IADC Briefing Book
IADC’s Briefing Book outlines IADC’s positions on topics and issues pertinent to the oil and gas industry and to drilling contractors.
Table of Contents
Access to Public Land and Water
In the U.S., the Department of Interior’s (DoI) Bureau of Land Management (BLM) is responsible for managing 264 million acres of surface acre public lands located primarily in 12 western states, including Alaska. The agency also manages an additional 300 million acres of below ground mineral estate located around the country. The DoI’s Bureau of Ocean Energy Management (BOEM) is responsible for managing oil and gas acreage on the U.S. outer continental shelf.
As easy oil comes to an end and long-term energy demand continues to rise, interest in the Arctic will continue to grow among governments and oil and gas companies. According to the U.S. Geological Survey, the Arctic is believed to contain 13% of the world’s yet to be found oil, and 30% of the yet to be found gas.  The Arctic contains resources in Alaska (U.S.), Russia, Denmark (Greenland), Norway, Sweden, Finland, Iceland and Canada. Each of these areas presents challenging conditions for finding and developing oil and gas and each has associated environmental, social, legislative and political issues. As with all uses of the Arctic, concerns include effects on sustainable development, climate change, the unique biodiversity of the environments, indigenous people’s way of life, and pollution preparedness and response.
BLM Hydraulic Fracturing Rule
In March 2015, the US Bureau of Land Management (BLM) issued a final rule, “Hydraulic Fracturing on Federal and Indian Lands.” This rule aims to regulate the use of hydraulic fracturing by adding regulations for oil and gas development on Federal and Indian lands throughout the nation. Industry responded that the rule is redundant given the fact that in the U.S., multiple states, including Colorado, Wyoming, Texas, Alaska and North Dakota, have existing regulations which govern the hydraulic fracturing process, particularly with regard to environmental protection and protection of groundwater sources. These pre-existing rules cover everything from well permitting, well materials and construction, to safe disposal of used fluids, water testing and recordkeeping.
BSEE Well Control Rule
The Bureau of Safety and Environmental Enforcement (BSEE) issued the Oil and Gas and Sulfur Operations in the Outer Continental Shelf – Blowout Preventer Systems and Well Control Final Rule in April 2016 (Well Control Rule). The rule addresses the range of systems and equipment related to well control operations, and is intended to improve equipment reliability, building upon industry standards for blowout preventers and blowout prevention technologies. It also includes reforms in well design, well control, casing, cementing, real-time well monitoring and subsea containment. The rule includes technology-forcing provisions, i.e., it requires future deployment of technologically advanced equipment not presently available.
In 2015, the 40-year-ban on oil exports was lifted. In 1975, in the aftermath of the oil embargo by the Arab members of OPEC, the U.S. Congress enacted the Energy Policy and Conversation Act, which banned all crude oil exports except in select circumstances. Before the ban was lifted, the U.S. exported an allowable 500,000 barrels a day.
Cybersecurity is a growing concern in the oil and gas industry. For the past 30 years, the oil and gas sector has been targeted by cyberattacks, including the well-known 2012 attack on Saudi Aramco, which crippled 30,000 computers and disrupted corporate operations for months – although it did not disrupt production. Cyber risks affecting the digital oilfield include wireless offshore technologies and automated drilling assets and drilling control systems.
With respect to hydraulic fracturing, increased seismic activity is mostly associated with water injection wells. An injection well is one that is used to place fluid underground into porous geologic formations. Spent hydraulic fracturing fluids, including water, wastewater, brine (salt water) are injected into these wells that are drilled specifically for this purpose.
Methane is the second most prevalent greenhouse gas emitted in the US from human activities, accounting for 11% of all US greenhouse gas emissions. Carbon dioxide is the most prevalent greenhouse gas emitted from human activities. Natural gas and petroleum systems are the largest source of methane emissions in the US. Methane is the primary component of natural gas. Some is emitted to the atmosphere during the production, processing, storage, transmission and distribution of natural gas. Because gas is often found alongside petroleum, the production, refinement, transportation and storage of crude oil is also a source of methane emissions. With the advent of hydraulic fracturing, the public and environmentalists have focused on methane emissions to debate the environmental impacts of hydraulic fracturing operations.
In 1973, the U.S. Congress passed the Endangered Species Act (ESA) to protect the nation’s native plants and animals from harm. The Act is administered by the U.S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS). Under the ESA, species may be listed as either threatened or endangered, with regulations drafted to protect the habitat of an imperiled species. Particularly regarding areas of the U.S. where oil and gas drilling operations are abundant, protection of species can be a serious obstacle to oil and gas operations.
