    FYI: I didn’t have a dog in that hunt, just an outside observer.

    • Raymond Rogers
      Dec 27, 2017 at 9:52 pm

      I thought this was a website that deals with numbers, not left-wing articles on drilling on public land. Few economic numbers were given. So is it a surprise that the very first comment is from a hack calling the President “Drumpf” (which is not even clever in any regard whatsoever).

      It’s amazing. People complain about the standard of living in one article and the environment in the next. You can’t have your cake and eat it too. You can be a minimalist and an enviornmentalist or live high on the hog and disregard some environmental standards.

      • Dec 28, 2017 at 2:08 am

        In terms of the price of oil, we were doing just fine after those regulations took effect. In fact, the price of oil dropped since those regulations took effect. Being a responsible corporate citizen that doesn’t destroy the planet on which humans would like to live for a few more generations, if possible, isn’t all that expensive.

        Since when is protecting the environment “left wing”? Everyone breathes the air. It was a Republican President who started the EPA in response to Love Canal and other environmental mayhem caused by reckless corporations.

        And if those regulations had been in place before the Deepwater Horizon fiasco, and if BP and its contractors had followed them, they could have saved tens of billions of dollars, and shareholders would have been a lot happier.

        • Gandalf
          Dec 28, 2017 at 4:36 pm

          Wolf,

          Not to try to continue a descent into a political discussion, since your website tries to avoid politics, but you should know by now that the standards for what count as left wing and right wing and mainstream in America have shifted quite a bit to the far right.

          Neo-Nazis, the KKK, and white Christian nationalists openly endorsed the current president wholeheartedly during 2016, and appear to have helped him win the election, and he continues to pander to them, so it appears that they are now an established part of the right wing Republican coalition (and I am sadly speaking here as a former registered Republican).

          As for Nixon, apart from his Vietnam policies and enemies list, he was in many ways to the left of Hillary Clinton in his social politics and accomplishments. Besides creating the EPA by executive order, he signed into law the Clean Air Act of 1970, the Endangered Species Act of 1973, the OSHA Act of 1970 to protect worker safety (which became much hated by all businesses as heavy-handed guvmint regulation), proposed a Universal Healthcare system in 1974 that had a striking resemblance to what became Obamacare, did Federal revenue sharing, tried wage and price controls to control inflation, etc., etc., all examples of a belief in the ability of a heavily interventionist regulatory Federal government to do good in America.

          Reagan also was far more “left wing” than most people, including Paul Ryan, choose to remember. After his big tax cut busted the budget, he ended up raising taxes several times, including payroll taxes, to keep Social Security solvent for several more decades. He also signed the unfunded Federal mandate of EMTALA into law, which was labeled by Romney as American’s “Universal Healthcare Plan” in 2012, and later supported gun control even, coming out publicly in favor of the Brady bill and other measures.

          Anyway, I’m just getting these bits of history in because hardly anybody bothers to check their facts before firing in with the Usual Labels and Insults.

          Not trying to be political here :)

        • RAYMOND ROGERS
          Dec 29, 2017 at 6:26 am

          I never said that protecting the environment was left wing, I said “not left-wing articles on drilling on public land”. I was pointing out the temperament of the article, and if you don’t think this was a partisan article aimed at Trump, you only need to look to look at the comments of the people both directly above and directly below. Now you have Gandalf characterizing people who support Trump as “Neo-Nazis, the KKK, and Christian nationalists (whatever that is supposed to mean).

          Most of the articles you have here deal primarily with numbers, the analysis of those numbers, and the historical events surrounding things like spikes, falls, and the unknowns. Those are great articles. But this article didn’t even attempt to dress up as that.

          Nobody has any qualms with the EPA doing reasonable things to protect the environment. But let’s not pretend this is an agency that not only gets involved with “reckless corporations”. It also harasses ordinary people over small man-made ponds, and have created their own disasters in Colorado and Georgia.

          I’ve seen enough of these articles that attempt to demonize the fossil fuel industry, and most of the assessments disingenuously conflate electricity needs with energy needs. People read articles like this and ready the pitchforks to destroy the very industries that support their standard of living.

