Oil and Gas and Sulphur Operations in the Outer Continental Shelf: Requirements for Subsurface Safety Valve Equipment

Federal Register: June 12, 2008 (Volume 73, Number 114)

Proposed Rules

Page 33333-33337

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr12jn08-30

DEPARTMENT OF THE INTERIOR

Minerals Management Service 30 CFR Part 250

Docket ID: MMS-2007-OMM-0066

RIN 1010-AD45

Oil and Gas and Sulphur Operations in the Outer Continental

Shelf-Requirements for Subsurface Safety Valve Equipment

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Proposed rule.

SUMMARY: The MMS proposes to incorporate the Eleventh Edition of the

American Petroleum Institute's Specification for Subsurface Safety

Valve Equipment (API Spec 14A), into the regulations. The rule also proposes that lessees and operators provide supporting design verification information for subsurface safety valves intended for use in high pressure high temperature environments. The MMS proposes to incorporate the Eleventh Edition of API Spec 14A because it updated the design validation and functional testing requirements, incorporated new design changes, and corrected ambiguous areas open to misinterpretation. These proposed changes would ensure that lessees and operators use the best available and safest technologies while operating in the Outer Continental Shelf.

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DATES: Submit comments by August 11, 2008. The MMS may not fully consider comments received after this date.

ADDRESSES: You may submit comments on this rulemaking by any of the following methods. Please use the Regulation Identifier Number (RIN) 1010-AD45 as an identifier in your message. See also Public

Availability of Comments under Procedural Matters.

Federal eRulemaking Portal: http://www.regulations.gov.

Under the tab ``More Search Options,'' click Advanced Docket Search, then select ``Minerals Management Service'' from the agency drop-down menu, then click ``submit.'' In the Docket ID column, select MMS-2007-

OMM-0066 to submit public comments and to view supporting and related materials available for this rulemaking. Information on using

Regulations.gov, including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available through the site's ``User Tips'' link. The

MMS will post all comments.

Mail or hand-carry comments to the Department of the

Interior; Minerals Management Service; Attention: Regulations and

Standards Branch (RSB); 381 Elden Street, MS-4024; Herndon, Virginia 20170-4817. Please reference ``Incorporate API Spec 14A for Subsurface

Safety Valve Equipment, 1010-AD45'' in your comments and include your name and return address.

FOR FURTHER INFORMATION CONTACT: Wilbon Rhome, Regulations and

Standards Branch at (703) 787-1587.

SUPPLEMENTARY INFORMATION: The MMS has conducted a thorough review of the Eleventh Edition of the American Petroleum Institute's

Specification for Subsurface Safety Valve Equipment, 14A (API Spec 14A) and has determined that the new edition should be incorporated into the regulations to ensure the use of the best available and safest technologies for downhole safety valves. We also propose adding a new section (30 CFR 250.807) to the regulations that identify additional safety valve information requirements for high pressure high temperature (HPHT) environments.

The Eleventh Edition contains significant technological and design changes that will increase the safety of downhole operations in the

Outer Continental Shelf (OCS). The updated API Spec 14A is an improvement over the current API Spec 14A, Tenth Edition incorporated in the regulations for the following reasons:

Strengthens the guidelines for preparation of a functional specification by the user/purchaser to submit to the manufacturer/ supplier when ordering equipment addressed by this standard. Functional characteristics in the specification must include, but are not limited to, well parameters, operational parameters, environmental compatibility, and compatibility with related well equipment.

Adds new design verification and validation guidelines.

Clarifies procedures in areas such as design methodology and verification.

Introduces state-of-the-art technological advances to improve downhole performance.

When Hurricanes Katrina and Rita caused catastrophic damage to equipment in the Gulf of Mexico, most of the subsurface safety valves

(SSSV) performed exactly according to design; however, there were recorded minor incidents. Incorporating the revised API Spec 14A should lead to improved performance of downhole safety valves.

While the API Spec 14A Eleventh Edition contains many improvements that we support, MMS does not fully agree with the revision that allows a reduced safety factor for the higher pressure valve body test. This reduced safety factor for the design of downhole safety valves installed in wells drilled in HPHT environments is a concern that MMS cannot overlook. Therefore, MMS proposes through this rulemaking that lessees and operators provide supporting design verification information for SSSVs planned for use in HPHT environments. This supporting information must show that the design of the SSSV to be installed in an HPHT environment provides the same level of safety and environmental protection that was previously provided by the design standards contained in API Spec 14A Tenth Edition.