The energy-water nexus refers to the relationship between the water used for energy production and the energy consumed to extract, purify, deliver, heat/cool, treat and dispose of water. In 2014, the U.S. Department of Energy (DOE) began a program that aims to examine the interaction between present-day energy and water systems with an understanding that there are dynamic interactions between the energy system, population, economy, infrastructure systems and natural resources. The DOE is working in partnership with representatives from a wide variety of industries to enable more effective research, development and deployment of key technologies, harmonization of policies where warranted, shared datasets, informed decision-making and robust public dialogue. In relation to the oil and gas industry, water is used for hydraulic fracturing and horizontal drilling activities, enhanced oil recovery and other fossil fuel production processes.
EPA/BLM Emissions Rules
In 2016, the U.S. Bureau of Land Management (BLM) proposed to update its regulations to reduce the waste of natural gas from flaring, venting and leaks from oil and gas production operations on federal and Indian lands. The proposed rule would require oil and gas producers to reduce this waste and modernize the existing 30-year-old oil and gas production rules. It would also modify existing royalty rate provisions. Similarly, also in 2016, the U.S. Environmental Protection Agency (EPA) announced federal standards to cut methane emissions by 40 to 45% below 2012 levels by 2025 to meet climate change reduction goals.
Hydraulic fracturing is the process of drilling and injecting fluid into the ground at a high pressure in order to fracture shale rocks to release the natural gas inside. It involves forcing a fluid that is typically 99% water and sand and 1% chemical additives into the shale at high pressure. This creates threadlike fissures in the rock creating space into which the gas can flow easily. Used with directional and horizontal drilling, hydraulic fracturing is unlocking vast tight and shale gas resources across the world. Hydraulic fracturing is used mostly onshore, but offshore as well. In most countries where the practice is being utilized, there has been strong opposition from environmentalists and other groups who question the safety of such a practice.
Liquefying natural gas is a way to move natural gas long distances when pipeline transport is unavailable. Geographies that are too far away from places that produce natural gas are able to access it through LNG, which is shipped in special tankers and returned to its gaseous state on arrival. Importing and exporting liquefied natural gas in the U.S. is governed by the U.S. Department of Energy, the Federal Energy Regulatory Commission and the U.S. Maritime Administration. In January 2015, the U.S. House passed the LNG Permitting Certainty and Transparency Act, which aimed to streamline the process for natural gas export projects.
Operations in Politically Unstable Countries
Supplying the world’s energy needs is a huge task and one that is not undertaken lightly by the world’s energy companies. Oil and gas exploration has continued for decades in established regions of the world. However, a growing world population and its larger energy needs demands that the industry look beyond long-established regions for exploration, drilling and production. In recent years, operations in countries considered to be “volatile” or “unstable” have received attention for potentially offering a dangerous environment for workers. Dangers of pursuing work in these countries include politically difficult environments, general civil unrest, local populations unsupportive of outside companies drilling activities, terrorist actions and militant activism.
In the U.S., air pollutant emissions are governed by the Clean Air Act. In 2015, the U.S. Environmental Protection Agency issued the National Ambient Air Quality Standards for Ozone, which revised the 2008 version. Based on EPA’s review of the air quality criteria for ozone and related petrochemical oxidants, the EPA revised the levels and set the standard for 70 parts per billion, lowered from the previous 75 parts per billion. The earth’s atmosphere, when working properly, maintains a natural balance of the stratospheric ozone layer as a protective sun blocker while dissipating concentrations of ground-level ozone that can harm human health and the living environment. However, that balance is being distorted, with ground-level ozone building up, due to nitrogen oxides (NOx) and volatile organic compounds (VOC) emissions, to unhealthy levels near and around major urban areas. Environmentalists and other advocacy groups have cited the use of fossil fuels as a large contributor to this imbalance. The groups also contend that high concentrations of pollutants contribute to health concerns, mainly in children.
Pipelines are the transportation mode for delivering oil and gas products to consumers. In the U.S., a network of more than 185,000 miles of liquid petroleum pipelines and 2.3 million miles of natural gas, pipelines deliver the nation’s crude oil and petroleum products, such as gasoline, diesel, jet fuel, home heating oil and natural gas, reliably, safety, efficiently and economically.