          Your never going forge the 97 million tonnes (not the the smaller tons) of steel that the US consumes each year with solar panels and a few wind turbines (which if reincarnation is true, you better hope you never reincarnate as a bird near some of these disaster sites). For each tonne of steel, you need about .6 tonnes of of Coking coal which comes out to a very staggering number. This does not even take into account the processing inputs of turning coal into coking coal, a process of inputting energy for up to three days for each batch of coking coal, nor does it include the energy inputs needed for fabrication of rolls that are shaped into beams or any shaping process once the sheets have been pressed.

          I stand by last statement; You can’t have your cake and eat it too. You can be a minimalist and an environmentalist or live high on the hog and disregard some environmental standards.

        • Gandalf
          Dec 30, 2017 at 5:43 am

          Raymond Rogers,

          Well, rather than chase you down the political rabbit hole, let’s just say that you’re wrong again on lots of things. Let’s focus on the economic and technological issues

          1. Wow, you sure are out of date on iron production.
          Technology does march on, and direct reduced iron processes, done mostly with natural gas or other coke-less reducing agent, is rapidly taking over the world, and in some countries is already the #1 method for producing raw iron, e.g. Iran (due to their overabundance of natural gas). India leads the world in DRI production, Iran is #2. Direct smelting of iron ore with electricity, like aluminum, currently in a research stage, also appears highly feasible. This will eventually kill off mining of metallurgical (high carbon, low organic content) coal. No, Trump voters, those coal jobs are not coming back, ever.

          https://www.saimm.co.za/Journal/v099n02p111.pdf

          https://financialtribune.com/articles/economy-business-and-markets/60588/the-discreet-charm-of-gas-for-iranian-steel

          http://www.saultthisweek.com/2016/01/05/mit-researcher-eliminates-co2-in-steelmaking

          2. I love the oil industry! And I know more about it than you ever will. My dad worked for Mobil Oil almost his entire career, and my mom did too later, which means that if you ever bought Mobil gas, you helped pay for my college education and part of my medical school also. My conscience is clear. Mobil, as far as I can tell, was a good corporate citizen and never caused any major environmental disasters. Mobil merged with Exxon only after my parents retired. Exxon cut corners which is what led to the Exxon Valdez disaster (they wrongly tried to blame it all on the ship captain). Afterwards, stricter standards were applied to shipping oil through Prince William Sound and are still in place, and this sort of disaster has never happened there again. And, as bad as it was, no humans were killed. Today, I own Exxon-Mobil stock.

          Deepwater Horizon was far different – 11 oil rig workers died in the inferno (i.e. they were roasted alive), and over 100,000 claims/lawsuits were filed against BP by Gulf area residents for damages caused by the massive oil spill which created a massive environmental catastrophe that continues today. BP was convicted of gross negligence and eventually settled with the Feds for $20 billion. The underlying causes of the disaster were complex. The best article I’ve read discussing this is here:

          http://www.slate.com/articles/health_and_science/science/2016/09/bp_is_to_blame_for_deepwater_horizon_but_its_mistake_was_actually_years.html

          “Normalization of deviance” – i.e., everybody involved had gotten too used to the multiple little glitches that had been ignored with no consequence in previous successful executions of a complex project that carried potentially fatal and catastrophic consequences. BP in particular had a corporate culture of pushing for the quickest solutions, rather than the safest, and pushed the drilling crew hard, and cut corners as a result.

          Drilling oil wells in deep waters is extraordinarily hazardous, as it turns out. BP chose to drill this well in an aggressive, speeded up fashion, with inadequate safeguards. The Federal Mineral Management Service (MMS) rubber stamped their plans. The disaster proved that such deepwater oil field drilling needs to be done far more carefully, with greater oversight and safety precautions. That was the intent of the new regulations putting the Bureau of Safety and Environmental Enforcement (BSEE) in charge of all the new safety rules. Trump threw all of that out.

