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US To Issue First New Drilling Rules Since BP Oil Spill

Published Tuesday, 21st September 2010 03:29 am - © 2010 Dow Jones

By Tennille Tracy


WASHINGTON -(Dow Jones)- The U.S. Interior Department is close to releasing its first new offshore-drilling rules since the Deepwater Horizon disaster, revealing just how strictly it will regulate the oil and gas industry in the wake of the worst offshore spill in U.S. history.

The new rules, which the Interior Department will release in the next two weeks, will apply to both shallow-water and deep-water drillers--encompassing dozens, if not hundreds, of companies that help produce a significant portion of U.S. energy resources.

Oil and gas companies that were forced to suspend their deep-water projects when the Obama administration imposed its drilling moratorium will have to comply with the new rules before they're allowed to resume their work.

The moratorium is scheduled to expire on Nov. 30.

Among the things that oil and gas companies will be watching for is a requirement that forces top-level executives to personally certify their companies' compliance with the operating rules.

The Interior Department first asked chief executives to submit that certification in a June 8 notice to oil and gas companies, but there are questions as to whether the department will back away from that requirement.

A spokeswoman for the Interior Department's Bureau of Ocean Management, Regulation and Enforcement declined to comment on details of the new rule.

A spokeswoman for the American Petroleum Institute said the industry was "anxiously awaiting these rules."

The new offshore drilling rule will include some or all of the suggestions made by the Interior Department in a May 27 report to President Barack Obama.

That report included a spate of new well-design standards and safety measures, including a provision to make sure blowout preventers have two sets of blind shear rams that are spaced at least four feet apart.

A blowout preventer is a mechanism that seals and controls oil from a well reservoir and could have played a role in the blowout of BP PLC's Macondo well.

The new rule will also codify some of the certification standards released by the Interior Department on June 8. Known as NTL-05, the standards require oil and gas companies to vouch for safety reviews of well-control system equipment, drilling and cementing practices, and emergency procedures, among others.

Once released, the department's so-called interim final rule will go into effect immediately. The department will then solicit feedback on the rule for 30 days, after which it will issue a final rule that may or may not incorporate any proposed changes.

-By Tennille Tracy, Dow Jones Newswires; 202-862-6619;

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