Monthly eNewsletter from the IADC

Texas A&M IADC Student Chapter Members Attend Independence Contract Drilling Rig Visit

 img-DrillBits-2014-header DRILLBITS – September 2019 In This Edition Advocacy Industry News Accreditation IADC Committees Industry Resources Recurring Items Accreditation Updates Safety Alerts Upcoming Events Rigs receive ISP certificates IADC welcomes new members Sign Up For the DRILLBITS Email Newsletter! Get DRILLBITS By Email Advocacy EPA Proposes Updates to Air Regulations for Oil and Gas On 29 August, the US Environmental Protection Agency (EPA), proposed updates to the national standards for the oil and gas industry. The proposal would remove regulatory duplication and save the industry millions of dollars in compliance costs each year, while maintaining health and environmental regulations on oil and gas sources that the agency considers appropriate. The proposal is the result of EPA’s review of the 2016 New Source Performance Standards (NSPS) for the oil and gas industry. EPA’s regulatory impact analysis estimates that the proposed amendments would save the oil and natural gas industry $17-$19 million per year, for a total of $97-$123 million from 2019 through 2025. The agency is co-proposing two actions, both of which would remove unnecessary regulatory duplication in the 2016 rule. In its primary proposal, the agency would remove sources in the transmission and storage segment of the oil and gas industry from regulation. These sources include transmission compressor stations, pneumatic controllers and underground storage vessels. The proposal would also rescind emissions limits for methane, from the production and processing segments of the industry, but would keep emissions limits for ozone-forming volatile organic compounds (VOCs). These sources include well completions, pneumatic pumps, pneumatic controllers, gathering and boosting compressors, natural gas processing plants and storage tanks. The controls to reduce VOCs emissions also reduce methane at the same time, so separate methane limitations for that segment of the industry are redundant. In an alternative proposal, EPA would rescind the methane emissions limitations without removing from regulation any sources from the transmission and storage segment of the industry. EPA is taking comment on the proposal, and will hold a public meeting. More information about the proposal can be found at EPA’s website. Colorado County Enacts Rules for Oil and Gas Drilling; Imposes Tougher Regulations than State Requirements Adam’s County in Colorado, which encompasses the suburbs of Denver recently enacted its own rules for oil and gas drilling, taking advantage of a new law that allows local governments to impose tougher regulations than the state. The Adams County commissioners unanimously approved a requirements that new wells be at least 1,000 feet from homes, twice the distance required by Colorado rules. It encourages oil and gas operators to use cleaner, quieter electric drilling rigs and requires them to offer multiple locations for a proposed well so the county can evaluate the impacts on public health and safety. More information about the specifics contained in the new requirements can be found at the Adams County website. Results of DRILLERSPAC Campaign IADC’s DRILLERSPAC ran a fundraising campaign from May 20-June 20 with a goal to raise $50,000. To date, $36,000 has been received from 70 individuals and 12 companies! Thank you for those contributions. In addition, Latshaw Drilling had 43 employees who committed to supporting the PAC. Thank you Trent and Latshaw Drilling! In the 2018 midterm elections, the IADC DRILLERSPAC supported 14 candidates in Senate and Congressional races, with 13 of those winning their races, a 93% success rate. The next election cycle includes key races in Texas, Louisiana, Oklahoma, Colorado, Wyoming, Mississippi and Alaska, among others, and IADC will again be supporting candidates who have demonstrated a commitment to supporting energy and the drilling industry. The DRILLERSPAC was sanctioned by IADC’s Board of Directors to further IADC’s goal of advocacy engagement with federally elected Members of Congress. DRILLERSPAC is not affiliated with any political party. It is organized and conducted on a voluntary, non-partisan basis. DRILLERSPAC is overseen by the PAC Board of Trustees, which is comprised of 10 members – three from offshore companies, three from onshore companies, two from drilling services companies and two IADC employees. Washington D.C. Updates House: The House spent August in recess, with lawmakers and staff returning to work in-district and take vacation ahead of what will be a busy September. Having sent 10 of 12 spending bills to the Senate, House lawmakers still need to pass two appropriations bills in time for the Senate to pass them and work out a broader agreement with the House by October 1st. House Majority