Renewable Fuel Standard
The Renewable Fuel Standard (RFS) program was created by the U.S. Congress to reduce greenhouse gas emissions and expand the nation’s renewable fuels sector while reducing the nation’s reliance on imported oil. The program was authorized under the Energy Policy Act of 2005, which amended the Clean Air Act, and it was expanded significantly under the Energy Independence and Security Act of 2007. The U.S. Environmental Protection Agency (EPA) implements the program, together with the U.S. Department of Agriculture and the U.S. Department of Energy. The RFS program requires a certain volume of renewable fuel to replace or reduce the quantity of petroleum-based transportation fuel, heating oil or jet fuel. In 2016, EPA proposed to update its renewable fuels standard regulations and related fuels regulations to better align standards with the current state of the renewable fuels market and to promote the use of ethanol and non-ethanol biofuels.
Safety continues to be the top industry priority. Every driller’s goal is to have zero incidents that harm personnel, or put facilities or the environment at risk. As a result of this mindset, safety performance in the last 30+ years has improved significantly, reflected by a downward trend in key performance indicators such as lost time incidents, fatalities and recordable incidents. Safety performance in the oil and gas industry will always remain under close scrutiny due to the nature of our business. A single significant safety incident, and/or a number of unrelated safety issues, or even perceived safety issues, have the potential to severely impact operations and the overall reputation of the industry and our ‘social license’ to drill.
The U.S. National Institute for Occupational Safety and Health (NIOSH) field studies have identified overexposure to airborne silica as a health hazard to workers. In 2016, the U.S. Occupational Safety and Health Administration (OSHA) released its final rule, “Occupational Exposure to Respirable Crystalline Silica”, to limit worker exposure to respirable crystalline silica. The requirements become effective on 23 June 2018, and the rule contains 2 standards, one for general industry and maritime (which applies to oil and gas workers) and one for construction. The rule limits exposure to an 8-hour-time-weighted average of 50 micrograms of respirable crystalline silica per cubic meter of air. Silica sand is used in larger quantities during hydraulic fracturing activities, where it is blended with other fluids prior to high- pressure injection into the drilling hole.
Oil and gas spills, and the resulting environmental contamination, are the most visible incidents to the general public, which leads to an overall negative perception about the industry. These include both larger scale offshore incidents, such as Macondo, as well as onshore incidents. However, the implementation of prevention-oriented regulations along with voluntary industry initiatives, have combined to reduce the incidence of spills dramatically. Billions of barrels of oil and trillions of cubic feet of natural gas are produced successfully each year with minimal spills.
Venting & Flaring
Flaring is the controlled burning of natural gas and is a common practice in oil and gas exploration, production and processing. Venting is the controlled release of gases into the atmosphere during oil and gas production operations. The U.S. Government Accountability Office recently found that 40% of methane gas being burned or vented could be captured economically and sold. According to the U.S. Department of Interior, between 2009 and 2014, the amount of natural gas lost through venting, flaring and leaks could power more than 5 million homes for a year. In response, in January 2016, the U.S. Bureau of Land Management (BLM) proposed a rule that would require oil and gas producers to limit the rate of flaring at oil wells on public and tribal lands, and would prevent them from venting natural gas except in the case of emergencies and from specified equipment subject to proposed limits.
One of the most frequently discussed concerns with hydraulic fracturing is whether or not it contaminates groundwater with methane gas or oil. Fracturing is routinely used for wells that are thousands of feet deeper than any local water basin. Well design requirements for hydraulically fractured wells include stronger pipe and additional cement to seal the well off and prevent contamination. The reality is the potential to leak fracture materials into water sands or basins from deep hydrocarbon zones is exceptionally low as shown by microseismic monitoring data.
Drilling and hydraulically fracturing wells can use between one to seven million gallons of water, per well. At first glance, the total volume of water used to complete a hydraulically fractured well can seem large, however, when compared to the amount of water needed to produce other forms of energy, hydraulic fracturing activities use significantly less, while providing an important energy resource.
Waters of the U.S. (WOTUS)
The Waters of the United States (WOTUS) was published in the Federal Register on 29 June 2015 and became effective on 28 August 2015. It was developed by the U.S. Environmental Protection Agency (EPA) and the Department of the Army Corps of Engineers to attempt to simplify the process for identifying those waters that are and are not protected under the Clean Water Act, based on the latest science and the law. Its intent is to define which rivers, streams, lakes and marshes fall under the jurisdiction of the EPA and the Army Corps of Engineers. Since it was issued, more than 32 states filed suit to have the law struck down, and on 9 October 2015, the U.S. Court of Appeals for the Sixth Circuit stayed the rule pending further action.