Oil and Gas and Sulphur Operations in the Outer Continental Shelf-Requirements for Subsurface Safety Valve Equipment, 33333-33337 [E8-13223]

Agencies

• DEPARTMENT OF THE INTERIOR
• Minerals Management Service

[Federal Register Volume 73, Number 114 (Thursday, June 12, 2008)]
[Proposed Rules]
[Pages 33333-33337]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-13223]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250

[Docket ID: MMS-2007-OMM-0066]
RIN 1010-AD45


Oil and Gas and Sulphur Operations in the Outer Continental 
Shelf-Requirements for Subsurface Safety Valve Equipment

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Proposed rule.

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SUMMARY: The MMS proposes to incorporate the Eleventh Edition of the 
American Petroleum Institute's Specification for Subsurface Safety 
Valve Equipment (API Spec 14A), into the regulations. The rule also 
proposes that lessees and operators provide supporting design 
verification information for subsurface safety valves intended for use 
in high pressure high temperature environments. The MMS proposes to 
incorporate the Eleventh Edition of API Spec 14A because it updated the 
design validation and functional testing requirements, incorporated new 
design changes, and corrected ambiguous areas open to 
misinterpretation. These proposed changes would ensure that lessees and 
operators use the best available and safest technologies while 
operating in the Outer Continental Shelf.

[[Page 33334]]


DATES: Submit comments by August 11, 2008. The MMS may not fully 
consider comments received after this date.

ADDRESSES: You may submit comments on this rulemaking by any of the 
following methods. Please use the Regulation Identifier Number (RIN) 
1010-AD45 as an identifier in your message. See also Public 
Availability of Comments under Procedural Matters.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Under the tab ``More Search Options,'' click Advanced Docket Search, 
then select ``Minerals Management Service'' from the agency drop-down 
menu, then click ``submit.'' In the Docket ID column, select MMS-2007-
OMM-0066 to submit public comments and to view supporting and related 
materials available for this rulemaking. Information on using 
Regulations.gov, including instructions for accessing documents, 
submitting comments, and viewing the docket after the close of the 
comment period, is available through the site's ``User Tips'' link. The 
MMS will post all comments.
     Mail or hand-carry comments to the Department of the 
Interior; Minerals Management Service; Attention: Regulations and 
Standards Branch (RSB); 381 Elden Street, MS-4024; Herndon, Virginia 
20170-4817. Please reference ``Incorporate API Spec 14A for Subsurface 
Safety Valve Equipment, 1010-AD45'' in your comments and include your 
name and return address.

FOR FURTHER INFORMATION CONTACT: Wilbon Rhome, Regulations and 
Standards Branch at (703) 787-1587.

SUPPLEMENTARY INFORMATION: The MMS has conducted a thorough review of 
the Eleventh Edition of the American Petroleum Institute's 
Specification for Subsurface Safety Valve Equipment, 14A (API Spec 14A) 
and has determined that the new edition should be incorporated into the 
regulations to ensure the use of the best available and safest 
technologies for downhole safety valves. We also propose adding a new 
section (30 CFR 250.807) to the regulations that identify additional 
safety valve information requirements for high pressure high 
temperature (HPHT) environments.
    The Eleventh Edition contains significant technological and design 
changes that will increase the safety of downhole operations in the 
Outer Continental Shelf (OCS). The updated API Spec 14A is an 
improvement over the current API Spec 14A, Tenth Edition incorporated 
in the regulations for the following reasons:
     Strengthens the guidelines for preparation of a functional 
specification by the user/purchaser to submit to the manufacturer/
supplier when ordering equipment addressed by this standard. Functional 
characteristics in the specification must include, but are not limited 
to, well parameters, operational parameters, environmental 
compatibility, and compatibility with related well equipment.
     Adds new design verification and validation guidelines.
     Clarifies procedures in areas such as design methodology 
and verification.
     Introduces state-of-the-art technological advances to 
improve downhole performance.

