NOSAC Well Intervention Task Statement Subcommittee Interim Report

NOSAC Well Intervention Task Statement Subcommittee Interim Report – SPRING 2016, New Orleans Recommendations and Path Forward Co-Chairs: Dardar, Fuhrmann, Kallaway REV-B Dated 2016 -03 -29

NOSAC Well Intervention Task Statement Report • The Well Intervention subcommittee is submitting this Interim Report with recommendations and partial completion of the deliverables requested within the Task Statement due to time restrictions: • There were three choices in this decision: 1. Status report – simply an update of the progress of the subcommittee and without recommendations to provide actionable guidance to USCG 2. Interim Report – a report providing partial fulfillment of the deliverables requested within the Task Statement and some recommendations to provide actionable guidance to USCG 3. Final report – a complete report that would deliver all requests on the Task Statement and would include all recommendations from the subcommittee to provide actionable guidance to USCG • Reasons an Interim Report was chosen: 1. Certain key recommendations could be presented in an effort to give guidance to the USCG on this topic and avoid unnecessary delay resulting from ongoing discussions of critical points highlighted in the Task Statement; 2. The USCG could be equipped with a general (though incomplete) understanding of industry concerns, opinions, and challenges before deciding to proceed with any rulemaking process; 3. Recommendations could be provided that would support the alignment of any future BSEE and USCG regulatory efforts.

High Level Response to Task Statement In order to remove ambiguity from conversation, the following statements apply without exception to all recommendations listed at this time: 1. 2. 3. 4. Existing regulations are sufficient, no additional USCG regulations are required. USCG should align their view on Well Intervention Activities to BSEE/BOEM regulations. No single Risk Assessment Process (R A Process) shall be endorsed by the USCG. All Well Intervention Activities shall have a documented R A Process. Lease Holders shall be able to demonstrate that they are actively using their R A Process to mitigate risks. The method and form of that R A Process shall be up to each individual company, as outlined in their SEMS program. 5. The notion of “Fit for Purpose” appears in 46 CFR as “fit for the service intended”, therefore the concept “fit for purpose” is not a new legal term. 6. Any vessel involved in W I Activities should be allowed to be used in in that operation if the vessel & operation have been risk assessed, the risks mitigated, the vessel verified to be operating within its documented capabilities, including adherence to its Certificate Of Inspection (COI). 7. Foreign regulations, standards and rules should not be codified to apply in USA waters.

Task Statement Recommendation #1 Question 1 a, 1 e, 1 f, 1 h – Define Well Intervention Activities in contrast to drilling activities; Outline associated risk mitigations, etc. USCG should align their view on Well Intervention Activities to BSEE/BOEM regulations. • Recommendation: • The Sub Committee recommends that any activity requiring an Application for Permit to Modify (APM) be defined as a Well Intervention Activity. Furthermore, any activity requiring an Application For Permit for Drilling (APD) should not be defined as a Well Intervention Activity. • During deliberations, BSEE provided that drilling is entering virgin rock, deepening an existing well bore, or side tracking / bypassing through virgin rock to which the above recommendation is appropriate. • • Reference: http: //www. bsee. gov/About-BSEE/Doing-Business-with-BSEE/OCS-Operation-Forms/index/ Reference: http: //www. bsee. gov/uploaded. Files/APD_Facts_and_Definitions_BSEE. pdf • Additional definitions were received from industry stakeholders including vessel operators, class societies and the public. It is the opinion of the Committee that any deviation from the BSEE definition could result in a regulatory gap that is problematic for compliance.

Task Statement Recommendation #2 Question 1 e – Define the risk assessment & mitigations associated with Well Intervention Activities. No single Risk Assessment Process (R A Process) shall be endorsed by the USCG. All Well Intervention Activities shall have a documented R A Process and Lease Holders shall be able to demonstrate to be actively using their R A Process to mitigate risks; but the method and form of that R A Process shall be up to each individual company, as outlined in their SEMS program and bridged as necessary to the vessel(s) SMS. • Recommendation: • The Committee recommends that all stakeholders involved in the offshore industry conduct suitable company-specific fit for purpose Risk Assessments on all defined Well Intervention Activities and on operations undertaken in support of, or otherwise associated with, those same Well Intervention Activities; • The Committee recommends that no specific risk assessment format or process be endorsed or recognized but rather left to interested stakeholders to develop and implement as deemed appropriate. The non-regulatory and non-prescriptive risk assessment process should be comprehensive in nature and could follow a format such as that included in Attachment A (following slide). No Risk Assessment process should be endorsed to which the public has not been allowed access for purposes of review, comment and consensus approval.

Attachment A - Question 1 d, 1 e Aspirational Risk Assessment Process Non-Prescriptive, Generic Identify Activity & Location Specific Risk Potential Conduct Risk Assessment (Likelihood & Impact) Determine Vulnerability of Each Risk to WI Activities Identify Acceptable Risk Level & Mitigations Identify Fit or Modified-Fit For Purpose Vessel + Equipment Combination Company specific, site specific, well specific, vessel specific Note: “Modified-Fit For Purpose”, as a term used in this report, is meant to refer to modifications made to vessel and or vessel systems to conduct the activity and meet any additional safety requirements. If such modifications require approval, as per applicable regulations for the vessel, they would be duly approved by the requirement. Additional clarity around this term will be provided in final report. See next slide for additional context.