Background Information on Design Qualification Testing

The design qualification testing requirements in the API Spec 14A,

Tenth Edition requires that a SSSV be pressure tested to 150 percent of the rated working pressure of the valve (e.g., a 10,000 psig SSSV would be tested to 15,000 psig of the rated working pressure regardless of the magnitude of the rated working pressure). The API Spec 14A,

Eleventh Edition pressure testing methodology results in a decreasing test pressure factor from 150 percent at 10,000 psig, to 133 percent at 15,000 psig, to 125 percent at 20,000 psig rated working pressure.

Wells and related equipment with a rated working pressure of 15,000 psig or greater are subjected to a hydrostatic test pressure of 5,000 psig greater than the rated working pressure. As a well becomes more critical, the margin of safety decreases as a result of the decreasing test pressure factor. Therefore, this proposed rule would address this safety issue by requiring the lessee or operator to provide additional information when SSSVs and related equipment are planned to be installed in a HPHT environment. These additional informational requirements are found in new 30 CFR 250.807 titled ``Additional requirements for subsurface safety valves installed in high pressure high temperature environments.'' Wells and related equipment with a rated working pressure less than or equal to 15,000 psig would not be affected by the new requirements in 30 CFR 250.807.

Proposed Requirements

The new 30 CFR 250.807 provisions would require the lessee or operator to provide additional information when SSSVs and related equipment are intended to be installed in a HPHT environment. The lessee or operator would be required to include such information in an

Application for Permit to Drill (APD), Application for Permit to Modify

(APM), or Deepwater Operations Plans (DWOP) and must demonstrate that the SSSV and related equipment are fit-for-purpose for performing in

HPHT environments. For the purpose of this rulemaking, HPHT is considered a pressure rating greater than 15,000 psig, or a temperature rating equal to or greater than 350 degrees Fahrenheit under one of the following well conditions: 1. A maximum anticipated surface pressure greater than 15,000 psig on the seafloor for a well with a subsea wellhead or at the surface for a well with a surface wellhead. 2. A shut-in tubing pressure greater than 15,000 psig on the seafloor for a well with a subsea wellhead or at the surface for a well with a surface wellhead, or 3. A flowing temperature equal to or greater than 350 degrees

Fahrenheit on the seafloor for a well with a subsea wellhead or the surface for a well with a surface wellhead.

Related equipment refers to wellheads, tubing heads, tubulars, packers, SSSVs, threaded connections, seals, seal assemblies, production trees, equipment associated with coiled tubing, snubbing, operations, chokes, well control equipment and any other equipment that will be exposed to the reservoir pressure and/or temperature with rated working pressures greater than 15,000 psig, or temperatures greater than 350 degrees Fahrenheit.

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Procedural Matters

Regulatory Planning and Review (Executive Order (E.O.) 12866)

This proposed rule is not a significant rule as determined by the

Office of Management and Budget (OMB) and is not subject to review under E.O. 12866.

(1) The proposed rule (incorporation of the new API Spec 14A and the new 30 CFR 250.807) would not have an annual effect of $100 million or more on the economy. It would not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. The primary purpose for this proposed rule is to establish minimum acceptable requirements for SSSVs. The requirements apply to

SSSVs as well as all components that establish tolerance and/or clearances which may affect performance or interchangeability of SSSVs.

This rule also would set minimum requirements for SSSVs and related equipment to conform to international standards and would require compliance by supplier/manufacturers. Finally, this rule would establish minimum fit-for-purpose criteria for HPHT equipment operating over 15,000 psig or 350 degrees Fahrenheit; and, would require lessees and operators to provide information that demonstrates to the MMS that their SSSVs are properly designed to operate in HPHT environments.

The oil and gas industry took the lead in revising API Spec 14A,

Eleventh Edition. The industry and API have encouraged the promulgation of the proposed rule incorporating API Spec 14A. The API Spec 14A standard is now accepted as an industry standard both domestically and internationally; and, consequently, the impact of this proposed rule on the oil and gas industry is expected to be negligible.

The impact of the new requirements of 30 CFR 250.807 will also be negligible. A review of drilling activity indicates that, if the current trend continues, there may not be any HPHT wells that exceed 15,000 psig at the wellhead drilled and completed in the next 3 years.

