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

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89 The committee’s charge was to advise the Bureau of Safety and Environ- mental Enforcement (BSEE), U.S. Department of the Interior, on the use of remote real-time monitoring (RRTM) systems by industry and gov- ernment to improve the safety and reduce the environmental risks of off- shore oil and gas operations. As a central part of its remit, the committee held a public workshop, which has guided the findings and recommenda- tions presented in this final report. Specifically, the committee’s workshop and final report were to address the critical operations and parameters to be monitored, the role of automation and predictive software, the role of condition-based maintenance (CBM) in RRTM, whether RRTM should be incorporated in BSEE’s regulatory scheme, and how BSEE should leverage RRTM to enhance its safety enforcement program. Chapter 2 outlined the nature of offshore oil and gas operations and discussed industry experience with RRTM systems and their application in the monitoring of drilling and production operations. The chapter also briefly discussed two previous reports concerning RRTM and reviewed the committee’s April 2015 workshop summary report. Chapter 3 briefly examined best available and safest technology (BAST) as it relates to RRTM. The chapter discussed the benefits of RRTM in the oil and gas industry on the basis of four use cases. Considerations and challenges concerning the application of RRTM to the delivery of these use cases were presented. Issues discussed included data management, cybersecurity, the role of RRTM in risk-based regulations, and the poten- tial of using real-time data for CBM. The committee’s consensus findings and recommendations are presented below. Finding 1. The use of RRTM is highly variable across the offshore oil and gas industry. No industry standard or standard practice for the 4 Findings and Recommendations

90 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations implementation of RRTM exists, and the industry exhibits varying levels of maturity in its use of RRTM. Operators using RRTM believe that it offers benefits related to increased efficiency, reduced downtime and operational disruptions, reduced equipment damage, increased safety, and overall reduction in risk. Operating companies justify the use of RRTM on the basis of a business need, which can include aspects of safety, and that need can differ among companies. There is no uniform solution (“one size does not fit all”) for RRTM implementation because there is no uniformity in many aspects of offshore oil and gas operations. The committee notes that the man- agement of offshore operations varies by the type of operator—major, large independent, small independent—and that drilling operations and production operations present different risks. Drilling and produc- tion operations also differ in scope and scale, which further complicates any proposed regulatory approach to RRTM. Offshore facilities vary in location, water depth, size, age, design, and breadth of operations. Safety may be the initial impetus for implementing RRTM, but increased efficiency and operational reliability can also result. While there are no industrywide RRTM best practices or standards, the committee notes that companies using RRTM monitor some of the same critical operations and parameters as those listed in the internal BSEE report (BSEE 2014) and the 838, Inc., report (2014). Many of those operations and parameters were presented to the committee at its first meeting and at its subsequent workshop. Finding 2. The committee’s workshop and discussions with industry indicate that responsibility and accountability for offshore operations reside with the lessee as designated by BSEE when the lease assignment is made. Representatives of the U.S. oil and gas industry uniformly expressed a strong belief that the responsibility and authority for oper- ational decision making should remain on the mobile offshore drilling unit (MODU) or other offshore facility. RRTM can provide support to the operational decision making of offshore operations. It can offer offshore personnel access to technical support and onshore expertise. The design of any RRTM system requires industry to address the entire operational system on the MODU or other

Findings and Recommendations 91 offshore facility. Ensuring that the proper protocols and procedures are in place is critical in supporting the operator’s decision-making ability, and the decision-making realities dictated by the need for situational awareness must be considered. The committee recognizes that there are unmanned platforms and subsea developments. In such cases the decision makers are located at the nearest connected, manned facility, whether offshore or onshore. Finding 3. Currently, real-time data are generated and collected on the MODU and are used by offshore personnel in making operational decisions. Industry uses archived drilling performance data, when they are avail- able, for planning new wells and for recreating events. A large number of sensors already exist on many MODUs and in many of the rig systems. Industry has voiced concern about data validity and reliability. Industry representatives at the committee’s workshop believed that including more sensors would magnify validity and reliability problems because of the need to maintain complex sensor systems in addition to those already in place (see TRB 2015). However, properly designed networks of sensors with cross-checking algorithms could reduce the problems associated with sensor reliability. Finding 4. In the committee’s judgment, appropriate RRTM can be considered BAST. It would need to be applied in a manner consistent with the recommendations made by a recent report on implementing BAST for offshore oil and gas operations. In this context (see Chapter 3), the implementation of RRTM would be considered relative to its potential to reduce risk and contribute to overall safety—consistent with the principle of ALARP (as low as reason- ably practicable)—where practicability is interpreted as encompassing both technological capability and economic feasibility. Ultimately, the director of BSEE initiates the BAST determination process and makes the final BAST decision. However, this committee (as supported by NAE and NRC 2013, 13) considers “safest technology” to include all technologies that reduce risks and that are consistent with the principle of ALARP. Improving safety can encompass both occupational and process safety.