    When Hurricanes Katrina and Rita caused catastrophic damage to 
equipment in the Gulf of Mexico, most of the subsurface safety valves 
(SSSV) performed exactly according to design; however, there were 
recorded minor incidents. Incorporating the revised API Spec 14A should 
lead to improved performance of downhole safety valves.
    While the API Spec 14A Eleventh Edition contains many improvements 
that we support, MMS does not fully agree with the revision that allows 
a reduced safety factor for the higher pressure valve body test. This 
reduced safety factor for the design of downhole safety valves 
installed in wells drilled in HPHT environments is a concern that MMS 
cannot overlook. Therefore, MMS proposes through this rulemaking that 
lessees and operators provide supporting design verification 
information for SSSVs planned for use in HPHT environments. This 
supporting information must show that the design of the SSSV to be 
installed in an HPHT environment provides the same level of safety and 
environmental protection that was previously provided by the design 
standards contained in API Spec 14A Tenth Edition.

Background Information on Design Qualification Testing

    The design qualification testing requirements in the API Spec 14A, 
Tenth Edition requires that a SSSV be pressure tested to 150 percent of 
the rated working pressure of the valve (e.g., a 10,000 psig SSSV would 
be tested to 15,000 psig of the rated working pressure regardless of 
the magnitude of the rated working pressure). The API Spec 14A, 
Eleventh Edition pressure testing methodology results in a decreasing 
test pressure factor from 150 percent at 10,000 psig, to 133 percent at 
15,000 psig, to 125 percent at 20,000 psig rated working pressure. 
Wells and related equipment with a rated working pressure of 15,000 
psig or greater are subjected to a hydrostatic test pressure of 5,000 
psig greater than the rated working pressure. As a well becomes more 
critical, the margin of safety decreases as a result of the decreasing 
test pressure factor. Therefore, this proposed rule would address this 
safety issue by requiring the lessee or operator to provide additional 
information when SSSVs and related equipment are planned to be 
installed in a HPHT environment. These additional informational 
requirements are found in new 30 CFR 250.807 titled ``Additional 
requirements for subsurface safety valves installed in high pressure 
high temperature environments.'' Wells and related equipment with a 
rated working pressure less than or equal to 15,000 psig would not be 
affected by the new requirements in 30 CFR 250.807.

Proposed Requirements

    The new 30 CFR 250.807 provisions would require the lessee or 
operator to provide additional information when SSSVs and related 
equipment are intended to be installed in a HPHT environment. The 
lessee or operator would be required to include such information in an 
Application for Permit to Drill (APD), Application for Permit to Modify 
(APM), or Deepwater Operations Plans (DWOP) and must demonstrate that 
the SSSV and related equipment are fit-for-purpose for performing in 
HPHT environments. For the purpose of this rulemaking, HPHT is 
considered a pressure rating greater than 15,000 psig, or a temperature 
rating equal to or greater than 350 degrees Fahrenheit under one of the 
following well conditions:
    1. A maximum anticipated surface pressure greater than 15,000 psig 
on the seafloor for a well with a subsea wellhead or at the surface for 
a well with a surface wellhead.
    2. A shut-in tubing pressure greater than 15,000 psig on the 
seafloor for a well with a subsea wellhead or at the surface for a well 
with a surface wellhead, or
    3. A flowing temperature equal to or greater than 350 degrees 
Fahrenheit on the seafloor for a well with a subsea wellhead or the 
surface for a well with a surface wellhead.
    Related equipment refers to wellheads, tubing heads, tubulars, 
packers, SSSVs, threaded connections, seals, seal assemblies, 
production trees, equipment associated with coiled tubing, snubbing, 
operations, chokes, well control equipment and any other equipment that 
will be exposed to the reservoir pressure and/or temperature with rated 
working pressures greater than 15,000 psig, or temperatures greater 
than 350 degrees Fahrenheit.

