Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations (2016)

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5 Under the authority granted by the Outer Continental Shelf Lands Act and subsequent amendments passed in 1978,1 the Bureau of Safety and Environmental Enforcement (BSEE)2 works to promote safe and envi- ronmentally responsible activity for oil and natural gas exploration, development, and production operations in U.S. federal waters. Over the past 30 years, BSEE, with support from industry, has sought to improve the safety and oversight of offshore oil and gas operations by applying new technologies and implementing more robust safety management systems, including the American Petroleum Institute’s (API’s) Recom- mended Practice (RP) 75—a comprehensive safety and environmental management program initially released in 1993. In the aftermath of the Macondo well blowout and Deepwater Horizon mobile offshore drilling unit (MODU) explosion3 in April 2010, BSEE has developed a mission statement and set of strategic goals4 to underpin its oversight and enforcement role and to enhance the safety of offshore oil 1 Background 1 See Public Law 95-372 as amended on September 18, 1978 (http://www.gpo.gov/fdsys/pkg /STATUTE-92/pdf/STATUTE-92-Pg629.pdf). 2 Initially, oversight authority rested with the U.S. Geological Survey. The Minerals Management Service (MMS) had authority for offshore oil and gas operations from 1982 to 2010. In June 2010, MMS was renamed the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE). On October 1, 2011, the U.S. Department of the Interior reorganized BOEMRE and established two new, independent bureaus—BSEE and the Bureau of Ocean Energy Management (BOEM). 3 For background on the blowout and explosion, see Presidential Commission 2011 and NAE and NRC 2012. 4 The mission statement and strategic goals are available at http://www.bsee.gov/WorkArea /DownloadAsset.aspx?id=85899347070.

6 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations and gas operations. The agency began urging industry to make a deeper commitment to a strong culture of safety in all its operations (Federal Register 2013) and to move toward a more risk-based safety regulatory program by passing the Safety and Environmental Management Systems (SEMS) regulations5 in 2010 and 2013. These regulations mandated the previously voluntary API RP 75 and moved beyond a prescriptive system that encouraged compliance through checklists of potential incidents of noncompliance. Over the past 3 years, BSEE has sought improvements in implementing its mandate for the use of emerging technologies and best available and safest technology (BAST).6 BSEE has attempted to bolster its risk-based regulatory program by identifying initiatives such as risk-based inspections, a near-miss and failure reporting system, and real-time monitoring (RTM) of offshore facilities.7 BSEE expects these initiatives—especially RTM—to help decrease many of the risks asso- ciated with and allow more effective oversight of offshore oil and gas development. Some industry representatives have agreed that focused remote RTM (RRTM) of exploration and production facilities could help to decrease some of the risks associated with offshore oil and gas operations (TRB 2015). As part of its evaluation and implementation of emerging technologies and BAST, BSEE has proposed hiring quali- fied staff for its new Engineering Technology Assessment Center, which would evaluate innovative technologies and proposed industry standards and provide engineering expertise necessary for developing offshore oil and gas regulations (DOI 2015, 9–10). The current BSEE hybrid regula- tory model incorporates both prescriptive and performance elements. Before any new BSEE initiatives, such as RTM, can be integrated into its regulatory program, the agency will need to decide on the structure of a new regulatory model. Improved communication with stakeholders will be necessary to prevent contradictory signals and practices. 5 See SEMS regulations in Subpart S (http://cfr.regstoday.com/30cfr250.aspx#30_CFR_250p SUBPART_S); see also TRB 2012. 6 See NAE and NRC 2013. 7 D. Morris, BSEE, presentation to the committee, December 2014; S. Dwarnick, presentation to the committee at the Houston workshop, April 2015.