92 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations At its workshop, the committee was told repeatedly that RRTM (whether done continuously or more intermittently) can offer benefits related to increased efficiency, decreased downtime and operational disruptions, reduced equipment damage, improved safety, and overall reduction in risk. RRTM is done on some wells but not on every well; each determination includes an assessment of risk. Each operator has a different business case and uses its own internal risk management process in assessing each well. Viewing RRTM as BAST does not mandate the use of RRTM on every well, and the committee does not endorse the mandatory continuous use of RRTM. RRTM is one of many technologies that industry uses to support safe operations. Finding 5. The committee is not in a position to recommend or validate a standard definitive list of critical operations, sensors, systems, and parameters for RRTM. Furthermore, in the committee’s judgment, a single standard list for all operations is not a practical aspiration, in view of the variability in operating conditions, geology, scope and scale of facilities, the evolu- tion of technology, consideration of human factors, and the incorporation of RRTM in a risk-based approach to regulating offshore operations. However, industry representatives that presented to the committee pro- vided numerous examples of monitored operations (see TRB 2015). In addition, as noted above, companies using RRTM monitor some of the same critical operations and parameters as those listed in an internal BSEE report (see BSEE 2014, Annex 1, p. 14, Annex 2, p. 17, and Annex 3, p. 20) and the 838, Inc., report (2014), which enumerates data collected, moni- tored, or calculated (see pp. 110–124). These lists are all reasonable starting points for conversations between BSEE and industry. Finding 6. The committee recognizes and supports the efforts of the American Petroleum Institute (API) real-time monitoring study group and encourages industry to work with the regulator to achieve short- and long-term goals related to the use of RRTM for safe offshore operations. As reported to the committee, the use of RRTM data can positively affect operations, including safety. The committee encourages industry

Findings and Recommendations 93 stakeholders to share best practices and lessons within and across the industry, since some experiences indicate that RRTM can improve safety in operations. Finding 7. CBM could increase efficiency in multiple phases of offshore operations and increase the maintenance reliability of critical safety equipment, such as the blowout preventer (BOP). The committee considers RRTM to be a necessary but not sufficient condition for achieving the longer-term benefits that would come from CBM of offshore equipment and systems. To facilitate CBM, predictive models will need to be developed by using monitored operational data— such as temperature, pressure, vibration, and fluid properties—and material fatigue analysis. These data and the models that are based on them will be crucial for any CBM endeavor, including the BOP. A longer-term goal of CBM requires that data be collected and stored continually over the lifetime of the equipment and systems. However, BOP maintenance history may be difficult to access, poorly tracked, and incomplete. Achieving CBM could be difficult in the offshore business environment given the variability, complexity, and risk inherent in dif- ferent wells, facilities, and operations. Additional considerations include the economic test associated with the choice of BAST and the international movement of equipment and systems. The BOP, which is a critical piece of safety equipment for drilling operations, is expected to function in emergencies as one of the barriers to maintain well control. Maintain- ing and servicing BOPs during operations can be expensive and time- consuming, which provides an incentive for the development of CBM for BOP systems. Finding 8. Specific subtasks for offshore drilling and production are automated. However, the level of automation is limited, and auto mation is in a research phase in most companies. The use of predictive software integral to automation is also limited due to a lack of instrumentation, which leads to a lack of relevant data and could inhibit the necessary sophistication of algorithms. At its workshop, the committee was told that automation for certain activities such as pipe racking and power management is commonplace

94 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations and that the rotary steerable tool at the wellsite does have some auto- mated capability in setting a path and maintaining a heading during drilling. However, the performance of critical equipment and the work processes utilizing that equipment would need to be captured by instru- mentation before they could be modeled in a computer program and ultimately automated. Accurate algorithms for performance prediction would allow the operator to have confidence in forecasts. When a process is known and consistent, it can be automated. Lack of or variable main- tenance of sensors and meters gives rise to concerns about data quality and could lead to manual processes that bypass digital measurements. RRTM helps enable the collection of data and the development of better algorithms for predictive tools, but the lack of standard practices drives custom, tactical advances rather than holistic ones. Finding 9. Cybersecurity vulnerabilities in the oil and gas industry exist and are increasing as the use of technology expands and evolves. In addition, legacy control systems were typically not designed with remote connectivity or cybersecurity in mind. Cybersecurity guidelines are offered in both the National Institute of Standards and Technology’s Cybersecurity Framework and the 62443 series of the American National Standards Institute and the International Society for Automation. The Drilling Control Systems Subcommittee of the Advanced Rig Technology Committee, International Association of Drilling Contractors (IADC), has established a Cybersecurity Work Group. The group has developed draft guidelines based on existing stan- dards that will provide direction to industry on establishing a meth- odology for assessing cybersecurity risks. Reevaluating risks as RRTM systems are added to offshore drilling and production operations is an important step. The United States Coast Guard (USCG) released its cyberstrategy in June 2015. The strategy outlines USCG’s plan to work with industry and to manage cyberrisks to critical maritime infrastructure. USCG plans to release a final policy in 2016. BSEE has not released its own cyberstrat- egy but is collaborating with USCG. BSEE has an opportunity to engage industry stakeholders in determining the most viable route toward an industry standard for cyber-related threats to RRTM.