[[Page 33335]]

Procedural Matters

Regulatory Planning and Review (Executive Order (E.O.) 12866)

    This proposed 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 proposed rule (incorporation of the new API Spec 14A and 
the new 30 CFR 250.807) would not have an annual effect of $100 million 
or more on the economy. It would 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 primary purpose for this proposed rule is to establish 
minimum acceptable requirements for SSSVs. The requirements apply to 
SSSVs as well as all components that establish tolerance and/or 
clearances which may affect performance or interchangeability of SSSVs. 
This rule also would set minimum requirements for SSSVs and related 
equipment to conform to international standards and would require 
compliance by supplier/manufacturers. Finally, this rule would 
establish minimum fit-for-purpose criteria for HPHT equipment operating 
over 15,000 psig or 350 degrees Fahrenheit; and, would require lessees 
and operators to provide information that demonstrates to the MMS that 
their SSSVs are properly designed to operate in HPHT environments.
    The oil and gas industry took the lead in revising API Spec 14A, 
Eleventh Edition. The industry and API have encouraged the promulgation 
of the proposed rule incorporating API Spec 14A. The API Spec 14A 
standard is now accepted as an industry standard both domestically and 
internationally; and, consequently, the impact of this proposed rule on 
the oil and gas industry is expected to be negligible.
    The impact of the new requirements of 30 CFR 250.807 will also be 
negligible. A review of drilling activity indicates that, if the 
current trend continues, there may not be any HPHT wells that exceed 
15,000 psig at the wellhead drilled and completed in the next 3 years. 
However, there is activity in the Mobile Bay region and in the western 
Gulf of Mexico where the working environment for SSSVs and related 
equipment may reach over 350 degrees Fahrenheit, flowing tubing 
temperature. The MMS estimates that approximately 10 to 20 APD's or 
APM's may be submitted by lessees or operators over the next 3 years 
which could be subject to the proposed rule. These submittals would be 
required to provide additional information on SSSVs and related 
equipment for wells to be drilled and completed that may be classified 
as HPHT completions.
    The proposed provisions of 30 CFR 250.807 would require lessees and 
operators to provide supporting design verification information. The 
information that the proposed rule would require is engineering data 
and analytical analysis for HPHT equipment. This is the kind of 
information that a prudent operator should have available for operating 
in HPHT environments. The MMS estimates the cost to comply with this 
proposed rule would be $4,000 per well. Companies will be required to 
gather and present well data that should be readily available if 
requested by MMS for review. We estimate that the hourly burden to 
produce this data would be approximately 40 hours for each well at an 
hourly rate of $100 per hour and would cost $4,000 per well. (40 hours 
at $100 per hour x 1 well = $4,000).
    The estimated cost to industry over the next 3 years, based on the 
high estimate of 20 APD's or APM's per year, would be approximately 
$80,000 ($4,000 per well x 20 wells = $80,000). As a result, additional 
costs associated with implementing these new requirements would be 
negligible given the overall costs of off-shore oil and gas production. 
Additional costs could be incurred if a lessee engages an independent 
consultant to prepare the fitness-for-purpose report for HPHT 
application with readily available information. However, these costs 
are very small when compared to the cost of drilling a well in an HPHT 
environment, which can cost over $150 million.
    (2) The proposed rule (incorporation of the new API Spec 14A and 
the new 30 CFR 250.807) would not create a serious inconsistency or 
otherwise interfere with action taken or planned by another agency.
    (3) This proposed rule (incorporation of the new API Spec 14A and 
the new 30 CFR 250.807) does not alter the budgetary effects of 
entitlements, grants, user fees or loan programs, or the rights or 
obligations of their recipients.
    (4) This proposed rule (incorporation of the new API Spec 14A and 
the new 30 CFR 250.807) does not raise novel legal or policy issues. 
The proposed rule simply seeks to improve MMS safety regulations by 
maintaining them current with improved oil and gas industry standards 
and requires lessees and operators to meet additional criteria for 
safety reasons to demonstrate fitness-for-purpose for HPHT 
applications.