Attachment B - Question 1 d, 1 e “Fit for Purpose” The notion of “Fit for Purpose” appears in 46 CFR as “fit for the service intended”. The concept “fit for the service intended” comes from the SOLAS Convention 74/78. When the U. S. ratified SOLAS 74/78, it agreed to promulgate statutes, regulations and other measures to give the Convention full and complete effect. The resulting regulations seek to ensure that, from the aspect of safety of life, a subject vessel and specific equipment is “fit for the service for which it is intended. ” The 1978 protocol, which amends the 1974 Convention, establishes a mandatory annual survey requirement to evaluate whether a ship is maintained in accordance with the regulations and that the ship and its equipment remain satisfactory for the service intended. As a result, the phrase “fit for the service intended” appears throughout the regulations relating to ships, equipment and their inspection, see following citations : 46 CFR 61. 01 -1 , 46 CFR 61. 01 -5, 46 CFR 71. 25 -10, 46 CFR 91. 27 -1, 46 CFR 91. 27 -13, 46 CFR 115. 404, 46 CFR 115. 500, 46 CFR 115. 814, 46 CFR 115. 816, 46 CFR 126. 510, 46 CFR 134. 120, 46 CFR 169. 223, , 46 CFR 169. 225. , 46 CFR 169. 226, 46 CFR 169. 241, 46 CFR 169. 243, 46 CFR 169. 251, 46 CFR 169. 253, 46 CFR 176. 404, 46 CFR 176. 500, 46 CFR 176. 814, 46 CFR 176. 816, 46 CFR 189. 25 -10, 46 CFR 189. 27 -1. , 46 CFR 189. 27 -5, 46 CFR 189. 25 -10, 46 CFR 197. 462

Task Statement Recommendation #3 Question 1 q – Provide historical marine casualty data for vessels conducting WI activities, include the vessel class and mode of propulsion; the type of WI activity being conducted; was the activity permitted by the Bureau of Safety and Environmental Enforcement and if so, was the permit a general permit or a permit for a specific operation; and, the results of the incident. This data may include data that did not require reporting to the U. S. Coast Guard under the Marine Casualty Reporting and or Reporting of Hazardous Conditions regulations and should cover the past 10 years of operations on the US OCS. • Recommendation: • The committee recommends that USCG develop its own data collection methods independent of the Committee. The USCG’s ability to collect this data exceeds the resources of participating subcommittee members. • The Sub Committee will continue to look for sources of data and report on any gaps in incident data reporting found. • Reference BERCHA report: For guidance, the committee would like to provide reference to a BOEM report that provides some insight into historical casualty data. The report, titled OCS Study BOEM 2014 -772, FINAL REPORT, Loss of Well Control Occurrence and Size Estimators, for Alaska OCS (BOEM Contract Number M 12 PC 00004, October 2014) may be found at: http: //www. boem. gov/uploaded. Files/BOEM_Newsroom/Library/Publications/BOEM_2014 -772. pdf

Task Statement Questions 1 b & 1 c – Vessel types conducting WI activities and applicable standards Foreign regulations, standards and rules should not be codified to apply in USA waters. • Subcommittee’s consensus answer: • In general: MODUs (jack up, anchored semi-submersible, drillship and DP vessels), OSVs (Liftboats, Offshore Supply Vessels (DP 1, DP 2, DP 3) and MOUs (built for purpose and modifiedfit for purpose WI vessel, Inspection Maintenance & Repair (IMR) Vessels) with one or more of the following standards: • • Applicable Port State: USA - USCG: Subchapter I-A, Subchapter L, Subchapter I, MODU Applicable Flag State standards Applicable and appropriate Class rules of IACS members Applicable industry best practices

Task Statement Question 1 i – Integration of vessel into Lease Holder’s SEMS • Subcommittee’s consensus answer: • Lease operators are expected to audit contractor (SEMS) and vessel owners (SMS) subject to their approved SEMS. In addition, lease operators vet contractors' industry training and safety culture, and audit contractors to determine any deficiencies. • Any gaps between contractor and operator SEMS found during auditing can be brought into compliance or bridged.

Task Statement Question 1 j – How does SMS address WI activities • Subcommittee’s consensus answer: • SEMS is denoted in this report as a requirement for the lease holder and in certain cases, non-marine contractors of the lease holder. Marine contractors of the lease holder typically have a Safety Management System (SMS) that may or may not be required to align with ISM Code but should align with the lease holder’s SEMS or bridged accordingly. • The lease holder reviews the project related activities and the vessel’s SMS to confirm that the activities fall under the existing SMS. Bridging documents allow for an interface between vessel, lease holder, and service providers’ SEMS to ensure that the risks of the project are mitigated adequately. Typically, the more stringent requirement will be adopted when there is overlap, otherwise the service providers and vessel operators will address the risks in their specific SMS programs to align with the lease holder’s SEMS through the Management of Change (MOC) process.

Plan Forward • Subcommittee will continue its deliberation and fact finding. • Subcommittee will generate a final report that would recap this Interim Report, complete the requested deliverables and provide all additional recommendations. • Final Report will be submitted to the full NOSAC in sufficient time so that it can be reviewed in depth and voted on during the Fall 2016 convening of NOSAC.