However, there is activity in the Mobile Bay region and in the western

Gulf of Mexico where the working environment for SSSVs and related equipment may reach over 350 degrees Fahrenheit, flowing tubing temperature. The MMS estimates that approximately 10 to 20 APD's or

APM's may be submitted by lessees or operators over the next 3 years which could be subject to the proposed rule. These submittals would be required to provide additional information on SSSVs and related equipment for wells to be drilled and completed that may be classified as HPHT completions.

The proposed provisions of 30 CFR 250.807 would require lessees and operators to provide supporting design verification information. The information that the proposed rule would require is engineering data and analytical analysis for HPHT equipment. This is the kind of information that a prudent operator should have available for operating in HPHT environments. The MMS estimates the cost to comply with this proposed rule would be $4,000 per well. Companies will be required to gather and present well data that should be readily available if requested by MMS for review. We estimate that the hourly burden to produce this data would be approximately 40 hours for each well at an hourly rate of $100 per hour and would cost $4,000 per well. (40 hours at $100 per hour x 1 well = $4,000).

The estimated cost to industry over the next 3 years, based on the high estimate of 20 APD's or APM's per year, would be approximately

$80,000 ($4,000 per well x 20 wells = $80,000). As a result, additional costs associated with implementing these new requirements would be negligible given the overall costs of off-shore oil and gas production.

Additional costs could be incurred if a lessee engages an independent consultant to prepare the fitness-for-purpose report for HPHT application with readily available information. However, these costs are very small when compared to the cost of drilling a well in an HPHT environment, which can cost over $150 million.

(2) The proposed rule (incorporation of the new API Spec 14A and the new 30 CFR 250.807) would not create a serious inconsistency or otherwise interfere with action taken or planned by another agency.

(3) This proposed rule (incorporation of the new API Spec 14A and the new 30 CFR 250.807) does not alter the budgetary effects of entitlements, grants, user fees or loan programs, or the rights or obligations of their recipients.

(4) This proposed rule (incorporation of the new API Spec 14A and the new 30 CFR 250.807) does not raise novel legal or policy issues.

The proposed rule simply seeks to improve MMS safety regulations by maintaining them current with improved oil and gas industry standards and requires lessees and operators to meet additional criteria for safety reasons to demonstrate fitness-for-purpose for HPHT applications.

Regulatory Flexibility Act

The Department of the Interior (DOI) certifies that this proposed rule would not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

The new API Spec 14A would affect lessees and operators of oil and gas leases on the OCS. This may include approximately 130 active

Federal oil and gas lessees. Lessees that conduct business under this rule are coded under the Small Business Administration's (SBA) North

American Industry Classification System (NAICS) with the following: 1.

No. 211111 (Crude Petroleum and Natural Gas Extraction); and, 2. No. 213111 (Drilling Oil and Gas Wells). For these NAICS code classifications, a small company is defined as one with fewer than 500 employees. Based on these criteria, an estimated 70 percent of these companies (91) are considered small. Therefore, this proposed rule would affect a substantial number of small entities.

However, with respect to the new 30 CFR 250.807, the MMS has determined that it is unlikely that a substantial number of small companies are currently involved with HPHT wells on the OCS due to the expense and the advanced technical expertise needed for drilling, completing, and producing HPHT wells. While it is possible that the operations of small companies may involve HPHT wells on the OCS, the

MMS believes that any company, regardless of size, attempting to complete a HPHT well must do the engineering evaluations proposed in this rulemaking to insure the safe operation of such activities and to avoid a catastrophic failure that could result in loss of life or serious environmental damage.

The costs of the additional requirements for HPHT wells would not have a significant economic effect on a substantial number of small companies because very few, if any, would be involved in the activities that would require compliance with these additional requirements. As mentioned previously, the costs of complying with these proposed requirements are very small when compared to the cost of drilling a

HPHT well, which can cost over $150 million. The proposed rule incorporating the new API Spec 14A would not have a significant economic effect on a substantial number of small companies because the revised API Spec 14A will not impose significant costs or burdens on any lessees or operators.

Your comments are important. The Small Business and Agriculture

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Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from small business about Federal agency enforcement actions. The Ombudsman will annually evaluate the enforcement activities and rate each agency's responsiveness to small business. If you wish to comment on the enforcement actions of the MMS, call toll-free 1-888-734-3247. You may submit comments to the Small

Business Administration without concern for retaliation. Disciplinary action for retaliation by an MMS employee may include suspension or termination from employment with the DOI.