Findings and Recommendations 95 Finding 10. Data collected from real-time operations can help BSEE inspectors in preparing for their on-site visits. Although it would not necessarily be part of RRTM, these data could play a role in an improved document and information management process for BSEE. As long as regulations require periodic inspections of each offshore facility, BSEE may have difficulty in reducing the number of its on-site visits. Operators presenting at the committee’s workshop will accept visits by BSEE inspectors to their RRTM centers (when they exist), but they do not want these visits to replace offshore inspections (see TRB 2015). As suggested at the committee’s April 2015 workshop, remote monitor- ing of the frequent tests of BOPs could be a starting point and serve the interests of equipment manufacturers, service companies, operators, and the regulator. The lack of standardization of RRTM solutions could hinder inspec- tors in making good use of these data before their offshore visits and in utilizing RRTM as a replacement for inspections. The internal BSEE report (2014) discusses the need for properly trained personnel1 and illustrates how digital information can help in inspector preparation— and thus improve the efficiency and effectiveness of each visit—but, in the committee’s judgment, RRTM per se may not cut down on the number of visits. The use of historical RRTM data could support the devel- opment of a risk-based inspection policy that is being piloted by BSEE by providing inspectors with a data-driven knowledge of performance. The committee was told by industry representatives at its workshop that RRTM does not replace the ultimate accountability of the operator for safe operations on the offshore facility. Furthermore, in the committee’s judgment (and as acknowledged by the BSEE report authors), many of the ideas set forth for RRTM in BSEE’s internal report are not achievable for several reasons, such as staffing, legal and regulatory environments, and the level of current and future technology. In particular, the develop- ment of a BSEE RRTM center for the Gulf of Mexico is not warranted, nor would such a center be effective at this time. 1 See also Chapter 3 of 838, Inc. 2014.

96 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations Recommendation 1. BSEE should pursue a more performance-based regulatory framework by focusing on a risk-based regime that allows industry to determine relevant uses of RRTM on the basis of assessed levels of risk and complexity. Although the industry maintains responsibility for gathering and respond- ing to operational real-time data, BSEE could challenge operators to dis- cuss the RRTM of complex (risk-ranked) wells and critical production facilities in their Application for Permit to Drill and in their Deepwater Operations Plan. Safety and Environmental Management Systems (SEMS) guidelines require the identification and mitigation of risks in outer continental shelf (OCS) operations. BSEE could also challenge opera- tors to include an RRTM plan in their SEMS document. BSEE could ask industry to include test procedures, plans, and other information. BSEE could use these items to review execution of the plan by visiting operation centers to determine whether an operator is following its own RRTM plan. Furthermore, because SEMS plans require the identification and miti- gation of risks in OCS operations, the potential exists for SEMS planning to include cyber-related threat mitigation.2 In this context, BSEE could also work with industry stakeholders to provide additional guidance on how well these cyberrisks are mitigated on a systematic basis by incorpo- rating cyberrisk management through SEMS. Any regulatory framework should allow a phase-in period that gives operators and contractors time to comply. Recommendation 2. The committee views RRTM as BAST when justi- fied by the risk of particular wells. BSEE should monitor the spectrum of RRTM technologies and best practices by using either an internal BSEE group, such as the agency’s proposed Engineering Technology Assessment Center (ETAC), or an external organization, such as the Ocean Energy Safety Institute (OESI). 2 See comments by Rear Admiral Paul Thomas at the 2015 Offshore Technology Conference con- cerning management of the risk of cybersecurity issues through a safety management system (http://mariners.coastguard.dodlive.mil/2015/05/21/5212015-2015-offshore-technology-conference -complexity-of-operations-and-cyber/).

