Petrochem/Utilities Industry Trends

Keeping up with Deepwater Exploration and Development

Issue Table of Contents

API Moves Into Deepwater Keeping up with Deepwater Exploration and Development New Guidelines for a New World

In the early 1990s, the exploration and development of deepwater reserves (reserves located under water deeper than 1,000 feet or 305 meters) was a minor component of offshore production—but this was soon to change. According to the U.S. Department of the Interior’s Minerals Management Service (MMS), in 1993, deepwater operations in the outer continental shelf accounted for only 12 percent of oil and 2 percent of gas offshore production; by 2004, these numbers had climbed to 62 percent and 32 percent respectively.

This significant increase in deepwater production is the result of state-of-the-art technology, which is allowing for the exploration and development of ever deeper—and more productive—environments. Yet as key players in the industry lead the way in introducing these new technologies, both the government and industry organizations are working hard to keep up.

The gap between industry advances in deepwater technology and supporting standards and regulations first became evident in the late 1990s, when the MMS challenged the American Petroleum Institute (API) to strengthen its specifications and recommended practices focused on offshore production technology to include better coverage for deepwater operations. At the same time, the agency also began work on beefing up its own regulations.

“API and MMS came up with a list of standards that the industry would target to make sure they were applicable for deepwater,” says API Upstream Standards Manager Andy Radford. “And in turn, MMS agreed to begin preparation of a rule to propose incorporation of some of these standards into its regulations.”

One of the key concerns the agency had was a lack of guidelines for floating production systems (FPSs). Unlike fixed platforms, which are ideal for use in depths only up to 1,500 feet, FPSs can be used in much deeper water, up to 7,500 feet. And as more companies were moving into deeper waters in areas such as the Gulf of Mexico, MMS was seeing greater numbers of applications for use of the floating platforms.

“In the deepwater environment, technology changes pretty quickly. It’s a challenge to keep standards up to date with what is actually going on in the industry. I think the reason MMS first approached us about updating our standards was because it was seeing information on applications for permits that we hadn’t yet addressed,” Radford explains.

To keep up with the new technology being proposed for use, in late 2001 MMS published a proposed rule that amended its regulations governing offshore oil and gas platforms. The rule, which was finalized this past July, incorporated many of the newly updated industry standards offered by API, and for the first time, provided specific guidelines for FPSs.

By using accepted industry standards to regulate the design and construction of floating platforms in the final rule, MMS hopes to streamline its permitting processes. In 2003, for example, each of the 16 FSPs and 11 fixed production platforms approved for use in the Gulf of Mexico were evaluated on a case-by-case basis. The agency believes the new rule will provide a consistent set of guidelines that operators and lessees can depend upon as they move into ever deeper waters.

Subscribe to eNewsletter