Small Business Regulatory Enforcement Fairness Act

The proposed rule (incorporation of the new API Spec 14A and the new 30 CFR 250.807) is not a major rule under 5 U.S.C. 804(2) of the

Small Business Regulatory Enforcement Act. This proposed rule: a. Would not have an annual effect on the economy of $100 million or more. The proposed rule would not impose any significant costs to lessees or operators. The costs associated with the proposed rule would involve the cost of the new document (API Spec 14A), and any cost associated with gathering and presenting the well data to MMS. As mentioned previously, the costs of complying with these proposed requirements are very small when compared to the cost of drilling a

HPHT well, which can cost over $150 million. b. Would not impose significant increases in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. c. Would not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of

U.S.-based enterprises to compete with foreign-based enterprises.

Unfunded Mandates Reform Act

This proposed rule would not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The proposed rule would not have a significant or unique effect on State, local, or tribal governments or the private sector. A statement containing the information required by the Unfunded

Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required.

Takings Implication Assessment (E.O. 12630)

Under the criteria in E.O. 12630, this proposed rule does not have takings implications. The proposed rule is not a governmental action capable of interference with constitutionally protected property rights. A takings implication assessment is not required.

Federalism (E.O. 13132)

Under the criteria in E.O. 13132, this proposed rule does not have federalism implications to warrant the preparation of a Federalism

Assessment. This proposed rule would not affect the relationship between the Federal and State governments. To the extent that State and local governments have a role in OCS activities, this proposed rule would not affect that role. A Federalism Assessment is not required.

Civil Justice Reform (E.O. 12988)

This rule complies with the requirements of E.O. 12988.

Specifically, this rule:

(a) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and

(b) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.

Consultation With Indian Tribes (E.O. 13175)

Under the criteria in E.O. 13175, we have evaluated this proposed rule and determined that it has no potential effects on federally recognized Indian tribes. There are no Indian or tribal lands on the

OCS.

Paperwork Reduction Act (PRA)

The proposed revisions to 30 CFR 250, subpart H regulations (30 CFR 250.807) will specify that lessees and operators must submit a brief description in their APD, APM, or DWOP when SSSVs and related equipment are intended to perform in HPHT environments. The information that would be required by the proposed rule should be readily available since a prudent operator would already possess this information for daily operations. Lessees and operators must then provide this existing information as part of their APM, APD, or DWOP submissions. The MMS has determined that the number of hours for paperwork burdens currently approved for preparation of APD's (3,135 annual burden hours) and APM's

(9,900 annual burden hours) pursuant to the requirements set forth in 30 CFR 250, subpart D (1010-0141) and for DWOP's (51,000 annual burden hours) in 30 CFR 250, subpart B (1010-0151), are more than enough to accommodate this minor addition to existing submissions. Therefore, due to the fact that the burden hours are effectively included under currently approved OMB information collections, the proposed rule does not require a submission to OMB for review and approval under section 3507(d) of the PRA.

The PRA provides that an agency may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number. Until OMB approves a collection of information and assigns a control number, you are not required to respond. The OMB approved the referenced information collection requirements for 30 CFR 250, subparts B, D, and H under OMB Control Numbers 1010-0151 (321,817 hours; expiration 7/31/08), 1010-0141 (163,954 hours; expiration 8/31/ 08) and 1010-0059 (17,598 hours; expiration 2/28/09).

National Environmental Policy Act

This rule does not constitute a major Federal action significantly affecting the quality of the human environment. The MMS has analyzed this proposed rule under the criteria of the National Environmental

Policy Act and 516 Departmental Manual 15. This proposed rule meets the criteria set forth in 516 Departmental Manual 2 (Appendix 1.10) for a

Departmental ``Categorical Exclusion'' in that this proposed rule is

``* * * of an administrative, financial, legal, technical, or procedural nature and whose environmental effects are too broad, speculative, or conjectural to lend themselves to meaningful analysis *

* *.'' This proposed rule also meets the criteria set forth in 516

Departmental Manual 15.4(C)(1) for a MMS ``Categorical Exclusion'' in that its impacts are limited to administration, economic or technological effects. Further, the MMS has analyzed this proposed rule to determine if it meets any of the extraordinary circumstances that would require an environmental assessment or an environmental impact statement as set forth in 516 Departmental Manual 2.3, and Appendix 2.

The MMS concluded that this rule does not meet any of the criteria for extraordinary circumstances as set forth in 516 Departmental Manual 2

(Appendix 2).