Findings and Recommendations 97 The suitability of RRTM for specific wells and facilities should be judged in a manner consistent with the recommendations made by a recent report on implementing BAST for offshore oil and gas opera- tions (NAE and NRC 2013). Criteria would include both the technical availability and the economic feasibility of any proposed technologies and would allow operators to judge the value of RRTM in the context of ALARP. Monitoring RRTM technologies would allow BSEE to enhance its safety management program and is more consistent with a performance- based regulatory framework. Recommendation 3. Consistent with recommendations of previous committees of the National Academies (NAE and NRC 2012; NAE and NRC 2013), BSEE should encourage involvement of all stakeholders in the development of risk-based goals and standards governing offshore oil and gas processes. Specifically, BSEE should work with API, IADC, and other relevant stakeholders to form an API standing technical committee (as opposed to an ad hoc committee) that would establish minimum requirements for which critical operations (and parameters) are monitored and for which data are collected and monitored in real time. In addition, BSEE, along with this technical committee, should propose standards for communication protocols between onshore and offshore facilities when RRTM is used. As noted in Finding 5, the committee is not in a position to recom- mend or validate a standard definitive list of critical operations and parameters and does not believe that such a list for RRTM is practical in view of the variability of operational environments and the impact of changing technology. However, industry has the breadth of RRTM experience in both drilling and production environments needed to establish minimum data set requirements. Experience with RRTM will grow as more industry stakeholders adopt the technology. All industry stakeholders should collaborate through an API technical committee to establish and keep up to date a minimum set of data that could be monitored and stored as more operators utilize RRTM. Ultimately, this minimum data set could be the basis for industry-recommended practices or standards for the application of RRTM. This API committee could also document how RRTM can serve as an effective risk management

98 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations tool and demonstrate RRTM’s value through risk reduction, increased efficiencies, and improved safety. The committee believes that BSEE should be represented on this API technical committee, and it strongly encourages industry to move toward collecting all relevant and appropriate data. In the committee’s opinion, in deciding what and how much data are to be collected, indus- try should consider the data’s use in potential applications, such as CBM. Collection of RRTM data is necessary for achieving the longer-term benefits that would come from CBM of equipment and systems. This longer-term goal would require that the collected data be stored over the lifetime of the equipment and systems. Although such a goal could be difficult to achieve in view of the operational realities of offshore drilling (e.g., international rig movements), CBM should be considered a priority for critical safety equipment, such as BOPs. In addition, as noted in Chapters 2 and 3, explicit protocols must govern the interactions between offshore operating staff and the remote center, whether they concern a discussion initiated from offshore or how escalation will occur when anomalies are detected from an onshore RRTM center. BSEE’s internal report acknowledges this point by noting that effec- tive communication between offshore and onshore staff demands clear protocols and procedures on identifying, verifying, and escalating safety concerns and that guidance must be provided on who should talk with whom (BSEE 2014). For current operators of RRTM centers, the design of communication protocols is carefully thought out, and within each company these protocols are documented and followed when issues arise. However, across the industry, operators have different protocols, and stan- dardization between companies does not appear to exist. As suggested by panelists at the committee’s workshop, BSEE can take a leading role in providing guidelines on communication protocols (TRB 2015). Recommendation 4. BSEE should encourage API to work with original equipment manufacturers (OEMs), drilling contractors, and industry trade associations to establish a BOP CBM pilot project, with the goal of an API publication. The pilot project should be phased in and should include multiple sensors that report the same or similar data. The work—monitored by

Findings and Recommendations 99 BSEE—could be done in cooperation with ETAC or OESI. BOPs are a critical piece of safety equipment located either at the surface or on the seafloor for all MODUs. Surface BOPs are readily accessible and can be inspected and repaired or maintained in place or at a rig work area. CBM sensors can be accessed relatively easily and can be connected or replaced efficiently. Subsea BOPs are run in place (in water depths up to 12,000 feet) and remain there through the drilling process unless they need to be repaired. Pulling and rerunning the BOP can take several days, and therefore any repairs, sensor replacement, or other work on a subsea BOP is more time-consuming. This creates an incentive for developing CBM capabilities so that issues can be detected and the pulling opera- tion better planned. Work to create this CBM pilot should be led by an established industry committee such as the API Standards Committee. It should include OEM BOP and CBM personnel, drilling contractor personnel with expertise in BOPs and CBM, operating company person- nel with drilling expertise, and trade associations with interest in this issue (such as IADC, the Petroleum Equipment Supplier Association, and the Offshore Operators Committee). For CBM to be effective and to be appli- cable beyond a pilot test, an industry publication such as an API standard should be developed. REFERENCES Abbreviations BSEE Bureau of Safety and Environmental Enforcement NAE National Academy of Engineering NRC National Research Council TRB Transportation Research Board 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. 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.

100 Application of Remote Real-Time Monitoring to Offshore Oil and Gas Operations 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. 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. 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.