Background 7 BSEE PRIORITIES AND CURRENT STATUS As one of its top objectives and on the basis of recommendations from external investigative reports on the Deepwater Horizon MODU explo- sion (OIG 2010; Presidential Commission 2011; NAE and NRC 2012),8 BSEE initiated exploration of how RTM and its associated technologies could transform the agency’s safety and environmental oversight of offshore operations. BSEE’s RTM initiative examined industry use of and experience with RTM, potential benefits of the use of RTM by BSEE, and many of the implementation challenges of incorporating RTM into the regulatory framework (BSEE 2014). BSEE also commissioned an external study to provide a broad industry overview of the use of RTM (see 838, Inc. 2014). These and other studies provided BSEE with inter- nally and externally generated recommendations for developing its own use of RTM. The recommendations ranged from limited application of RTM as a tool for improving inspections to its constant use in monitoring high-risk offshore operations. Lessons and key conclusions from these previous studies are examined in Chapter 2. BSEE is aware that RTM and its related technologies are advancing at a rapid pace, and the agency believes that RTM technologies could pro- vide access to more timely data that would permit the agency to improve identification and assessment of risks and would allow for more focused inspections.9 BSEE also considers RTM technologies and “risk-based inspection criteria” as a way to supplement and improve its offshore safety program (DOI 2015, 11) by integrating RTM with an enhanced SEMS and allowing the agency to prioritize which inspections and SEMS audits it should observe (DOI 2015, 8–9). Despite the opportunities for the management of safety in offshore operations, BSEE realizes that it must consider the implications of these RTM technologies for BSEE’s regulatory and oversight role. 8 In particular, see Recommendation 18 of OIG 2010 and Recommendations 3.4 and 3.5 of NAE and NRC 2012. 9 S. Dwarnick, presentation to the committee at the Houston workshop, April 2015.

8 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations RTM AND OFFSHORE OIL AND GAS OPERATIONS For several decades, the U.S. outer continental shelf (OCS) has been a major source of energy for the United States. Over the past 25 years, deepwater development has increased significantly. Deepwater oil produc- tion, as a percentage of all oil produced in the Gulf of Mexico, increased from 4 percent in 1990 to more than 80 percent in 2014, or from roughly 12 million barrels to more than 400 million barrels annually.10 BSEE reports that there are approximately 3,000 offshore facilities (MODUs and production platforms) operating on the OCS within U.S. federal waters (up to 200 miles offshore).11 Deepwater drilling and production operations on the OCS can be more complex than shallow-water or land-based drilling and can increase safety and environmental risks. In addition to moving into greater water depths, industry is drilling deeper wells offshore, where operations can experience higher pressures, higher temperatures, and greater uncertainty. Industry must manage these operations in a safe and environmentally responsible way, while BSEE must fulfill its mandate for enforcing off- shore safety and environmental regulations on the OCS. Monitoring of basic sensor data and equipment on the MODU has been an important part of safe drilling operations for some time. Advances in technology have improved the ability to capture data, which can be used for trend analysis and anomaly detection on the MODU. Improvements in telecommunications technology have allowed for data transmission to other locations, data aggregation from multiple sources, and data analysis—all while permitting remotely located staff to view real-time data and to engage with offshore personnel. The ability to collect and manage data through centralized onshore facilities has also allowed many contractors to provide enhanced services to the industry (Booth 2009). Operators and contractors have used on-site (on the rig) real-time data, such as surface measurements and downhole tool readings, to monitor 10 See http://www.data.bsee.gov/homepg/data_center/production/production/summary.asp. BSEE defines deepwater as water depth greater than 1,000 feet. 11 D. Morris, BSEE, presentation to the committee, December 2014. A more recent count indicates that there are about 2,300 offshore facilities; data are available at https://www.data.boem.gov /homepg/data_center/leasing/WaterDepth/WaterDepth.asp.