Data Quality Act

In developing this proposed rule we did not conduct or use a study, experiment, or survey requiring peer review under the Data Quality Act

(Pub. L. 106-554).

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Effects on the Energy Supply (E.O. 13211)

This rule is not a significant energy action under the definition in E.O. 13211. A Statement of Energy Effects is not required.

Clarity of This Regulation

We are required by E.O. 12866, E.O. 12988, and by the Presidential

Memorandum of June 1, 1998, to write all rules in plain language. This means that each rule we publish must:

(a) Be logically organized;

(b) Use the active voice to address readers directly;

(c) Use clear language rather than jargon;

(d) Be divided into short sections and sentences; and

(e) Use lists and tables wherever possible.

If you believe that we have not met these requirements, send us comments by one of the methods listed in the ADDRESSES section above.

To better help us revise the rule, your comments should be as specific as possible. For example, you should tell us the numbers of the sections or paragraphs that you find unclear, which sections or sentences are too long, the sections where you feel lists or tables would be useful, etc.

Public Availability of Comments

Before including your address, phone number, e-mail address, or other personal identifying information in your comment, you should be aware that your entire comment--including your personal identifying information--may be made available to the public. While you request in your comment that your personal identifying information be withheld from public review, we cannot guarantee that we will be able to do so.

List of Subjects in 30 CFR Part 250

Continental shelf, Environmental protection, Incorporation by reference, Public lands--mineral resources, Reporting and recordkeeping requirements.

Dated: May 28, 2008.

3. Stephen Allred,

Assistant Secretary--Land and Minerals Management.

For the reasons stated in the preamble, the MMS proposes to amend 30 CFR part 250 as follows:

PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER

CONTINENTAL SHELF 1. The authority citation for part 250 continues to read as follows:

Authority: 31 U.S.C. 9701, 43 U.S.C. 1334. 2. In Sec. 250.198, the table in paragraph (e), revise the entry for API Spec 14A to read as follows:

Sec. 250.198 Documents incorporated by reference.

* * * * *

(e) * * *

Incorporated by

Title of documents

reference at

* * * * * * *

API Spec 14A, Eleventh Edition October 2005,

Sec.

Specification for Subsurface Safety Valve

250.806(a)(3)

Equipment, Effective Date: May 1, 2006; ISO 10432: 2004, API Stock No. GX14A11........................

* * * * * * *

3. In Sec. 250.806, remove the second sentence in paragraph (a)(3) and add two sentences in its place to read as follows:

Sec. 250.806 Safety and pollution prevention equipment quality assurance requirements.

(a) * * *

(3) * * * All SSSVs must meet the technical specifications of API

Specification 14A (incorporated by reference as specified in Sec. 250.198). However, SSSVs and related equipment planned to be used in high pressure high temperature environments must meet the additional requirements set forth in Sec. 250.807.

* * * * * 4. Redesignate Sec. 250.807 as Sec. 250.808 and add new Sec. 250.807 to read as follows:

Sec. 250.807 Additional requirements for subsurface safety valves installed in high pressure high temperature environments (HPHT).

(a) If you plan to install SSSVs and related equipment in a HPHT environment, you must submit detailed information with your Application for Permit to Drill (APD), Application for Permit to Modify (APM), or

Deepwater Operations Plan (DWOP) that demonstrates the SSSVs and related equipment are capable of performing in the applicable HPHT environment. Your detailed information must include the following:

(1) A discussion of how you determined that the SSSVs and related equipment are fit-for-service;

(2) A discussion on the SSSVs design validation and functional testing process and procedures used, and explain why the process and procedures ensure that the SSSVs and related equipment are fit-for- service in the applicable HPHT environment.

(b) For this section, HPHT environment means when one or more of the following well conditions exist:

(1) The maximum anticipated surface pressure is greater than 15,000 psig on the seafloor for a well with a subsea wellhead or at the surface for a well with a surface wellhead;

(2) The shut-in tubing pressure is equal to or greater than 15,000 psig on the seafloor for a well with a subsea wellhead or at the surface for a well with a surface wellhead; or

(3) The flowing temperature is equal to or greater than 350 degrees

Fahrenheit on the seafloor for a well with a subsea wellhead or the surface for a well with a surface wellhead.

(c) For this section, related equipment includes wellheads, tubing heads, tubulars, packers, threaded connections, seals, seal assemblies, production trees, chokes, well control equipment and any other equipment that will be exposed to the HPHT environment.

FR Doc. E8-13223 Filed 6-11-08; 8:45 am

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