Regulatory Flexibility Act

    The Department of the Interior (DOI) certifies that this proposed 
rule would not have a significant economic effect on a substantial 
number of small entities under the Regulatory Flexibility Act (5 U.S.C. 
601 et seq.).
    The new API Spec 14A would affect lessees and operators of oil and 
gas leases on the OCS. This may include approximately 130 active 
Federal oil and gas lessees. Lessees that conduct business under this 
rule are coded under the Small Business Administration's (SBA) North 
American Industry Classification System (NAICS) with the following: 1. 
No. 211111 (Crude Petroleum and Natural Gas Extraction); and, 2. No. 
213111 (Drilling Oil and Gas Wells). For these NAICS code 
classifications, a small company is defined as one with fewer than 500 
employees. Based on these criteria, an estimated 70 percent of these 
companies (91) are considered small. Therefore, this proposed rule 
would affect a substantial number of small entities.
    However, with respect to the new 30 CFR 250.807, the MMS has 
determined that it is unlikely that a substantial number of small 
companies are currently involved with HPHT wells on the OCS due to the 
expense and the advanced technical expertise needed for drilling, 
completing, and producing HPHT wells. While it is possible that the 
operations of small companies may involve HPHT wells on the OCS, the 
MMS believes that any company, regardless of size, attempting to 
complete a HPHT well must do the engineering evaluations proposed in 
this rulemaking to insure the safe operation of such activities and to 
avoid a catastrophic failure that could result in loss of life or 
serious environmental damage.
    The costs of the additional requirements for HPHT wells would not 
have a significant economic effect on a substantial number of small 
companies because very few, if any, would be involved in the activities 
that would require compliance with these additional requirements. As 
mentioned previously, the costs of complying with these proposed 
requirements are very small when compared to the cost of drilling a 
HPHT well, which can cost over $150 million. The proposed rule 
incorporating the new API Spec 14A would not have a significant 
economic effect on a substantial number of small companies because the 
revised API Spec 14A will not impose significant costs or burdens on 
any lessees or operators.
    Your comments are important. The Small Business and Agriculture

[[Page 33336]]

Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were 
established to receive comments from small business 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 enforcement actions of the MMS, 
call toll-free 1-888-734-3247. You may submit comments to the Small 
Business Administration without concern for retaliation. Disciplinary 
action for retaliation by an MMS employee may include suspension or 
termination from employment with the DOI.

Small Business Regulatory Enforcement Fairness Act

    The proposed rule (incorporation of the new API Spec 14A and the 
new 30 CFR 250.807) is not a major rule under 5 U.S.C. 804(2) of the 
Small Business Regulatory Enforcement Act. This proposed rule:
    a. Would not have an annual effect on the economy of $100 million 
or more. The proposed rule would not impose any significant costs to 
lessees or operators. The costs associated with the proposed rule would 
involve the cost of the new document (API Spec 14A), and any cost 
associated with gathering and presenting the well data to MMS. As 
mentioned previously, the costs of complying with these proposed 
requirements are very small when compared to the cost of drilling a 
HPHT well, which can cost over $150 million.
    b. Would not impose significant increases in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions.
    c. Would 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.

Unfunded Mandates Reform Act

    This proposed rule would not impose an unfunded mandate on State, 
local, or tribal governments or the private sector of more than $100 
million per year. The proposed rule would not have a significant or 
unique effect on State, local, or tribal governments or the private 
sector. A statement containing the information required by the Unfunded 
Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required.

Takings Implication Assessment (E.O. 12630)

    Under the criteria in E.O. 12630, this proposed rule does not have 
takings implications. The proposed rule is not a governmental action 
capable of interference with constitutionally protected property 
rights. A takings implication assessment is not required.

Federalism (E.O. 13132)

    Under the criteria in E.O. 13132, this proposed rule does not have 
federalism implications to warrant the preparation of a Federalism 
Assessment. This proposed rule would not affect the relationship 
between the Federal and State governments. To the extent that State and 
local governments have a role in OCS activities, this proposed rule 
would not affect that role. A Federalism Assessment is not required.

