Oil and Gas and Sulphur Operations in the Outer Continental Shelf-Incorporate API RP 65 for Cementing Shallow Water Flow Zones, 8900-8903 [E7-3426]
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8900
Federal Register / Vol. 72, No. 39 / Wednesday, February 28, 2007 / Rules and Regulations
DEPARTMENT OF THE INTERIOR
Minerals Management Service
30 CFR Part 250
RIN 1010–AD19
Oil and Gas and Sulphur Operations in
the Outer Continental Shelf—
Incorporate API RP 65 for Cementing
Shallow Water Flow Zones
Minerals Management Service
(MMS), Interior.
ACTION: Final rule.
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AGENCY:
SUMMARY: MMS is incorporating by
reference the First Edition of the
American Petroleum Institute’s
Recommended Practice (RP) for
Cementing Shallow Water Flow (SWF)
Zones in Deep Water Wells (API RP 65)
into MMS regulations. From 1987 to
2004, at least 113 Outer Continental
Shelf (OCS) wells encountered SWF to
varying degrees. While the majority of
these wells experienced SWF to only a
minor degree, there were instances of
severe encounters resulting in
abandonment of well sites and loss of
wells. This action establishes best
practices for cementing wells in deep
water areas of the OCS that are prone to
SWF.
EFFECTIVE DATE: March 30, 2007. The
incorporation by reference of the
publication listed in the regulation is
approved by the Director of the Federal
Register as of March 30, 2007.
FOR FURTHER INFORMATION CONTACT: Kirk
Malstrom, Office of Offshore Regulatory
Programs, Regulations and Standards
Branch at (703) 787–1751.
SUPPLEMENTARY INFORMATION:
Background: Since 1987, OCS
operators have reported encountering
SWF problems while drilling in specific
areas of the Gulf of Mexico (GOM).
Between 1987 and 2004, MMS is aware
of at least 113 wells, drilled by
approximately 25 different operators,
that encountered problems with SWF.
General information on SWFs, and maps
showing the location of areas in the
GOM that have had documented cases
of SWF, can be viewed at our Web site:
https://www.gomr.mms.gov/homepg/
offshore/safety/wtrflow.html.
This final rule updates the
requirements for cementing operations
in 30 CFR Part 250 Subpart A—General,
and Subpart D—Oil and Gas Drilling
Operations. Subpart A is amended to
incorporate by reference ‘‘API RP 65,
Recommended Practice for Cementing
SWF Zones in Deep Water Wells,’’ First
Edition, September 2002. Subpart D is
amended by adding new subparagraph
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(e) to § 250.415, detailing when API RP
65 is to be evaluated by an operator in
designing a cementing program. Some of
the key points of this final rulemaking
include the following:
• Use of this standard is not
warranted for every OCS well, or for all
casing strings in a particular well. Its
use is limited to situations where there
is a risk of encountering a SWF based
upon past drilling activity, seismic data
or interpretation, or correlation of data
from offset wells in water depths greater
than 500 feet (SWF has not been
encountered in wells in water depths
less than 500 feet).
• The risk associated with
encountering a SWF is characterized in
one of two ways: (1) An area with an
unknown SWF potential, or (2) an area
known to contain a SWF hazard.
• For purposes of this final rule, these
terms are defined as follows:
• An area with an unknown SWF
potential means a zone or geologic
formation where neither the
presence nor absence of potential
for a SWF has been confirmed.
• An area known to contain a SWF
hazard means a zone or geologic
formation for which drilling has
confirmed the presence of SWF.
• Use of this standard is limited to
water depths greater than 500 feet for
areas with an unknown SWF potential
or areas known to contain a SWF
hazard. Data available to the MMS on
the 113 wells that have encountered
SWF show that the water depths for
these wells ranged from approximately
500 feet to 9,675 feet, with an average
water depth of 3,560 feet.
• As part of an operator’s Application
for Permit to Drill (Form MMS–123), a
statement needs to be included
concerning how API RP 65 was
evaluated by the operator. The operator
must also detail which of the cementing
techniques from this standard were used
as part of the cementing program for a
well drilled in either ‘‘areas with an
unknown SWF potential’’ or ‘‘areas
known to contain a SWF hazard.’’ This
information will be evaluated by MMS
during the review of the application for
permit to drill, and discussed with the
operator as appropriate.
• Particular attention should be
placed on evaluating, designing, and
implementing the cementing programs
of both the surface and conductor casing
strings in wells requiring review under
API RP 65. Data available to the MMS
on the 113 wells that have encountered
SWF show that the tops of the SWF
zones ranged from approximately 450
feet below mud line to 3,005 feet below
mud line, with an average depth of
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encounter of 1,305 feet below mud line.
These depths are typical of the setting
depths of either conductor or surface
casings.
Comments on the Rule: On May 22,
2006, MMS published a proposed rule
(71 FR 29280) to incorporate API RP 65.
