New offshore drilling rules get tougher

Oil industry blasts Gulf spill-inspired reforms as costly.

NEW ORLEANS — The Obama administration issued new rules Thursday to make offshore oil and natural gas drilling equipment safer and to reduce risks in digging wells, but the oil industry and its supporters in Congress say the regulations are costly and questioned their need.

The rules published by the Interior Department came nearly six years after the catastrophic blowout of a BP well in the Gulf of Mexico killed 11 workers and injured many others aboard Transocean’s Deepwater Horizon drilling rig. The out-of-control leak dumped millions of gallons of oil into the Gulf.

Meanwhile, another federal agency — the U.S. Chemical Safety Board — issued recommendations Wednesday saying even more rigorous safety standards are needed to make offshore drilling safe. That agency said offshore workers should have more involvement in safety decisions and regulators need more authority to enforce rules.

The Interior Department rules target blowout preventers, massive valve-like devices meant to prevent oil and gas from escaping when a driller loses control of a well. A blowout preventer failed In the BP spill.

Officials said the rules will improve the inspection, maintenance, and repair of blowout preventers, known as BOPs. They include requirements that BOPs be broken down and inspected every five years and that they be better equipped to shear drill pipe in an emergency. That was one of the problems in BP’s disaster.

In addition, drilling of highly complex wells must be monitored in real time by experts onshore. And the rules set out standards called “safe drilling margins” for the design, casing, cementing and other work that goes into drilling a well.

On a teleconference, Interior Secretary Sally Jewell called the rules “a vital part of our extensive reform agenda to strengthen, update and modernize our offshore energy program using lessons learned from Deepwater Horizon.”

Environmental groups applauded the rules.

“It’s about time the federal government tightened the safety rules on offshore drilling,” said Jacqueline Savitz with Oceana, an environmental group. She cited federal data showing 22 losses of well control, 1,066 injuries and 11 deaths in the offshore industry since the BP disaster.

Industry leaders and their supporters saw it differently. Erik Milito, the upstream group director for the American Petroleum Institute, said his group was reviewing the rules and expressed concern that they might stifle innovation.

U.S. Sen. David Vitter, R-La., said the federal move is “bad news for Louisiana, and certainly has the potential to kick our oil and gas industry while it’s down.”

A recent industry-funded study warned of dire consequences if the rules went into effect as proposed. Wood Mackenzie, a business research firm, found the regulations could raise drilling costs by 20 percent or more. In worst-case scenarios, it said, exploration could drop by as much as 55 percent, resulting in $70 billion in lost state and federal tax revenues by 2030 and up to 190,000 fewer jobs.

Last year, a study commissioned by the American Petroleum Institute estimated the regulations would cost the industry $31.8 billion over 10 years.