Leader Steny Hoyer (D-MD) recently told reporters that while a continuing resolution could be inevitable, it would be “short-term” and “no more than 60 days,” possibly setting up another funding fight in early December. On September 10th, the Natural Resources committee will hold what is expected be to be a contentious hearing to examine the proposed relocation and reorganization of BLM. Additionally, two anti drilling bills H.R. 1146 (ANWR coastal plain drilling ban) and H.R. 1941 (Atlantic and Pacific drilling ban) will be voted on in the coming weeks on the House floor. From a broader standpoint, the House will also move to examine legislation for several bubbling issues like the USMCA trade deal, FISA surveillance reauthorizations, gun control, and continued oversight of the administration via the Judiciary Committee as we move into the Fall. With 2020 elections about a year away, lawmakers from across the political spectrum will be looking to solidify their legislative accomplishments in time to message them out to voters around the nation. Senate: The Senate also spent August in recess. On one of the last working days before leaving town, the Senate Finance Committee held a hearing on the USMCA trade deal in which lawmakers generally expressed interest in a speedy approval of the deal this fall. On the appropriations front, the Senate didn’t pass any of the 10 funding bills passed by the House prior to recess, opting instead to wait for congressional leaders and President Trump to strike a two-year budget deal, which was secured on August 2nd. Absent the passage of the 12 spending bills or another temporary continuing resolution (a.k.a. CR), the government will shut down at midnight on October 1st. White House: The Administration continued to advance the President’s various agendas throughout August. Following two days of trade talks with the Chinese early in the month, negotiations again stuttered and President Trump announced a 10% tariff on over $300 billion in Chinese goods. In response, Chinese officials announced they would halt the purchase of American agricultural products. After an agreement was reached to delay the new round of tariffs, the Administration reiterated that tariffs are to be raised from 25% to 30% on the existing $250 billion worth of Chinese goods beginning on October 1st, and from 10% to 15% on the remaining $300 billion worth of goods beginning on December 15th. On the national security front, the Administration spent August continuing to deal with the situation in Iran, additional missile testing issues with North Korea, and diplomatic tensions with E.U. leaders. On the regulatory front, the Administration faced significant public backlash over its proposed rollback of EPA’s 2016 methane regulations concerning oil and gas production. Additionally, the Administration also spent the month dealing with significant pushback from large automakers over the President’s decision to rollback 2012 vehicle pollution standards put in place by former President Obama. At the agency level, BOEM held its fifth offshore lease sale under the 2017-2022 OCS Leasing Program on August 22nd. It was this year’s second U.S. Gulf auction and received 165 bids on 151 blocks from 27 companies, with high bids totaling $159.4 million. Those totals were mostly down from the last two gulf lease sales: Lease Sale 252 in March and Lease Sale 251 in August 2018. Analysts reported that over 25% of bids were for acreage in the Mississippi Canyon area. INDUSTRY NEWS August GOM Lease Sale Yields More than $159 Million in Bids The US Department of Interior’s region-wide Gulf of Mexico (GOM) Lease Sale 253, held on 21 August, generated bids in excess of $159 million for 151 tracts covering 835,006 acres in federal waters of the GOM. A total of 27 companies participated in the lease sale, submitting $174,922,200 in all bids. Lease Sale 253 included 14,585 unleased blocks, located from three to 231 miles offshore, in the Gulf’s Western, Central and Eastern Planning Areas in water depths ranging from nine to more than 11,115 feet. Lease Sale 253 was the fifth offshore sale held under the 2017-2022 National Outer Continental Shelf Oil and Gas Leasing Program. More information about the sale, can be found at the Bureau of Ocean Energy Management’s website. Texas A&M IADC Student Chapter Members Attend Independence Contract Drilling Rig Visit The Texas A&M IADC Student Chapter was invited to visit an Independence Contract Drilling (ICD) rig in Giddings, Texas in mid-August. 30 students from Texas A&M and Ole Miss, along with 3 professors from the Texas A&M Mays School of Business attended the visit. Participating students are majoring in Business, Finance, Petroleum Engineering and Agriculture Science. The students were treated to a tour of the rig, currently working for IronRoc Energy Partners, by ICD Senior Management, along with a lunch graciously cooked by Cameron.