The public comment period ended on
July 21, 2006. MMS received six
comments on the proposed rule. All the
comments came from companies or
organizations working in the oil and gas
industry, including ExxonMobil, BP,
Devon, BJ Services Company,
Schlumberger, and the Offshore
Operators Committee (OOC). A majority
of the comments addressed similar
issues mostly on the bias toward using
foam cement to address the SWF issue
in sections of the RP. Other comments
expressed concern that singling out a
specific cementing technique hinders
new methods and technology
development, and that this RP is not
appropriate for other cementing
applications. You may view these
comments on MMS’ Public Connect online commenting system at: https://
www.mms.gov/federalregister/
PublicComments/APIRP65.htm.
Discussion of Comments:
Comment: Five out of the six
comments wanted MMS to omit
appendix F of API RP 65. The comments
suggest omitting this appendix due to a
perceived bias toward use of foam
cementing. At the time the RP was
developed, foam was the best available
cement system for use in combating
SWFs. Since development of this
standard, new options have been
developed that are similarly efficient,
i.e., non-compressible systems. A few
comments also recommend omitting
appendices D and E due to bias toward
foam cement.
Response: MMS agrees that there
appears to be a bias toward the use of
foam cement in appendices D, E, and F.
However, under this final rulemaking,
MMS does not require a company to
comply with the provisions contained
in these appendices or submit any
information related to these appendices.
MMS views the appendices in this RP
as examples and background
information. With specific reference to
appendix F, even with the apparent bias
towards use of foam cement, MMS still
views the cementing matrix as a useful
tool that can help a company evaluate
the performance of their cement jobs
and improve upon subsequent cement
operations.
Comment: One comment provided
further recommendations and alternate
language to change sections 11.1, 11.2,
and 11.3 of the RP to eliminate bias
towards foam cement.
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Federal Register / Vol. 72, No. 39 / Wednesday, February 28, 2007 / Rules and Regulations
Response: MMS does not have the
authority to change an API document.
While MMS could elect not to
incorporate by reference specified
provisions of the document, it has
instead opted to incorporate API RP 65,
First Edition (September 2002) in its
entirety. API updates these
recommended practices periodically
through a consensus-based process.
MMS believes it best that the changes
suggested by this commenter be
proposed to the API review committee
so that they can be considered by a
cross-section of industry. If the
proposals are adopted by API, and
incorporated into a revised edition of
this RP, MMS would then have the
option to consider incorporating the
revised edition into the regulations.
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Procedural Matters
Regulatory Planning and Review
(Executive Order (E.O.) 12866)
This final 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 final rule will not have an
annual effect of $100 million or more on
the economy. It will 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 economic analysis prepared by
the MMS indicates that, if the
techniques included in API RP 65 are
evaluated by operating companies in the
planning phases of wells drilled in
Areas with an Unknown SWF Potential
or Areas Known to Contain a SWF
Hazard, this process will increase the
planning costs associated with these
wells by no more than $20,000 per well
(industry estimate). This cost includes
planning associated with a full range of
SWF mitigation measures. The measures
include casing centralization; pipe
movement; use of light weight cements
such as a foam system; use of noncompressible systems; proper mud
circulation prior to cementing; site
selection; the drilling of pilot holes;
setting extra strings of casing; use of
measurement while drilling technology;
pressure while drilling technology; and
use of a drilling riser for shallow
sections of a deep water well. Today,
most lessees conducting operations in
SWF-prone areas already use most of
these techniques. As a result, additional
costs associated with implementing
these techniques under this final rule
will be negligible.
Based on information available to
MMS, there have been a total of 1,275
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wells drilled on the OCS in water
depths of 500 feet or greater during the
period 2000–2004. The cost to industry
over the past 5 years for SWF mitigation
would have been approximately $25.5
million ($20,000 per well × 1,275 wells
= $25.5 million) if the evaluations
required for this final rule were
conducted prior to drilling all of these
wells. In reality, a significant number of
the 1,275 wells would have been located
in areas known to be free of SWF, and
would not have required an operating
company to implement the techniques
included in API RP 65 as part of their
well planning efforts, resulting in a
significantly lower cost to the offshore
industry.
Using the well data trends from 2000–
2004, in water depths greater than 500
feet, MMS estimates an average of 200
wells will be drilled per year. Using the
average of 200 wells, the estimated
annual cost to industry will be
approximately $4 million ($20,000 per
well × 200 wells = $4 million). Based on
actual drilling figures, estimated total
well costs are in excess of $40 million
per well. Industry estimates of $20,000
per well for SWF mitigation represents
only 0.05 percent of total well costs. The
possible consequences of SWF, well
abandonment, or well loss are far more
severe than the 0.05 percent of well
costs for SWF mitigation.
For the above reasons, the final rule
will have a minor economic effect on
the offshore oil and gas industry.
(2) The final rule will not create a
serious inconsistency or otherwise
interfere with action taken or planned
by another agency. It will not change the
relationships of the OCS oil and gas
leasing program with other agencies’
actions.
(3) This final rule will not alter the
budgetary effects of entitlements, grants,
user fees or loan programs, or the rights
or obligations of their recipients. The
changes proposed in this rule are
strictly planning requirements for
specific well cementing processes to
prevent accidents and environmental
pollution on the OCS.
(4) This final rule will not raise novel
legal or policy issues.