Background 9 dynamic drilling processes for decades. More recently, a few major oper- ators have incorporated enhanced onshore RTM (that is, RRTM) as part of their standard management practices.12 The business case for RRTM of drilling operations has generally been based on increased efficiencies and improved risk management through better operational planning and execution (Laurens and Kales 2014). The remote centers in operation today are staffed by highly experienced technicians, most with offshore experience, who monitor wells and com- municate directly with offshore facilities through formal and informal protocols. This arrangement provides an additional level of risk manage- ment (see Booth 2010). Offshore personnel have the primary responsibility and account- ability for decision making for all drilling operations, and industry rep resentatives have indicated the importance of situational awareness for offshore personnel on the MODU.13 During drilling operations, remote monitoring centers can focus on abnormal trends or well events. The centers provide an additional set of eyes for the MODU. They offer advice, support, and improved access to onshore technical expertise and allow offshore personnel to concentrate on drilling operations. If offshore personnel encounter operational issues requiring assistance or subject matter expertise, RRTM allows quick worldwide collaboration with spe- cialists, engineers, and managers who can remain onshore. In addition, remote centers can verify the validity of incoming information streams and allow for the development of a knowledge base and for long-term data analysis. At the committee’s first meeting, a Shell representative reported that RTM “improves HSE [health, safety, and the environment], reduces subsurface NPT [nonproductive time], and facilitates operational excel- lence.” He also stated that RTM is a support tool that “improves the opera- tor’s ability to effectively manage its leases.”14 12 G. Buck, Chevron, presentation to the committee, December 2014. 13 Although it is defined in many ways, situational awareness generally means knowing what is going on around you. According to the U.S. Coast Guard, “Situational Awareness is the ability to identify, process, and comprehend the critical elements of information about what is happening to the team with regards to the mission” (https://www.uscg.mil/auxiliary/training/tct/chap5.pdf). See the section on terms and assumptions below. 14 B. Gaston, Shell, presentation to the committee, December 2014.

10 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations At present, RRTM centers are operated primarily by the larger com- panies. To be effective, these centers require staff who can independently monitor several offshore wells, recognize anomalies, and engage con- structively with offshore and onshore staff. Technicians meeting this description are always in demand. Other companies may use some ele- ments of RTM, but many of these operators have expressed concerns with regard to the cost and practicality of the continuous collection of data and monitoring of all drilling operations by an onshore staff. Fur- thermore, if a larger number of operating companies attempted to set up 24-hours-a-day, 7-days-a-week RRTM centers, staffing them with people who have the requisite offshore experience might become more difficult. STUDY OBJECTIVE AND CHARGE The U.S. federal government has regulated the offshore oil and gas indus- try for decades. The Deepwater Horizon incident in 2010 was a landmark event that caused BSEE to rethink its approach to offshore safety regula- tion. To enhance its mandate for enforcing offshore safety and environ- mental regulations, in July 2014 BSEE requested that the Marine Board of the National Research Council conduct a study advising the agency on the use of RTM to improve the safety and reduce the environmental risks of offshore oil and gas operations. BSEE believed that RTM technology could transform its ability to conduct safety and environmental oversight of offshore operations. The charge of the committee is shown in Box 1-1. As a central part of its remit, BSEE asked the committee to conduct a work- shop on the use of RTM systems by industry and government. In discussions concerning the statement of task at the committee’s first meeting in December 2014, the sponsor confirmed that the workshop agenda and summary report (see TRB 2015) and the committee’s final report would focus on the Gulf of Mexico region, would address the five issues listed in the statement of task, and would be informed by the two reports (BSEE 2014 and 838, Inc. 2014) mentioned in the statement of task and discussed in Chapter 2. Because conduct of the Houston work- shop was such an important component of the committee’s statement of task, this final report draws heavily from presentations and discussions held at that workshop.