Civil Justice Reform (E.O. 12988)

    This rule complies with the requirements of E.O. 12988. 
Specifically, this rule:
    (a) Meets the criteria of section 3(a) requiring that all 
regulations be reviewed to eliminate errors and ambiguity and be 
written to minimize litigation; and
    (b) Meets the criteria of section 3(b)(2) requiring that all 
regulations be written in clear language and contain clear legal 
standards.

Consultation With Indian Tribes (E.O. 13175)

    Under the criteria in E.O. 13175, we have evaluated this proposed 
rule and determined that it has no potential effects on federally 
recognized Indian tribes. There are no Indian or tribal lands on the 
OCS.

Paperwork Reduction Act (PRA)

    The proposed revisions to 30 CFR 250, subpart H regulations (30 CFR 
250.807) will specify that lessees and operators must submit a brief 
description in their APD, APM, or DWOP when SSSVs and related equipment 
are intended to perform in HPHT environments. The information that 
would be required by the proposed rule should be readily available 
since a prudent operator would already possess this information for 
daily operations. Lessees and operators must then provide this existing 
information as part of their APM, APD, or DWOP submissions. The MMS has 
determined that the number of hours for paperwork burdens currently 
approved for preparation of APD's (3,135 annual burden hours) and APM's 
(9,900 annual burden hours) pursuant to the requirements set forth in 
30 CFR 250, subpart D (1010-0141) and for DWOP's (51,000 annual burden 
hours) in 30 CFR 250, subpart B (1010-0151), are more than enough to 
accommodate this minor addition to existing submissions. Therefore, due 
to the fact that the burden hours are effectively included under 
currently approved OMB information collections, the proposed rule does 
not require a submission to OMB for review and approval under section 
3507(d) of the PRA.
    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 control number, you are not required to respond. The OMB 
approved the referenced information collection requirements for 30 CFR 
250, subparts B, D, and H under OMB Control Numbers 1010-0151 (321,817 
hours; expiration 7/31/08), 1010-0141 (163,954 hours; expiration 8/31/
08) and 1010-0059 (17,598 hours; expiration 2/28/09).

National Environmental Policy Act

    This rule does not constitute a major Federal action significantly 
affecting the quality of the human environment. The MMS has analyzed 
this proposed rule under the criteria of the National Environmental 
Policy Act and 516 Departmental Manual 15. This proposed rule meets the 
criteria set forth in 516 Departmental Manual 2 (Appendix 1.10) for a 
Departmental ``Categorical Exclusion'' in that this proposed rule is 
``* * * of an administrative, financial, legal, technical, or 
procedural nature and whose environmental effects are too broad, 
speculative, or conjectural to lend themselves to meaningful analysis * 
* *.'' This proposed rule also meets the criteria set forth in 516 
Departmental Manual 15.4(C)(1) for a MMS ``Categorical Exclusion'' in 
that its impacts are limited to administration, economic or 
technological effects. Further, the MMS has analyzed this proposed rule 
to determine if it meets any of the extraordinary circumstances that 
would require an environmental assessment or an environmental impact 
statement as set forth in 516 Departmental Manual 2.3, and Appendix 2. 
The MMS concluded that this rule does not meet any of the criteria for 
extraordinary circumstances as set forth in 516 Departmental Manual 2 
(Appendix 2).

Data Quality Act

    In developing this proposed rule we did not conduct or use a study, 
experiment, or survey requiring peer review under the Data Quality Act 
(Pub. L. 106-554).

[[Page 33337]]

Effects on the Energy Supply (E.O. 13211)

    This rule is not a significant energy action under the definition 
in E.O. 13211. A Statement of Energy Effects is not required.

Clarity of This Regulation

    We are required by E.O. 12866, E.O. 12988, and by the Presidential 
Memorandum of June 1, 1998, to write all rules in plain language. This 
means that each rule we publish must:
    (a) Be logically organized;
    (b) Use the active voice to address readers directly;
    (c) Use clear language rather than jargon;
    (d) Be divided into short sections and sentences; and
    (e) Use lists and tables wherever possible.
    If you believe that we have not met these requirements, send us 
comments by one of the methods listed in the ADDRESSES section above. 
To better help us revise the rule, your comments should be as specific 
as possible. For example, you should tell us the numbers of the 
sections or paragraphs that you find unclear, which sections or 
sentences are too long, the sections where you feel lists or tables 
would be useful, etc.