Regulatory Flexibility Act (RFA)
The Department certifies that this
final rule will not have a significant
economic effect on a substantial number
of small entities under the RFA (5
U.S.C. 601 et seq.).
The changes in the final rule will
affect lessees and operators of leases on
the OCS. This could include about 130
active Federal oil and gas lessees. Small
lessees that operate under this rule fall
under the Small Business
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8901
Administration’s (SBA) North American
Industry Classification System (NAICS)
codes 211111, Crude Petroleum and
Natural Gas Extraction, and 213111,
Drilling Oil and Gas Wells. For these
NAICS code classifications, a small
company is one with fewer than 500
employees. Based on these criteria, an
estimated 70 percent of these companies
are considered small. This final rule
will therefore affect a substantial
number of small entities.
As previously stated, there have been
a total of 1,275 wells drilled on the OCS
in water depths of 500 feet or greater
during the period 2000–2004. Of the
total 1,275 wells drilled, 1,107 were
drilled by large businesses and 168 by
small businesses. The 168 wells were
drilled by a total of 15 small businesses.
The 1,107 large business wells
correspond to 87 percent of all wells
drilled, leaving 13 percent as small
business wells.
The final rule will have a minor
economic effect on the oil and gas
offshore lessees and operators on the
OCS, regardless of company size. This is
due to the relatively small SWF
mitigation costs in relation to the high
drilling costs. Because of the high
potential costs of SWF, well
abandonment, or well loss, in the
overwhelming majority of cases
operators choose to perform improved
and safer well cementing procedures on
their own initiative, not because of
MMS safety requirements. The final rule
will add relatively little to the cost of a
well cementing procedure. Thus, there
will not be a significant impact on a
substantial number of small entities
under the RFA (5 U.S.C. 601 et seq.).
The final rule will not cause the
business practices of any of these
companies to change.
Your comments are important. The
Small Business and Agriculture
Regulatory Enforcement Ombudsman
and 10 Regional Fairness Boards were
established to receive comments from
small businesses 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 actions of
MMS, call 1–888–734–3247. You may
comment to the Small Business
Administration without fear of
retaliation. Disciplinary action for
retaliation by an MMS employee may
include suspension or termination from
employment with the DOI.
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Federal Register / Vol. 72, No. 39 / Wednesday, February 28, 2007 / Rules and Regulations
Small Business Regulatory Enforcement
Fairness Act (SBREFA)
The final rule is not a major rule
under the SBREFA (5 U.S.C. 804(2)).
This final rule:
a. Will not have an annual effect on
the economy of $100 million or more.
b. Will not cause a major increase in
costs or prices for consumers,
individual industries, Federal, State, or
local government agencies, or
geographic regions.
c. Will 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.
Leasing on the OCS is limited to
residents of the U.S. or companies
incorporated in the U.S. This final rule
will not change that requirement.
Unfunded Mandates Reform Act
(UMRA)
This final rule will not impose an
unfunded mandate on State, local, or
tribal governments or the private sector
of more than $100 million per year. The
final rule will not have a significant or
unique effect on State, local, or tribal
governments or the private sector. A
statement containing the information
required by UMRA (2 U.S.C. 1531 et
seq.) is not required.
Takings Implication Assessment
(Executive Order 12630)
This final rule is not a governmental
action capable of interference with
constitutionally protected property
rights. Thus, MMS did not need to
prepare a Takings Implication
Assessment according to E.O. 12630,
Governmental Actions and Interference
with Constitutionally Protected Property
Rights.
Federalism (Executive Order 13132)
With respect to E.O. 13132, this final
rule will not have federalism
implications. This final rule will not
substantially and directly affect the
relationship between the Federal and
State governments. To the extent that
State and local governments have a role
in OCS activities, this final rule will not
affect that role.
Civil Justice Reform (Executive Order
12988)
With respect to E.O. 12988, the Office
of the Solicitor has determined that the
final rule does not unduly burden the
judicial system and does meet the
requirements of sections 3(a) and 3(b)(2)
of the Order.
Paperwork Reduction Act (PRA)
The revisions to 30 CFR 250 refer to,
but do not change, information
collection requirements in current
regulations. They impose no new
reporting or recordkeeping requirements
and a submission to OMB under
§ 3507(d) of the PRA is not required.
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 number, you
are not required to respond. OMB
approved the referenced information
collection requirements for 30 CFR part
250 under OMB Control Numbers 1010–
0114 (22,538 burden hours), expiration
October 31, 2007, and 1010–0141
(163,714 burden hours), expiration
August 31, 2008.
National Environmental Policy Act
(NEPA) of 1969
This rule does not constitute a major
Federal action significantly affecting the
quality of the human environment.
MMS has analyzed this rule under the
criteria of the NEPA and 516
Departmental Manual 6, Appendix
10.4C(1). MMS completed a Categorical
Exclusion Review for this action and
concluded that ‘‘the rulemaking does
not represent an exception to the
established criteria for categorical
exclusion; therefore, preparation of an
environmental analysis or
environmental impact statement will
not be required.’’