Background 11 BOX 1-1 Statement of Task An ad hoc committee will conduct a study to advise the Bureau of Safety and Environmental Enforcement (BSEE), U.S. Depart- ment of the Interior, on the use of real-time monitoring systems (RTM) by industry and government to reduce the safety and environmental risks of offshore oil and gas operations. As part of its efforts, the committee will organize and hold a public work- shop that is informed by a recently released BSEE external techni- cal report on RTM for oil and gas operations and the preliminary findings from an internal BSEE RTM workgroup. The committee will develop the workshop agenda, select and invite speakers and discussants, and moderate the discussions. Subsequently, the committee will (1) issue an interim report sum- marizing the presentations and discussion at the workshop and any findings the committee draws from the event and from the BSEE technical report; and (2) hold additional meetings to develop and provide a final report with findings and recommendations on the use of RTM by the offshore oil and gas industry and BSEE that address the five issues below. Specifically, the final report shall address 1. The critical operations and specific parameters that should be monitored from drilling and producing facilities to manage and mitigate environmental and safety risks (e.g., to reduce the risk of well kicks, blowouts, and other sources of casualties), 2. The role that automation and the use of predictive software tools should play in RTM, 3. The role that condition-based monitoring should play in RTM and how the operating equipment using condition- based monitoring could be tailored to and/or used for RTM, 4. Whether RTM should be incorporated into BSEE’s regulatory scheme in either a prescriptive or performance-based manner, and 5. How BSEE should leverage RTM to enhance its safety enforce- ment program.

12 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations TERMS AND ASSUMPTIONS The statement of task (Box 1-1) mentions both drilling and production operations but does not distinguish between them. In approaching its charge, the committee differentiated between drilling operations, which are more dynamic and fluid, and production operations, which are more constant. In addition, the committee believes that clarification of the following terms relevant to its statement of task is important: • Real time and real-time data are terms characterizing data that are reported at (or near) the time during which a process or event occurs, usually at the same time it happens—as opposed to being reported after an extended delay. “Real time” is a flexible term with varied defini- tions, and its use depends on the specific application. The speed of the relevant network is important, but there is not a strict speed threshold or an a priori fixed standard for deciding whether a system is in real time. • Real-time monitoring is a process through which operational per- sonnel can review, evaluate, and adjust data on a database or a system (such as offshore drilling, well completions, or production). RTM allows operational personnel to review the overall processes and func- tions performed on the data in real time. Typically, RTM software or an RTM system provides visual insights into the data, which can be collected from multiple or various sources on the MODU. RTM can also provide instant notifications or alerts concerning specific data- driven or administrator-specified events, such as when a data value goes out of a specified range. • Remote real-time monitoring: Personnel on the MODU have moni- tored critical data in real time for decades. As telecommunications technology advanced, data could be monitored in real time at a remote location, which is typically an onshore office of the operating company or service contractor. In the statement of task, the term real-time monitoring (RTM) is used, but it appears to refer to remote real-time monitoring (RRTM). In this report, RTM will be used in referring generally to monitoring data and operations in real time or in referring to the statement of task or to the BSEE internal report, since that is the acronym used in those places. However, in addressing the key aspect of the committee’s work, RRTM will be used when the report is specifically discussing remote real-time monitoring.

Background 13 • Condition-based maintenance (CBM), also known as predictive maintenance, is an approach to performing maintenance actions on the basis of the condition of a component as measured or predicted by diagnosing its state of health, detecting and isolating failure modes, and estimating the component’s remaining useful life. This differs from the approach of scheduling maintenance actions at planned times at which the component is replaced regardless of its actual condition. CBM uses real-time data to prioritize and optimize maintenance resources. With the increase of equipment instrumentation, advance- ments in communications technology, and the availability of better tools for analyzing condition data, maintenance personnel can deter- mine an appropriate time to perform maintenance on a component or piece of equipment by developing more accurate models of equipment health and degradation. In the statement of task, the term “condition- based monitoring” is used to refer to condition-based maintenance. In this report, the term “condition-based maintenance” will be used. • Technology. This report uses the term technology broadly to encompass both the equipment involved in offshore operations and the control and human systems that are deployed with the equipment. • Situational awareness is a term that implies a high degree of knowl- edge of the inputs and outputs of a system—a feel for situations and events that play out according to variables that the subject can control. A lack of or inadequate situational awareness has been identified as one of the key factors in accidents attributed to human error.15 PROPOSED RULEMAKING BSEE was already considering relevant regulations with regard to RTM when the committee was asked to advise the agency on the use of RTM systems. Between the committee’s first meeting in December 2014 and its Houston workshop on April 20–21, 2015, BSEE released two proposed 15 In addition to the U.S. Coast Guard definition of situational awareness cited above, according to Endsley, situation awareness “is an understanding of the state of the environment (including relevant parameters of the system).” Such situation awareness “provides the primary basis for subsequent decision making and performance in the operation of complex, dynamic systems” (Endsley 1995, 65).

