On March 17, 2016, the Obama Administration announced through the Bureau of Ocean Energy Management (“BOEM”) its newly proposed air quality emission regulations for offshore oil and gas activities. According to BOEM, the primary benefit of this rule is “to ensure that offshore facilities and operations are in compliance with the air quality objectives and requirements of the OCSLA.” The proposal includes reductions in emissions of Volatile Organic Compounds, Nitrogen Oxide, Sulfur Oxide, Carbon Monoxide, and Particulate Matter. These measures will likely affect all activities conducted in Federal waters, including the Outer-Continental Shelf (“OCS”), of the Western and Central Gulf of Mexico, and the Artic. The remaining OCS areas will remain under the permitting and jurisdiction of the Environmental Protection Agency.
A major change to the existing regulations will be to “require a lessee or operator to add together emissions generated by proximate activities within one nautical mile from multiple facilities, whether or not they are described in a single plan.” The aggregate emissions from those facilities would then be combined for analysis. Therefore, if an operator utilizes various facilities in close proximity to one another for a single plan or project, the aggregate emissions of all of the facilities will be combined and considered one singular unit for regulatory compliance. This may pose compliance issues for operators utilizing a singular network of facilities to facilitate operations over a vast area as these network projects.
The new proposal also includes changes to the emission calculations for support vessels. Under the old regulations, emissions from supply vessels were considered part of a facility’s operations only if within 25 miles. The new proposed regulations would consider a support vessel’s emissions for the entirety of the vessel’s voyage. This change could pose a significant impact on facilities’ regulatory compliance based on the nature of deepwater drilling and vast distances now serviced by these support vessels. Also, this proposal does not provide specifics as to what constitutes a “support vessel.” A broad application could further reduce a facility’s allotted emissions.
In its Regulatory Impact Analysis, BOEM estimates the industry compliance costs for activities in the first year will be $23 million, the peak year (2020) $49 million, and $290 million over 10 years discounted at 3 percent.
The updated regulations proposed by the Administration will not only affect new plans or projects submitted to the Bureau, but will also affect previously approved plans, which will need to be made compliant. The public comment period has been extending to June 20, 2016. The press release addressing these new proposed regulations, including information on how to submit a comment may be found here.