Energy Supply, Distribution, or Use
(Executive Order 13211)
Executive Order 13211 requires the
agency to prepare a Statement of Energy
Effects when it takes a regulatory action
that is identified as a significant energy
action. This final rule is not a significant
energy action; and therefore, will not
require a Statement of Energy Effects
because it:
a. Is not a significant regulatory action
under E.O. 12866,
b. Is not likely to have a significant
adverse effect on the supply,
distribution, or use of energy, and
c. Has not been designated by the
Administrator of the Office of
Information and Regulatory Affairs,
OMB, as a significant energy action.
Consultation With Indian Tribes
(Executive Order 13175)
Under the criteria in E.O. 13175, we
have evaluated this final rule and
determined that it has no potential
effects on federally recognized Indian
tribes. There are no Indian or tribal
lands on the OCS.
List of Subjects in 30 CFR Part 250
Administrative practice and
procedure, Continental shelf,
Environmental protection, Incorporation
by reference, Oil and gas exploration,
and Reporting and recordkeeping
requirements.
Dated: January 31, 2007.
C. Stephan Allred,
Assistant Secretary—Land and Minerals
Management.
For the reasons stated in the preamble,
the MMS amends 30 CFR part 250 as
follows:
I
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:
I
Authority: 43 U.S.C. 1331, et seq., 31
U.S.C. 9701.
2. In § 250.198, the following
document incorporated by reference is
added to the table in paragraph (e) in
alphanumerical order.
I
§ 250.198 Documents incorporated by
reference.
*
*
*
(e) * * *
*
*
Incorporated by
reference at
Title of documents
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*
*
*
*
*
*
API RP 65, Recommended Practice for Cementing Shallow Water Flow Zones in Deep Water Wells, First Edition, September
2002, Product No. G56001 ..........................................................................................................................................................
*
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*
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*
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*
§ 250.415(e)
*
Federal Register / Vol. 72, No. 39 / Wednesday, February 28, 2007 / Rules and Regulations
3. In § 250.415, add a new paragraph
(e) as set forth below.
I
§ 250.415 What must my casing and
cementing programs include?
*
*
*
*
*
(e) a statement of how you evaluated
the best practices included in API RP
65, Recommended Practice for
Cementing Shallow Water Flow Zones
in Deep Water Wells (incorporated by
reference as specified in § 250.198), if
you drill a well in water depths greater
than 500 feet and are in either of the
following two areas:
(1) An ‘‘area with an unknown
shallow water flow potential’’ is a zone
or geologic formation where neither the
presence nor absence of potential for a
shallow water flow has been confirmed.
(2) An ‘‘area known to contain a
shallow water flow hazard’’ is a zone or
geologic formation for which drilling
has confirmed the presence of shallow
water flow.
[FR Doc. E7–3426 Filed 2–27–07; 8:45 am]
BILLING CODE 4310–MR–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[WV101–6038; FRL–8273–7]
Approval and Promulgation of Air
Quality Implementation Plans; West
Virginia; Update to Materials
Incorporated by Reference
Environmental Protection
Agency (EPA).
ACTION: Final rule; Notice of
administrative change.
AGENCY:
SUMMARY: EPA is updating the materials
submitted by West Virginia that are
incorporated by reference (IBR) into the
State Implementation Plan (SIP). The
regulations affected by this update have
been previously submitted by the West
Virginia Department of Environmental
Protection and approved by EPA. This
update affects the SIP materials that are
available for public inspection at the
National Archives and Records
Administration (NARA), the Air and
Radiation Docket and Information
Center located at EPA Headquarters in
Washington, DC, and the Regional
Office.
This action is effective
February 28, 2007.
ADDRESSES: SIP materials which are
incorporated by reference into 40 CFR
part 52 are available for inspection at
the following locations: Air Protection
Division, U.S. Environmental Protection
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EFFECTIVE DATE:
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Agency, Region III, 1650 Arch Street,
Philadelphia, Pennsylvania 19103; the
Air and Radiation Docket and
Information Center, EPA Headquarters
Library, Room Number 3334, EPA West
Building, 1301 Constitution Ave., NW.,
Washington, DC 20460, and the
National Archives and Records
Administration. If you wish to obtain
materials from a docket in the EPA
Headquarters Library, please call the
Office of Air and Radiation (OAR)
Docket/Telephone number: (202) 566–
1742; or the National Archives and
Records Administration (NARA). For
information on the availability of this
material at NARA, call (202) 741–6030,
or go to: https://www.archives.gov/
federal_register/
code_of_federal_regulations/
ibr_locations.html.
FOR FURTHER INFORMATION CONTACT:
Harold A. Frankford, (215) 814–2108 or
by e-mail at frankford.harold@epa.gov.
SUPPLEMENTARY INFORMATION: The SIP is
a living document which the State
revises as necessary to address the
unique air pollution problems.
Therefore, EPA from time to time must
take action on SIP revisions containing
new and/or revised regulations to make
them part of the SIP. On May 22, 1997
(62 FR 27968), EPA revised the
procedures for incorporating by
reference Federally-approved SIPs, as a
result of consultations between EPA and
the Office of the Federal Register (OFR).