14 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations rules. One, released February 24, 2015, concerned requirements for exploratory drilling on the Arctic OCS (Federal Register 2015b).16 The second, released April 17, 2015, concerned blowout preventer (BOP) systems and well control (Federal Register 2015a).17 Both proposed rules have RTM components as part of the new requirements: • The proposed Arctic drilling rule includes an RTM component (see Appendix A) that would require companies to gather real-time data for the BOP control system and the fluid-handling systems on the rig, in addition to data on a well’s downhole conditions during exploratory drilling operations, if downhole sensing equipment is installed. The Arctic rule would also require operators to transmit operations data to an onshore location, where the data would be stored and monitored by technically capable personnel who have the authority, in consultation with offshore personnel, to respond to an event or data abnormality (Federal Register 2015b, 9966). • The proposed BOP and well control rule incorporates many industry standards and revises or reforms areas of well design, well control, casing, cementing, real-time well monitoring, and subsea containment. The RTM component in the proposed BOP rule (see Appendix B) states that within 3 years of the rule’s final publication, well operations using a subsea BOP or surface BOP on a floating facility or opera- tions in a high-pressure, high-temperature environment must “gather and monitor real-time well data using an independent, automatic, and continuous monitoring system capable of recording, storing, and transmitting all aspects of . . . (a) the BOP control system; (b) the well’s fluid handling system on the MODU; and (c) the well’s downhole con- ditions with the bottom hole assembly tools (if tools are installed)” (Federal Register 2015a, 21573). Furthermore, the operator must trans- mit the collected data immediately to a designated onshore location, where the data must be monitored by technically qualified staff who 16 The new requirements for Arctic drilling are available at https://federalregister.gov/a/2015-03609. 17 During the final stage of the National Academies report review process, BSEE released its final Blowout Preventer Systems and Well Control rule. In view of the timing of the release, the com- mittee was unable to include additional information about the rule in its final report. The final rule is available at https://www.gpo.gov/fdsys/pkg/FR-2016-04-29/pdf/2016-08921.pdf.

Background 15 must maintain continuous contact with offshore personnel. When operations are completed, the operator “must preserve and store this data at a designated location for recordkeeping purposes,” and both data and location must be accessible to BSEE on request (Federal Reg- ister 2015a, 21574). With these proposed rules, BSEE appears to be preparing to incorpo- rate RRTM into its regulatory framework. At the April 2015 workshop, some industry participants believed that the issuance of the proposed BOP and well control rule the previous week constrained their dialogue with the committee and BSEE. However, BSEE representatives were present throughout the workshop and engaged in the discussion. Ultimately, the committee does not believe that it was limited in the number and types of questions that it could pose to industry representatives. The committee recognizes that neither proposed rule has been finalized during the draft- ing of its report. On the basis of the information that it has gathered, the committee believes that the findings and recommendations presented in this final report provide BSEE with a basis for incorporating RRTM into its regulatory framework for the offshore oil and gas industry. ORGANIZATION OF THIS REPORT Chapter 2 provides a brief overview of offshore oil and gas operations, outlines some of the processes and data flow interactions between oper- ators and contractors, and discusses industry experience with RRTM systems and their current application in drilling and production opera- tions. Chapter 3 discusses potential benefits of and considerations con- cerning the use of RRTM in offshore drilling and production operations. It examines the potential use of real-time data and RTM in CBM. Regu- latory considerations for BSEE are also discussed. Chapter 4 presents the committee’s consensus findings and recommendations for the applica- tion of RTM of offshore oil and gas operations on the U.S. OCS. REFERENCES Abbreviations BSEE Bureau of Safety and Environmental Enforcement DOI U.S. Department of the Interior