          And so, Raymond Rogers, you are DEAD WRONG. As a beneficiary and child of the oil industry, I see no “leftist intent” or even anti-oil industry sentiment in this article. Like the author, I see only that Trump will be rolling Federal rules back to a state of “normalization of deviance” and allowing the same sort of aggressive, unsafe practices in a technologically challenging subset of the oil industry with the same potential massive catastrophe as before.

          The old Mobil, and my parents, and our whole family did just fine without this sort of unsafe oilwell drilling.

      • WT Frogg
        Dec 28, 2017 at 12:07 pm

        @Raymond: If you took some time to check history you would find that Drumpf was the family name of POTUS before Granddaddy Drumpf bailed out of Bavaria in the 1800’s in order to avoid military service in the German Imperial Army. Looks like the apple didn’t fall too far from that tree IMO.
        BTW: You don’t know jack about me so to call me a “hack” as you put it a decidedly puerile approach to life. Grow up !!

        • Dec 28, 2017 at 1:04 pm

          From Wikipedia (accuracy not guaranteed):

          “The story of an itinerant lawyer Hanns Drumpf presented by Gwenda Blair in her book The Trumps (2000) who settled in Kallstadt in 1608 and whose descendants changed their name from Drumpf to Trump during the Thirty Years’ War of the 1600s[19][20][21] could not be substantiated and is not in accordance with the data provided by the German genealogists.[5] Journalist Kate Connolly, visiting Kallstadt, found several variations in spelling of the surname in the village archives (including Drumb, Tromb, Tromp, Trum, Trumpff, Dromb) but her article does not note “Drumpf”.”

          https://en.wikipedia.org/wiki/Frederick_Trump

        • Raymond Rogers
          Dec 29, 2017 at 3:58 pm

          Is that his name? Don’t play it off as if you were respectfully using his family name. There is something called context clues, and citing things like “and his minions” shows disdain.

          Those of us who did like Obama, used “Obama”, and did not delve into the petulance that many bring after November 2016

  2. Dec 27, 2017 at 3:31 pm

    https://en.wikipedia.org/wiki/Minerals_Management_Service

    this is a three agency org which replaced MMS. so while one agency might tamper around the edges of regulations the other two are still on the job. (we hope)

  3. Prairies
    Dec 27, 2017 at 4:12 pm

    When they change a rule because of the word safe… “BSEE has concluded that the term ‘safe’ creates ambiguity” How is it a bad thing to be safe when dealing with pressurized flammable gases and fluids? Must be nice getting rich while putting someone else at risk.

  4. Phil
    Dec 27, 2017 at 4:34 pm

    I trust the oil drillers self-regulation as much as I do the financial companies self-regulation.

    • Raymond Rogers
      Dec 27, 2017 at 9:57 pm

      When deregulation saves you money on fuel, take the savings that you would have paid on regulatory costs and send it either to any environmental organization of your choice. After all I’m sure you don’t want to personally benefit from lower prices. And don’t cheat, only sending the difference every other fill up, because your only cheating the environment.

      • Jim H
        Dec 28, 2017 at 2:23 pm

        Mr. Rogers,
        Had you been a BP shareholder when this disaster happened, and your stock had taken a large (55%) hit, might you be a bit less eager to blame “left wing” regulators for the ills of the world?

        (From Market Realist site 9/10/14 re: BP shareholder losses)

        “The fire not only destroyed BP’s physical property and caused casualties, but also destroyed shareholder wealth. From April 19, 2010, to June 25, 2010, BP’s share price came down by 55%—from $59.48 a share to $27 a share.

        Subsequently, however, share prices recovered. But they never returned to pre-crisis levels and have hovered around $37 to $52 in the past four years.

        Between August 2010 and August 2014, shares have averaged $44 a share. This average is 27% below the peak that shares reached just before the incident.”

        Those are “economic numbers” to consider. Perhaps you’ll consider wiping your right wing bias on the mat outside the comments section before you enter in the future.

        • RAYMOND ROGERS
          Dec 29, 2017 at 7:08 am

          “Perhaps you’ll consider wiping your right wing bias on the mat outside the comments section before you enter in the future.”