The description of the revised SIP
document, IBR procedures and
‘‘Identification of plan’’ format are
discussed in further detail in the May
22, 1997 Federal Register document. On
February 10, 2005 (70 FR 7024), EPA
published a Federal Register beginning
the new IBR procedure for West
Virginia. In this document, EPA is doing
the following:
1. Announcing the update to the IBR
material as of December 15, 2006.
2. Making corrections to the following
entries listed in the paragraph
52.2520(c) chart, as described below:
a. 45 CSR 14, ‘‘State citation [Chapter
16–20 or 45 CSR]’’ column—revising the
entries for the regulation citation and
Sections 45–14–2, 45–14–3, and 45–14–
19.
b. 45 CSR 14, ‘‘Title/subject’’
column—revising the entry for Section
45–14–25.
c. 45 CSR 14, ‘‘State effective date’’
column, all entries—revising the
effective date from ‘‘6/2/05’’ to ‘‘6/1/
05.’’
d. 45 CSR 19—Adding entries for
Tables 45–19A and 45–19B. These
tables were part of the regulatory text of
45 CSR 19 which EPA approved as a
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8903
revision of the West Virginia SIP on
November 2, 2006 (71 FR 64668), but
were inadvertently omitted from the
amended rule for 40 CFR 52.2520(c)
published at 71 FR 64670.
e. 45 CSR 19, ‘‘State citation [Chapter
16–20 or 45 CSR]’’ column—revising the
entries for the regulation citation and
Sections 45–14–2, 45–14–3, and 45–14–
17.
f. 45 CSR 19, ‘‘Title/subject’’
column—revising the entry for Section
45–19–23.
g. 45 CSR 19, ‘‘State effective date’’
column, all entries—revising the
effective date from ‘‘6/2/05’’ to ‘‘6/1/
05.’’
h. 45 CSR 14 and 45 CSR 19,
‘‘Additional explanation at 40 CFR
52.2565’’ column, all entries—adding
the SIP effective date for each entry.
3. Making corrections to the title of
the ‘‘Additional information’’ column in
the paragraph 52.2520(d) chart.
EPA has determined that today’s rule
falls under the ‘‘good cause’’ exemption
in section 553(b)(3)(B) of the
Administrative Procedures Act (APA)
which, upon finding ‘‘good cause,’’
authorizes agencies to dispense with
public participation, and section
553(d)(3) which allows an agency to
make a rule effective immediately
(thereby avoiding the 30-day delayed
effective date otherwise provided for in
the APA). Today’s rule simply codifies
provisions which are already in effect as
a matter of law in Federal and approved
State programs. Under section 553 of the
APA, an agency may find good cause
where procedures are ‘‘impractical,
unnecessary, or contrary to the public
interest.’’ Public comment is
‘‘unnecessary’’ and ‘‘contrary to the
public interest’’ since the codification
only reflects existing law. Immediate
notice in the CFR benefits the public by
removing outdated citations and
incorrect chart entries.
Statutory and Executive Order Reviews
A. General Requirements
Under Executive Order 12866 (58 FR
51735, October 4, 1993), this action is
not a ‘‘significant regulatory action’’ and
therefore is not subject to review by the
Office of Management and Budget. For
this reason, this action is also not
subject to Executive Order 13211,
‘‘Actions Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use’’ (66 FR 28355, May
22, 2001). This action merely approves
state law as meeting Federal
requirements and imposes no additional
requirements beyond those imposed by
state law. Accordingly, the
Administrator certifies that this rule
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Agencies
[Federal Register Volume 72, Number 39 (Wednesday, February 28, 2007)]
[Rules and Regulations]
[Pages 8900-8903]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-3426]
[[Page 8900]]
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
Minerals Management Service
30 CFR Part 250
RIN 1010-AD19
Oil and Gas and Sulphur Operations in the Outer Continental
Shelf--Incorporate API RP 65 for Cementing Shallow Water Flow Zones
AGENCY: Minerals Management Service (MMS), Interior.
ACTION: Final rule.
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SUMMARY: MMS is incorporating by reference the First Edition of the
American Petroleum Institute's Recommended Practice (RP) for Cementing
Shallow Water Flow (SWF) Zones in Deep Water Wells (API RP 65) into MMS
regulations. From 1987 to 2004, at least 113 Outer Continental Shelf
(OCS) wells encountered SWF to varying degrees. While the majority of
these wells experienced SWF to only a minor degree, there were
instances of severe encounters resulting in abandonment of well sites
and loss of wells. This action establishes best practices for cementing
wells in deep water areas of the OCS that are prone to SWF.
EFFECTIVE DATE: March 30, 2007. The incorporation by reference of the
publication listed in the regulation is approved by the Director of the
Federal Register as of March 30, 2007.
FOR FURTHER INFORMATION CONTACT: Kirk Malstrom, Office of Offshore
Regulatory Programs, Regulations and Standards Branch at (703) 787-
1751.
