McCaul Amendment Ensures R&D for Safe Offshore Drilling

Washington, D.C.– Congressman Michael McCaul (R-TX) successfully added an amendment to a bill that advances environmentally responsible oil and gas exploration. The amendment, accepted in committee with bipartisan support, ensures federal research funding is spent on research and development for safer exploration and production methods. The bill reprioritizes funding in the existing program by increasing R&D funding for Safety and Accident Prevention and Mitigation within the Department of Energy.

“This may help to advance, for example, understanding of the potential impacts of and alternatives to chemicals added to drilling muds, such as that used in the recent ‘top kill’ procedure,” Rep. McCaul said during today’s Science and Technology Committee markup. “Similar research needs exist with respect to onshore deep natural gas drilling activities.”

A summary of the bill, the Safer Oil and Natural Gas Drilling Technology Research and Development Act, is below. Click here to read Rep. McCaul’s amendment.

H.R. XXXX, the Safer Oil and Natural Gas Drilling Technology Research and Development Act

Background and Need
On April 20, 2010, an explosion and fire occurred on the Deepwater Horizon drilling rig, which was in the final stages of drilling an exploratory well in approximately 5,000 feet of water. While investigation into the exact cause of the Deepwater Horizon accident is ongoing, it is understood to be a confluence of critical human errors and the failure of certain equipment designed to stop an incident.

Deepwater drilling presents a unique set of technological challenges, including for safety and accident prevention and mitigation. Operations must be optimized to function under the extreme pressures, stresses, and temperatures which can effect equipment, drilling materials, and the hydrocarbon reservoir itself. Consequently, the industry has devoted billions of dollars to researching and developing technologies for both subsea and surface drilling systems specific to the deepwater and ultra-deepwater, especially those technologies which represent an increase in production efficiency. However, many contend that the industry has not devoted similar resources to the development of technologies and methods for accident prevention and mitigation.

In addition to a series of operator errors, initial investigations of the Deepwater Horizon incident indicate that the primary technology failure lay in the Blowout Preventer (“BOP”). The BOP is a large mechanism on the seafloor comprised of a series of high pressure hydraulic valves designed to stop an uncontrolled flow of oil and gas from the well, including the “blind shear ram” which uses two blades to cut through the metal drill pipe and seal the wellbore. A BOP can be activated from the drill rig, automatically via a “deadman switch”, via acoustic signal from a vessel other than the drill rig, or manually by remotely-operated vehicles (“ROV”). ROVs also perform a range of other functions. Crew aboard the Deepwater Horizon attempted unsuccessfully to activate the BOP before evacuating the rig, and a number of subsequent attempts to activate the BOP using an ROV also failed. Many stakeholders inside and outside of the industry, including the CEO of BP, have concluded that the design of blowout preventers must be rethought altogether. Witnesses at the June 23 Energy and Environment Subcommittee hearing testified about the need for research into BOPs and a range of other accident prevention and mitigation technologies and practices.

Section 999 of the Energy Policy Act of 2005 authorizes the Secretary of Energy to establish an Ultra-Deepwater and Unconventional Onshore Natural Gas and Other Petroleum Resources research and development program. Management of the 999 program was awarded to a public-private research consortium known as the Research Partnership to Secure Energy for America, or RPSEA, which is overseen for DOE by the national Energy Technology Laboratory (“NETL”). The program is funded through $50 million in annual mandatory spending from offshore oil and gas royalty revenues collected by MMS. Of this, DOE conducts approximately $12.5 million of “in house” research at NETL. The remaining $37.5 million is managed by the research consortium, RPSEA, and is divided into three parts: ultra-deepwater architecture and technology (“UDW”); unconventional onshore natural gas and other resources; and technology challenges of smaller producers.

RPSEA currently has approximately 170 members, with representation form across industry, academia, NGOs, and government laboratories and programs. IN the wake of the Deepwater Horizon tragedy, questions have arisen as to ho RPSEA and DOE activities under Section 999 could better serve the nation’s needs for development of advanced environmental and worker safety technologies and practices, while also providing a federal resource for technical expertise on deepwater and ultra-deepwater drilling technologies.

The bill before the Committee makes a series of changes to the 999 program, including by: renaming the program, “Safer Oil and Natural Gas Drilling Technology Research and Development Program”; making a number of changes to shift focus and funding of the program to research and development of technologies for safety and accident prevention and mitigation; and by streamlining the operations of the Program.

Summary of Major Provisions
The bill amends Subtitle J of title IX of the Energy Policy Act of 2005 (“EPAct 2005”) (42 U.S.C. 16371 et seq.), “Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Resources”, to establish the “Safer Oil and Natural Gas Drilling Technology Research and Development Program"

The bill adds “accident prevention and mitigation” as a program activity, and specifies that the program elements shall include deepwater activities in depths greater than 1000 feet. The bill also specifies that complimentary research will be carried out by the Department of Energy and the Office of Fossil Energy, instead of the National Energy Technology Laboratory. The bill also directs the Secretary of Energy to seek to establish partnerships with outside stakeholders for research not likely to be undertaken by the private sector alone.

The bill amends the program elements to include a focus on advancing the safe and environmentally responsible exploration, development, and production of natural gas and other petroleum resources.

The bill makes further changes to the areas on which the program should focus, including: (1) Deepwater Resources research and development will focus on safe and environmentally responsible technologies, integrated systems, and architectures for deepwater exploration and production, adapting operations to extreme weather and ocean conditions, and other activities; (2) Unconventional Onshore research and development will, in addition to its existing focus, now also focus on more energy efficient operations, improved management of produced water, and accident prevention, environmental mitigation, waste reduction, energy efficient operations, and well control and systems integrit

The bill adds a new Safety, Accident Prevention and Mitigation Technology research and development program to be conducted by the Department of Energy. The program may focus, in addition to ongoing activities by the Department, on new in-house activities including: technologies and practices to enhance well control and integrity; blowout prevention devices; research on best practices for workforce training; secondary control systems for well shut-off; technologies for accident mitigation; and other activities as determined by the Secretary.

The bill amends Section 999D of EPAct 2005 by making substantial changes to the current advisory committee structure. Most importantly, the two advisory committees know as the “Ultra-Deepwater Advisory Committee” and the “Unconventional Resources Technology Advisory Committee: will be consolidated into one advisory committee to be known as the “Program Advisory Committee.” The section also specifies membership of the Advisory Committee, authorizes the establishment of subcommittees and ad-hoc working groups, specifies the duties and compensation, and prohibits the Advisory Committee from making recommendations for specific awards.

The bill changes the funding allocations tot the program focus areas by: (1) decreasing funding for Deepwater research and development from the 35 percent to 32.5 percent; (2) decreasing funding for Unconventional Resources research and development from 32.5 percent to 25 percent; and (3) increasing funding for Safety and Accident Prevention and Mitigation research and development at the Department of Energy from 25 percent to 35 percent.

The bill also makes conforming changes to EPAct 2005.

Legislative History
On June 23, 2010 the Subcommittee on Energy and Environment held a hearing entitled “Deepwater Drilling Technology, Research, and Development.” The purpose of the hearing was to explore the technologies, standards, and practices for prevention and mitigation of oil spillage during deepwater oil and natural gas drilling operations; the role of government-sponsored technology development programs in advancing these technologies; and, in the wake of the Deepwater Horizon tragedy, how firms will assess risk as it relates to incident prevention and mitigation.