Public Availability of Comments

    Before including your address, phone number, e-mail address, or 
other personal identifying information in your comment, you should be 
aware that your entire comment--including your personal identifying 
information--may be made available to the public. While you request in 
your comment that your personal identifying information be withheld 
from public review, we cannot guarantee that we will be able to do so.

List of Subjects in 30 CFR Part 250

    Continental shelf, Environmental protection, Incorporation by 
reference, Public lands--mineral resources, Reporting and recordkeeping 
requirements.

    Dated: May 28, 2008.
C. Stephen Allred,
Assistant Secretary--Land and Minerals Management.
    For the reasons stated in the preamble, the MMS proposes to amend 
30 CFR part 250 as follows:

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:

    Authority: 31 U.S.C. 9701, 43 U.S.C. 1334.

    2. In Sec.  250.198, the table in paragraph (e), revise the entry 
for API Spec 14A to read as follows:


Sec.  250.198  Documents incorporated by reference.

* * * * *
    (e) * * *

------------------------------------------------------------------------
                                                        Incorporated by
                 Title of documents                      reference at
------------------------------------------------------------------------
 
                              * * * * * * *
API Spec 14A, Eleventh Edition October 2005,                        Sec.
 Specification for Subsurface Safety Valve                 250.806(a)(3)
 Equipment, Effective Date: May 1, 2006; ISO 10432:
 2004, API Stock No. GX14A11........................
 
                              * * * * * * *
------------------------------------------------------------------------

    3. In Sec.  250.806, remove the second sentence in paragraph (a)(3) 
and add two sentences in its place to read as follows:


Sec.  250.806  Safety and pollution prevention equipment quality 
assurance requirements.

    (a) * * *
    (3) * * * All SSSVs must meet the technical specifications of API 
Specification 14A (incorporated by reference as specified in Sec.  
250.198). However, SSSVs and related equipment planned to be used in 
high pressure high temperature environments must meet the additional 
requirements set forth in Sec.  250.807.
* * * * *
    4. Redesignate Sec.  250.807 as Sec.  250.808 and add new Sec.  
250.807 to read as follows:


Sec.  250.807  Additional requirements for subsurface safety valves 
installed in high pressure high temperature environments (HPHT).

    (a) If you plan to install SSSVs and related equipment in a HPHT 
environment, you must submit detailed information with your Application 
for Permit to Drill (APD), Application for Permit to Modify (APM), or 
Deepwater Operations Plan (DWOP) that demonstrates the SSSVs and 
related equipment are capable of performing in the applicable HPHT 
environment. Your detailed information must include the following:
    (1) A discussion of how you determined that the SSSVs and related 
equipment are fit-for-service;
    (2) A discussion on the SSSVs design validation and functional 
testing process and procedures used, and explain why the process and 
procedures ensure that the SSSVs and related equipment are fit-for-
service in the applicable HPHT environment.
    (b) For this section, HPHT environment means when one or more of 
the following well conditions exist:
    (1) The maximum anticipated surface pressure is greater than 15,000 
psig on the seafloor for a well with a subsea wellhead or at the 
surface for a well with a surface wellhead;
    (2) The shut-in tubing pressure is equal to or greater than 15,000 
psig on the seafloor for a well with a subsea wellhead or at the 
surface for a well with a surface wellhead; or
    (3) The flowing temperature is equal to or greater than 350 degrees 
Fahrenheit on the seafloor for a well with a subsea wellhead or the 
surface for a well with a surface wellhead.
    (c) For this section, related equipment includes wellheads, tubing 
heads, tubulars, packers, threaded connections, seals, seal assemblies, 
production trees, chokes, well control equipment and any other 
equipment that will be exposed to the HPHT environment.

 [FR Doc. E8-13223 Filed 6-11-08; 8:45 am]
BILLING CODE 4310-MR-P