16 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations NAE National Academy of Engineering NRC National Research Council OIG Office of Inspector General TRB Transportation Research Board Booth, J. E. 2009. Drilling Operations Centers: A History of Functionality and Organiza- tional Purpose—The First Generation. Presented at Society of Petroleum Engineers Digital Energy Conference and Exhibition, Houston, Tex., April 7–8. Booth, J. E. 2010. Real-Time Drilling Operations Centers: A History of Functionality and Organizational Purpose—The Second Generation. Presented at Society of Petro- leum Engineers Intelligent Energy Conference and Exhibition, Utrecht, Netherlands, March 23–25. BSEE. 2014. Summary of BSEE’s Real-Time Monitoring Study. U.S. Department of the Interior. http://onlinepubs.trb.org/onlinepubs/sp/Cushing_Summary_of_BSEE _RTM_Study_March_2014.pdf. DOI. 2015. Budget Justifications and Performance Information, Fiscal Year 2016: Bureau of Safety and Environmental Enforcement. http://www.bsee.gov/uploadedFiles/BSEE /About_BSEE/Budget/FY2016_BSEE_Greenbook.pdf. 838, Inc. 2014. An Assessment of the Various Types of Real-Time Data Monitoring Systems Available for Offshore Oil and Gas Operations. Bureau of Safety and Environmental Enforcement, U.S. Department of the Interior. http://www.bsee.gov/uploadedFiles /BSEE/Technology_and_Research/Technology_Assessment_Programs/Reports/700-799 /707AA.pdf. Endsley, M. R. 1995. Measurement of Situation Awareness in Dynamic Systems. Human Factors, Vol. 37, No. 1, pp. 65–84. http://hfs.sagepub.com/content/37/1/65. Federal Register. 2013. Final Safety Culture Policy Statement; Notice. Vol. 78, No. 91, May 10, pp. 27419–27421. https://federalregister.gov/a/2013-11117. Federal Register. 2015a. Oil and Gas and Sulphur Operations in the Outer Continental Shelf—Blowout Preventer Systems and Well Control; Proposed Rule. Vol. 80, No. 74, April 17, pp. 21503–21585. https://federalregister.gov/a/2015-08587. Federal Register. 2015b. Oil and Gas and Sulphur Operations on the Outer Continental Shelf—Requirements for Exploratory Drilling on the Arctic Outer Continental Shelf; Proposed Rule. Vol. 80, No. 36, Feb. 24, pp. 9915–9971. https://federalregister.gov /a/2015-03609. Laurens, M., and M. Kales. 2014. Moving Beyond Real-Time Operations Centres. Pre- sented at International Petroleum Technology Conference, Doha, Qatar, Jan. 20–22. NAE and NRC. 2012. Macondo Well Deepwater Horizon Blowout: Lessons for Improving Offshore Drilling Safety. National Academies Press, Washington, D.C. https://www .nae.edu/Publications/Reports/53926.aspx.

Background 17 NAE and NRC. 2013. Best Available and Safest Technologies for Offshore Oil and Gas Operations: Options for Implementation. National Academies Press, Washington, D.C. http://www.nap.edu/download.php?record_id=18545. OIG. 2010. A New Horizon: Looking to the Future of the Bureau of Ocean Energy Man- agement, Regulation and Enforcement. CR-EV-MMS-0015-2010. U.S. Department of the Interior, Washington, D.C. https://www.doioig.gov/sites/doioig.gov/files/A-New -Horizon-Public.pdf. Presidential Commission. 2011. Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling. Report to the President. http://www.gpo.gov/fdsys/pkg/GPO -OILCOMMISSION/pdf/GPO-OILCOMMISSION.pdf. TRB. 2012. Special Report 309: Evaluating the Effectiveness of Offshore Safety and Envi- ronmental Management Systems. Transportation Research Board of the National Academies, Washington, D.C. http://www.trb.org/Publications/Blurbs/167249.aspx. TRB. 2015. Conference Proceedings on the Web 17: Application of Real-Time Monitoring of Offshore Oil and Gas Operations: Workshop Report. Transportation Research Board, Washington, D.C. http://www.trb.org/main/blurbs/173606.aspx.