          Heaven forbid we have any dissenting opinions that go against against the army of pro-big government crowd.

          Your economic numbers are entirely to simplistic. While the spill did affect BP’s operations in a major way, stock prices were and are influenced by a number of factors, that in their totality, have a greater impact of the futures.

          1) The end of the great speculation. Share prices to a great extent, rely on what the futures will get years out. Not many analysts were saying post-spill that we were going to see the glory days of $157.73 a barrel.

          2) The dawn of fracking. You can find the old wolfstreet charts on Google with regards to this. The Rig count rises precipitously from the mid to end of 2009 to close to 2013 and then leveling off. The dive does not happen until after mid 2014. By then the fracking craze had taken its toll on the markets.

          3) Leveling of the market. Between 2013 and 2014 analysts were bothered by a price range of $5 for 13 consecutive months.

          I didn’t even go into the Arab Spring which coincided in 2010 and lasted many years. While the effects were minimal for BP they did exist, and there was no benefit of higher prices to compensate BP for this.

      • Art
        Dec 28, 2017 at 11:31 pm

        For the year 2016 the U.S. offshore oil industry produced 584 million barrels. This article says rolling back these more stringent safety regulations will save the industry 90 million dollars per year. That equates to roughly 15.5 CENTS per bbl or 1/3 of a cent per gallon. Ask the hundreds of thousands of business owners and residents of the Gulf Coast whose lives were financially or physically adversely affected by the BP spill if they think saving 1/3 of a penny per gallon is worth the trade off.

      • Kraig
        Dec 29, 2017 at 1:15 am

        Two problems with that approach. 1) savings go to oil companies not consumers most likely and 2) prevention is better than cure. Which groups can I give the money to to prevent oil spills in the first place in a deregulated environment?

      • MontanaBoy
        Dec 29, 2017 at 11:48 am

        These regulations were imposed in light of the fact that BP (and its contemporaries in the oil and gas extraction business) were extracting crude in a reckless manner that ended up costing lives and tens of billions of dollars in damages to marine fisheries, estuaries, and communities along the gulf coast. These costs will continue to accrue over the decades because remediation is costly and difficult, and BP will not be the ones to bear them due to the soft-touch punitive measures imposed by regulators during the Obama administration.
        The fact is that they’re not reducing the cost of fuel. By shifting the cost of these tremendous externalities onto others they’re effectively looting the community chest. You won’t immediately observe the hardships that these negative externalities cost, but when these sort of disasters crop up repeatedly and despoil estuaries that our shipping lanes rely upon for preserving safe harbors, destroy marine food sources that will become increasingly needed as our industrial farming devastates the ability of the world’s breadbaskets to produce enough calories to feed us all, and when coastal communities observe a massive uptick of cancers and poisonings from exposure to the carcinogenic fractions of the millions of gallons spread into the environment, leading to increased costs of healthcare for those regions, you’ll realize that the Earth is a system and destroying one part of it makes it harder for all of us to survive.

  5. Ken
    Dec 27, 2017 at 6:06 pm

    America has to do something – pretty soon they won’t be allowed to exchange worthless US greenback for real things like oil.

  6. Paulo
    Dec 27, 2017 at 7:09 pm

    Unbelieveable. Hopefuly, this change and ‘tenure’ will be short-lived. Hopefully, there will be no more major catastrophes.

    I couldn’t watch the Deepwater Horizon movie beyond the ‘blowout’. It was too upsetting for me.

    I would like to take Trump and his minions and toss ’em into the old Love Canal. At the very least, relocate the current Govt. to a superfund site.

    https://en.wikipedia.org/wiki/Love_Canal

  7. Dec 27, 2017 at 8:02 pm

    As M. King Hubbert (1962) shows, Peak Oil is about discovering less oil, and eventually producing less oil due to lack of discovery.
    https://imgur.com/a/6dEDt

    IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
    https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000

    Peak Oil Vindicated by the IEA

    • Gandalf
      Dec 28, 2017 at 5:21 pm

      Counterbalancing the fears of Peak Oil are predictions of Peak Oil Demand by 2024, e.g. from Goldman Sachs.