SUPPLEMENTARY INFORMATION:
Background: Since 1987, OCS operators have reported encountering
SWF problems while drilling in specific areas of the Gulf of Mexico
(GOM). Between 1987 and 2004, MMS is aware of at least 113 wells,
drilled by approximately 25 different operators, that encountered
problems with SWF. General information on SWFs, and maps showing the
location of areas in the GOM that have had documented cases of SWF, can
be viewed at our Web site: https://www.gomr.mms.gov/homepg/offshore/
safety/wtrflow.html.
This final rule updates the requirements for cementing operations
in 30 CFR Part 250 Subpart A--General, and Subpart D--Oil and Gas
Drilling Operations. Subpart A is amended to incorporate by reference
``API RP 65, Recommended Practice for Cementing SWF Zones in Deep Water
Wells,'' First Edition, September 2002. Subpart D is amended by adding
new subparagraph (e) to Sec. 250.415, detailing when API RP 65 is to
be evaluated by an operator in designing a cementing program. Some of
the key points of this final rulemaking include the following:
Use of this standard is not warranted for every OCS well,
or for all casing strings in a particular well. Its use is limited to
situations where there is a risk of encountering a SWF based upon past
drilling activity, seismic data or interpretation, or correlation of
data from offset wells in water depths greater than 500 feet (SWF has
not been encountered in wells in water depths less than 500 feet).
The risk associated with encountering a SWF is
characterized in one of two ways: (1) An area with an unknown SWF
potential, or (2) an area known to contain a SWF hazard.
For purposes of this final rule, these terms are defined
as follows:
An area with an unknown SWF potential means a zone or
geologic formation where neither the presence nor absence of potential
for a SWF has been confirmed.
An area known to contain a SWF hazard means a zone or
geologic formation for which drilling has confirmed the presence of
SWF.
Use of this standard is limited to water depths greater
than 500 feet for areas with an unknown SWF potential or areas known to
contain a SWF hazard. Data available to the MMS on the 113 wells that
have encountered SWF show that the water depths for these wells ranged
from approximately 500 feet to 9,675 feet, with an average water depth
of 3,560 feet.
As part of an operator's Application for Permit to Drill
(Form MMS-123), a statement needs to be included concerning how API RP
65 was evaluated by the operator. The operator must also detail which
of the cementing techniques from this standard were used as part of the
cementing program for a well drilled in either ``areas with an unknown
SWF potential'' or ``areas known to contain a SWF hazard.'' This
information will be evaluated by MMS during the review of the
application for permit to drill, and discussed with the operator as
appropriate.
Particular attention should be placed on evaluating,
designing, and implementing the cementing programs of both the surface
and conductor casing strings in wells requiring review under API RP 65.
Data available to the MMS on the 113 wells that have encountered SWF
show that the tops of the SWF zones ranged from approximately 450 feet
below mud line to 3,005 feet below mud line, with an average depth of
encounter of 1,305 feet below mud line. These depths are typical of the
setting depths of either conductor or surface casings.
Comments on the Rule: On May 22, 2006, MMS published a proposed
rule (71 FR 29280) to incorporate API RP 65. The public comment period
ended on July 21, 2006. MMS received six comments on the proposed rule.
All the comments came from companies or organizations working in the
oil and gas industry, including ExxonMobil, BP, Devon, BJ Services
Company, Schlumberger, and the Offshore Operators Committee (OOC). A
majority of the comments addressed similar issues mostly on the bias
toward using foam cement to address the SWF issue in sections of the
RP. Other comments expressed concern that singling out a specific
cementing technique hinders new methods and technology development, and
that this RP is not appropriate for other cementing applications. You
may view these comments on MMS' Public Connect on-line commenting
system at: https://www.mms.gov/federalregister/PublicComments/
APIRP65.htm.
Discussion of Comments:
Comment: Five out of the six comments wanted MMS to omit appendix F
of API RP 65. The comments suggest omitting this appendix due to a
perceived bias toward use of foam cementing. At the time the RP was
developed, foam was the best available cement system for use in
combating SWFs. Since development of this standard, new options have
been developed that are similarly efficient, i.e., non-compressible
systems. A few comments also recommend omitting appendices D and E due
to bias toward foam cement.
Response: MMS agrees that there appears to be a bias toward the use
of foam cement in appendices D, E, and F. However, under this final
rulemaking, MMS does not require a company to comply with the
provisions contained in these appendices or submit any information
related to these appendices. MMS views the appendices in this RP as
examples and background information. With specific reference to
appendix F, even with the apparent bias towards use of foam cement, MMS
still views the cementing matrix as a useful tool that can help a
company evaluate the performance of their cement jobs and improve upon
subsequent cement operations.
Comment: One comment provided further recommendations and alternate
language to change sections 11.1, 11.2, and 11.3 of the RP to eliminate
bias towards foam cement.
[[Page 8901]]
Response: MMS does not have the authority to change an API
document. While MMS could elect not to incorporate by reference
specified provisions of the document, it has instead opted to
incorporate API RP 65, First Edition (September 2002) in its entirety.
API updates these recommended practices periodically through a
consensus-based process. MMS believes it best that the changes
suggested by this commenter be proposed to the API review committee so
that they can be considered by a cross-section of industry. If the
proposals are adopted by API, and incorporated into a revised edition
of this RP, MMS would then have the option to consider incorporating
the revised edition into the regulations.
