New BSEE Requirements Allow Operators to be More Proactive

Athens Group explains the importance of a new general performance-based requirement that operators use recognized engineering practices to reduce risks to the lowest level practicable.

On April 17, 2015, the U.S. Bureau of Safety and Environmental Enforcement (BSEE) proposed new rules covering blowout preventer (BOP) systems and well control for oil and gas operations in the United States outer continental shelf (OCS). One of BSEE’s intentions for the new rules is to “ensure that the industry uses recognized engineering practices, as well as innovative technology and techniques to increase overall safety.”

Current rules require use of best available and safest technology (BAST) whenever practical. These regulations are predominantly prescriptive and do not require the application of systematic risk management practices. There is no specific requirement to establish a safety management system, and performance criteria and acceptance criteria are applied in only a limited extent.

The proposed rules signal that BSEE is “taking a more risk-based approach with its regulations.” A new Subpart G is added that includes new requirements for, among other things, design and manufacture of BOPs. This new subpart “includes a performance-based requirement that operators utilize recognized engineering practices that reduce risks to the lowest level practicable.”
Athens Group believes this new requirement is a significant change that will impact operators working on the U.S. OCS.

Regulations Change in Response to Major Accidents
BSEE’s proposed rules were developed to address recommendations arising from multiple investigations of the Deepwater Horizon incident. They are consistent with a pattern of supplementing prescriptive regulations with a systematic process to reduce risk in the wake of catastrophic incidents.

The Norwegian government responded to the Bravo blowout and the loss of the Alexander Kielland by transforming its approach to operational safety. Rather than relying solely on prescribed standards, the government required the industry to demonstrate thorough consideration of risks and shifted the burden of demonstrating safety to the operator.

In the United Kingdom (UK), the Piper Alpha accident and the subsequent investigation had a similar impact on regulation. The prescriptive regulatory approach evolved into one where companies must demonstrate to regulators that they had undertaken a thorough assessment of risks and had adequate safety and risk management systems to address them.

Other Countries are Shifting the Responsibility for Safety to the Industry
Before such incidents, regulators in the UK, Norway, and Canada had relied on prescriptive systems based on laws and regulations that set specific demands for technical equipment and operations to prevent accidents and hazards. However, in the aftermath of catastrophic accidents, regulators decided that adding a risk-based approach was essential. They faulted reliance on the “prescriptive regulation with inspection model” for being fundamentally reactive and therefore incapable of driving continuous improvement in policies and practices.

According to the Petroleum Safety Authority of Norway:
“A trend has existed among safety regulators worldwide over the past 20-30 years to move their regimes towards a greater degree of functional-based regulation. This is because the prescriptive approach has often turned out to encourage a passive attitude among the companies. They wait for the regulator to inspect, identify errors or deficiencies and explain how these are to be corrected. As a result, the authorities become in some sense a guarantor that safety in the industry is adequate and take on a responsibility which should actually rest with the companies.”

The UK, Norway, Canada, Australia and Denmark still define minimum standards for well control, prevention of fires and explosions and worker safety. However, the burden now rests on industry to assess the risks associated with offshore activities and demonstrate that each facility had the policies, plans, and systems in place to manage those risks.

Current Rules based on Best Available and Safest Technologies
Current BSEE rules state, “You must use the best available and safest technology (BAST) whenever practical on all exploration, development, and production operations. In general, we consider your compliance with BSEE regulations to be the use of BAST.” They allow “The Director may require additional measures when it is economically feasible and benefits outweigh the costs,” but there is no requirement for the application of systematic risk management practices. BAST was developed as part of regulations pertaining to increased drilling on the OCS following the 1973 oil embargo. It’s a broad concept described by its creators using the following terms:

Best: That which would most completely fulfill the composite purpose of the legislation, not necessarily the most expensive or sophisticated.

Available: The technology does not have to be in actual use somewhere, but the technology must be available at a cost and at a time the Administrator determines to be reasonable.

Safest: The comments about the term “best” also apply to the term “safest.” The exact meaning is left to administrative discretion.

Technology (and “Technologies”): Since more than one technology may be applicable as the best way to achieve a particular objective or do a particular job, the word “technologies” was added.

The OCS Lands Act (OCLA) mandates that the U.S. Secretary of the Interior determine what technologies are BAST and economically feasible. In the wake of the Deepwater Horizon accident, the U.S. National Academies has published options for implementing the requirements of BAST. However, at this time, BSEE does not provide an implementation of BAST that operators and OEMs can use when specifying, procuring, designing and building a BOP. This means that operators and OEMs make critical decisions without guidance for complying with BSEE’s implement of its BAST mandate.

New Requirement for Reducing Risk Using Recognized Engineering Practices
Significantly, BSEE’s proposed requirements for BOP design and manufacture/quality assurance include a general performance-based requirement that operators utilize recognized engineering practices that reduce risks to the lowest level practicable.Recognized engineering practice is the use of mathematics, scientific formulae, manufacturer’s data and/or experience by a qualified person to determine the elements of safety in a way that is accepted and approved as having legal or official authority.

As low as reasonably practicable (ALARP) is a term used to express an expected level of residual risk involved with a system or set of operations. In practice, this means that the operator has to show, through reasoned and supported arguments, that there are no other practical measures that could reasonably be taken to reduce risks further. Regulators in the UK, Norway and other countries have mandated use of formal processes to reduce risk associated with offshore oil and gas operations to a level as low as reasonably practicable.

A Proactive Approach to Reduce BOP Risks
Under the proposed rules, operators engaged in oil and gas operations on the U.S. OCS can take a more proactive and less prescriptive approach to risk reduction for BOP design and manufacture/quality assurance. The proposed rules require that operators:

• Use recognized engineering practices
• Reduce risks to the lowest level practicable

Recognized engineering practices can reduce the introduction of risk to operational functionality, safety or the environment at all four stages of the BOP lifecycle:

1. Vendor Selection and Design: establishes the vendor best qualified to design and deliver a BOP with the functional and operational parameters that best satisfy the requirements of the drilling asset with the lowest acceptable level of risk.
2. Manufacturing: physical implementation of the design from forging, assembly and programming of components, through requirement validation and factory acceptance tests (FAT) to ensure the equipment as-built meets design requirements.
3. Integration: receipt of the BOP system components through installation, equipment readiness, system readiness, and asset readiness. This is the stage when the Owner takes ownership and the Operator decides whether the vessel is ready to drill.
4. Operation: planning for maintenance and regulatory inspections, as well as development of lessons learned, best practices, and stronger relationships with the OEM.

Additionally, engineering practices for systematically identifying and managing risks, such as Failure Mode Effects and Criticality Analysis (FMECA), Hazard Identification (HAZID) and Hazard Operability Studies (HAZOPS), are used throughout the BOP lifecycle to ensure that health, safety, environmental and operational risks are identified and proactively addressed as early as possible.

In summary, Athens Group believes BSEE’s proposed rules signal a more risk-based approach to regulations for the design, manufacture and quality assurance of BOPs. The proposed requirement that operators utilize recognized engineering practices that reduce risks to the lowest level practicable enables operators to use a more proactive and less prescriptive approach to risk reduction.

As a qualified independent third party, Athens Group can help you use recognized engineering practices to proactively manage risk throughout your BOP’s lifecycle. Please call Sarah Hill at 281-921-8989 Ext. 159 or email for more information about the article or the sources used to develop it.

Copyright 2015 Athens Group. All Rights Reserved.

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