      http://www.businessinsider.com/goldman-sachs-oil-demand-expectation-2024-2017-7

      There are a great many undercurrents of a coming technological revolution, largely led, ironically, by China, which has in recent years taken its energy needs, its pollution problems, and desire to decrease its dependence on imported oil and polluting coal, and thus poured massive amounts of money into:

      1. Solar energy panels – China was the #1 reason for massively driving costs of solar panels down globally
      2. Electric vehicles – Next on the list – e.g., Geely’s Volvo division is shifting rapidly to electric vehicles. Other native Chinese carmakers are following suit. GM (with a large presence in China) is also advancing rapidly with EVs. If anybody ends up blowing Tesla out of the water, it will be China – unless Tesla will blows itself out of the water first.
      3. Improved battery technology – solid state, non-exploding, more energy dense, what more could you ask, this is in the cards for the future – Japan, Korea, and US also investing heavily into new battery technology. This will happen.
      4. Other renewable energy sources are also rapidly advancing.

      Please note also that oil reserves are calculated based on current oil prices versus cost of producing those reserves. Companies have to take off their reserves that which is not economical to produce at current oil prices, and since the oil price drop, that has meant billions of barrels of reserves taken off their reserve sheets.

      This is what has ALWAYS made predictions of “Peak Oil Reserves” totally bogus. As prices rise, technology develops to increase production of previously too expensive to produce oil sources. Shale is the classic example. Even in the 1970s Arab Oil Crisis, it was well known that the US had one of the largest shale oil deposits in the world. The technologies to produce oil from these deposits were not available then, and I remember predictions that oil would have to rise to $100/barrel before the shale oil could be produces economically.

      Well, SHAZAM! That happened in the 2000s – oil crossed over the $100/barrel price, horizontal drilling had already been developed, fracking technology progressed, and all of a sudden shale oil production in the US was making it look like the US could become independent from having to import any oil at all. When Saudi Arabia decided to drop the oil price by overproducing, the main reason was to drive American frackers out of business. All this did was force them to become economical – fracking shale oil is now way cheaper than $100/barrel, and can be as low as $25/barrel

      • Kraig
        Dec 29, 2017 at 1:18 am

        Peak oil demand makes a lot of sense if enough people believe in peak oil then a shift to alternatives to combat demand makes sense. The more demand for oil outpaces supply. The more renewables are intresting. Sadly We are well below levels we could be.

  8. Bin
    Dec 27, 2017 at 8:50 pm

    This is good news for the industry. I’ll be adding to my holdings of the offshore operators.

    • james wordsworth
      Dec 27, 2017 at 10:24 pm

      and bad news for the rest of us.

    • Frederick
      Dec 28, 2017 at 2:41 am

      Bin NICE way to think Sad actually

    • c smith
      Dec 28, 2017 at 11:43 am

      Offshore costs are still way out of line with onshore tight-oil (shale) production costs, even if regs are loosened. U.S. will get to 10 million barrels/day produced in 2017, with nearly all the growth from shale. So called “peak” oil is now a joke.

  9. Realist
    Dec 28, 2017 at 1:55 am

    A refund for the Brits next ?

    • d
      Dec 28, 2017 at 4:42 am

      Don’t live up to Your name.

      The US entities and claimants were allowed to milk BP, With the assistance of the Biased US Courts, and still are, as BP IS not a US company.

  10. mean chicken
    Dec 28, 2017 at 3:50 pm

    It’s getting so bad you can’t even spray for eagles without upsetting eco-kooks.

    • Art
      Dec 28, 2017 at 11:46 pm

      I know, right? Damn eagles are everywhere. And not a pint of DDT to be had. That’s the way I felt about the dolphins too, but at least the oil and the corexit have taken care of that problem, along with the shrimp and the blue crabs. What a nuisance they were. I can’t wait to see my savings at the pump!

  11. Rates
    Dec 28, 2017 at 7:32 pm

    You ask the climate change deniers about Deepwater, and they’ll tell you it’s a government conspiracy …. guaranteed.

Comments are closed.