Procedural Matters
Regulatory Planning and Review (Executive Order (E.O.) 12866)
This final 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 final rule will not have an annual effect of $100 million
or more on the economy. It will 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 economic analysis prepared by the MMS indicates that, if the
techniques included in API RP 65 are evaluated by operating companies
in the planning phases of wells drilled in Areas with an Unknown SWF
Potential or Areas Known to Contain a SWF Hazard, this process will
increase the planning costs associated with these wells by no more than
$20,000 per well (industry estimate). This cost includes planning
associated with a full range of SWF mitigation measures. The measures
include casing centralization; pipe movement; use of light weight
cements such as a foam system; use of non-compressible systems; proper
mud circulation prior to cementing; site selection; the drilling of
pilot holes; setting extra strings of casing; use of measurement while
drilling technology; pressure while drilling technology; and use of a
drilling riser for shallow sections of a deep water well. Today, most
lessees conducting operations in SWF-prone areas already use most of
these techniques. As a result, additional costs associated with
implementing these techniques under this final rule will be negligible.
Based on information available to MMS, there have been a total of
1,275 wells drilled on the OCS in water depths of 500 feet or greater
during the period 2000-2004. The cost to industry over the past 5 years
for SWF mitigation would have been approximately $25.5 million ($20,000
per well x 1,275 wells = $25.5 million) if the evaluations required for
this final rule were conducted prior to drilling all of these wells. In
reality, a significant number of the 1,275 wells would have been
located in areas known to be free of SWF, and would not have required
an operating company to implement the techniques included in API RP 65
as part of their well planning efforts, resulting in a significantly
lower cost to the offshore industry.
Using the well data trends from 2000-2004, in water depths greater
than 500 feet, MMS estimates an average of 200 wells will be drilled
per year. Using the average of 200 wells, the estimated annual cost to
industry will be approximately $4 million ($20,000 per well x 200 wells
= $4 million). Based on actual drilling figures, estimated total well
costs are in excess of $40 million per well. Industry estimates of
$20,000 per well for SWF mitigation represents only 0.05 percent of
total well costs. The possible consequences of SWF, well abandonment,
or well loss are far more severe than the 0.05 percent of well costs
for SWF mitigation.
For the above reasons, the final rule will have a minor economic
effect on the offshore oil and gas industry.
(2) The final rule will not create a serious inconsistency or
otherwise interfere with action taken or planned by another agency. It
will not change the relationships of the OCS oil and gas leasing
program with other agencies' actions.
(3) This final rule will not alter the budgetary effects of
entitlements, grants, user fees or loan programs, or the rights or
obligations of their recipients. The changes proposed in this rule are
strictly planning requirements for specific well cementing processes to
prevent accidents and environmental pollution on the OCS.
(4) This final rule will not raise novel legal or policy issues.
Regulatory Flexibility Act (RFA)
The Department certifies that this final rule will not have a
significant economic effect on a substantial number of small entities
under the RFA (5 U.S.C. 601 et seq.).
The changes in the final rule will affect lessees and operators of
leases on the OCS. This could include about 130 active Federal oil and
gas lessees. Small lessees that operate under this rule fall under the
Small Business Administration's (SBA) North American Industry
Classification System (NAICS) codes 211111, Crude Petroleum and Natural
Gas Extraction, and 213111, Drilling Oil and Gas Wells. For these NAICS
code classifications, a small company is one with fewer than 500
employees. Based on these criteria, an estimated 70 percent of these
companies are considered small. This final rule will therefore affect a
substantial number of small entities.
As previously stated, there have been a total of 1,275 wells
drilled on the OCS in water depths of 500 feet or greater during the
period 2000-2004. Of the total 1,275 wells drilled, 1,107 were drilled
by large businesses and 168 by small businesses. The 168 wells were
drilled by a total of 15 small businesses. The 1,107 large business
wells correspond to 87 percent of all wells drilled, leaving 13 percent
as small business wells.
The final rule will have a minor economic effect on the oil and gas
offshore lessees and operators on the OCS, regardless of company size.
This is due to the relatively small SWF mitigation costs in relation to
the high drilling costs. Because of the high potential costs of SWF,
well abandonment, or well loss, in the overwhelming majority of cases
operators choose to perform improved and safer well cementing
procedures on their own initiative, not because of MMS safety
requirements. The final rule will add relatively little to the cost of
a well cementing procedure. Thus, there will not be a significant
impact on a substantial number of small entities under the RFA (5
U.S.C. 601 et seq.). The final rule will not cause the business
practices of any of these companies to change.
Your comments are important. The Small Business and Agriculture
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were
established to receive comments from small businesses 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 actions of MMS, call 1-888-734-
3247. You may comment to the Small Business Administration without fear
of retaliation. Disciplinary action for retaliation by an MMS employee
may include suspension or termination from employment with the DOI.
[[Page 8902]]
Small Business Regulatory Enforcement Fairness Act (SBREFA)
The final rule is not a major rule under the SBREFA (5 U.S.C.
804(2)). This final rule:
a. Will not have an annual effect on the economy of $100 million or
more.
b. Will not cause a major increase in costs or prices for
consumers, individual industries, Federal, State, or local government
agencies, or geographic regions.
c. Will 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.
Leasing on the OCS is limited to residents of the U.S. or companies
incorporated in the U.S. This final rule will not change that
requirement.
Unfunded Mandates Reform Act (UMRA)
This final rule will not impose an unfunded mandate on State,
local, or tribal governments or the private sector of more than $100
million per year. The final rule will not have a significant or unique
effect on State, local, or tribal governments or the private sector. A
statement containing the information required by UMRA (2 U.S.C. 1531 et
seq.) is not required.
Takings Implication Assessment (Executive Order 12630)
This final rule is not a governmental action capable of
interference with constitutionally protected property rights. Thus, MMS
did not need to prepare a Takings Implication Assessment according to
E.O. 12630, Governmental Actions and Interference with Constitutionally
Protected Property Rights.
Federalism (Executive Order 13132)
With respect to E.O. 13132, this final rule will not have
federalism implications. This final rule will not substantially and
directly affect the relationship between the Federal and State
governments. To the extent that State and local governments have a role
in OCS activities, this final rule will not affect that role.
Civil Justice Reform (Executive Order 12988)
With respect to E.O. 12988, the Office of the Solicitor has
determined that the final rule does not unduly burden the judicial
system and does meet the requirements of sections 3(a) and 3(b)(2) of
the Order.
Paperwork Reduction Act (PRA)
The revisions to 30 CFR 250 refer to, but do not change,
information collection requirements in current regulations. They impose
no new reporting or recordkeeping requirements and a submission to OMB
under Sec. 3507(d) of the PRA is not required. 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 number, you are not required to
respond. OMB approved the referenced information collection
requirements for 30 CFR part 250 under OMB Control Numbers 1010-0114
(22,538 burden hours), expiration October 31, 2007, and 1010-0141
(163,714 burden hours), expiration August 31, 2008.
National Environmental Policy Act (NEPA) of 1969
This rule does not constitute a major Federal action significantly
affecting the quality of the human environment. MMS has analyzed this
rule under the criteria of the NEPA and 516 Departmental Manual 6,
Appendix 10.4C(1). MMS completed a Categorical Exclusion Review for
this action and concluded that ``the rulemaking does not represent an
exception to the established criteria for categorical exclusion;
therefore, preparation of an environmental analysis or environmental
impact statement will not be required.''
Energy Supply, Distribution, or Use (Executive Order 13211)
Executive Order 13211 requires the agency to prepare a Statement of
Energy Effects when it takes a regulatory action that is identified as
a significant energy action. This final rule is not a significant
energy action; and therefore, will not require a Statement of Energy
Effects because it:
a. Is not a significant regulatory action under E.O. 12866,
b. Is not likely to have a significant adverse effect on the
supply, distribution, or use of energy, and
c. Has not been designated by the Administrator of the Office of
Information and Regulatory Affairs, OMB, as a significant energy
action.
Consultation With Indian Tribes (Executive Order 13175)
Under the criteria in E.O. 13175, we have evaluated this final rule
and determined that it has no potential effects on federally recognized
Indian tribes. There are no Indian or tribal lands on the OCS.
List of Subjects in 30 CFR Part 250
Administrative practice and procedure, Continental shelf,
Environmental protection, Incorporation by reference, Oil and gas
exploration, and Reporting and recordkeeping requirements.
Dated: January 31, 2007.
C. Stephan Allred,
Assistant Secretary--Land and Minerals Management.
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For the reasons stated in the preamble, the MMS amends 30 CFR part 250
as follows:
PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER
CONTINENTAL SHELF
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1. The authority citation for part 250 continues to read as follows:
Authority: 43 U.S.C. 1331, et seq., 31 U.S.C. 9701.
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2. In Sec. 250.198, the following document incorporated by reference
is added to the table in paragraph (e) in alphanumerical order.
Sec. 250.198 Documents incorporated by reference.
* * * * *
(e) * * *
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Incorporated by
Title of documents reference at
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* * * * * * *
API RP 65, Recommended Practice for Cementing Shallow Sec.
Water Flow Zones in Deep Water Wells, First Edition, 250.415(e)
September 2002, Product No. G56001...................
* * * * * * *
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[[Page 8903]]
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3. In Sec. 250.415, add a new paragraph (e) as set forth below.
Sec. 250.415 What must my casing and cementing programs include?
* * * * *
(e) a statement of how you evaluated the best practices included in
API RP 65, Recommended Practice for Cementing Shallow Water Flow Zones
in Deep Water Wells (incorporated by reference as specified in Sec.
250.198), if you drill a well in water depths greater than 500 feet and
are in either of the following two areas:
(1) An ``area with an unknown shallow water flow potential'' is a
zone or geologic formation where neither the presence nor absence of
potential for a shallow water flow has been confirmed.
(2) An ``area known to contain a shallow water flow hazard'' is a
zone or geologic formation for which drilling has confirmed the
presence of shallow water flow.
[FR Doc. E7-3426 Filed 2-27-07; 8:45 am]
BILLING CODE 4310-MR-P