From: Rivera, Ray <Ray_Rivera@ios.doi.gov>
To: Rivera, Ray <Ray_Rivera@ios.doi.gov>
Sent: Mon May 31 11:43:46 2010

Subject: Interior Issues Directive to Guide Safe, Six-Month Moratorium on Deepwater Drilling

Interior Issues Directive to Guide Safe, Six-Month Moratorium on Deepwater Drilling

Washington, DC:  The U.S. Department of the Interior today issued a directive to oil and gas lessees and operators on the Outer Continental Shelf notifying them of requirements under the six month deepwater drilling moratorium that Secretary Salazar has ordered.

“The six month moratorium on deepwater drilling will provide time to implement new safety requirements and to allow the Presidential Commission to complete its work,” said Salazar.  “Deepwater production from the Gulf of Mexico will continue subject to close oversight and safety requirements, but deepwater drilling operations must safely come to a halt.  With the BP oil spill still growing in the Gulf, and investigations and reviews still underway, a six month pause in drilling is needed, appropriate, and prudent.”

The Moratorium Notice to Lessees and Operators (Moratorium NTL) issued today directs oil and gas lessees and operators to cease drilling new deepwater wells, including wellbore sidetrack and bypass activities; prohibits the spudding of any new deepwater wells; and puts oil and gas lessees and operators on notice that, with certain exceptions, MMS will not consider for six months drilling permits for deepwater wells and for related activities.  For the purposes of the Moratorium NTL, “deepwater”
means depths greater than 500 feet.

Operators that are currently drilling any well covered by the NTL must proceed at the next safe opportunity to secure the well and take all necessary steps to cease operations and temporarily abandon or close the well until they receive further guidance from the Regional Supervisor for Field Operations.

Activities necessary to support existing deepwater production may continue, but operators must obtain approval of those activities from the Department of the Interior.

The NTL issued today is based on a May 28, 2010 Memorandum from Secretary of the Interior Ken Salazar to the Director of the MMS finding that, under current conditions, deepwater drilling poses an unacceptable threat of serious and irreparable harm or damage to wildlife and the marine, coastal and human environment, as set forth in 30 C.F.R. 250.172(b).  The Secretary also determined that the installation of additional safety or environmental protection equipment is necessary to prevent injury or loss of life and damage to property and the environment, as set forth in 30 C.F.R. 250.172 (c).

Salazar’s determination that deepwater drilling activities on new wells must cease, and that MMS will not process APDs accordingly, is based on the recommendations in the May 27, 2010 report from Secretary Salazar to President Obama, Increased Safety Measures for Energy Development on the Outer Continental Shelf.

In addition to today’s NTL, Secretary Salazar again called on Congress to provide more time under the law for MMS to review exploration plans that oil and gas companies submit.  Under current law, MMS is currently required to review exploration plans within 30 days and determine whether the environmental analysis conducted at several previous stages in the leasing and planning process is sufficient.  In the oil spill response legislation submitted to Congress on May 12, the Obama Administration is proposing to change the 30-day congressionally-mandated deadline to a 90-day timeline that can be further extended to complete additional environmental and safety reviews, as needed.  (An exploration plan does not grant a company permission to drill a new well; companies must obtain additional and separate permits to gain permission to spud a well.)  The Department of the Interior, together with the Council on Environmental Quality, is also conducting a review of MMS’s use of categorical exclusions.

MEMORANDUM

To: Director, MMS

From: Secretary

Re: Suspension of Outer Continental Shelf (OCS) Drilling of New Deepwater Wells

Date: May 28, 2010

The recent blow-out and oil spill in the Gulf of Mexico is new evidence of the serious risks associated with deepwater drilling, and presents new challenges for the Department to assure the American public that OCS deepwater drilling can be accomplished in a safe and environmentally sound manner.

Yesterday, I presented recommendations to the President based on a 30-day review of the BP Explosion and Oil Spill that began on April 20, 2010. Based on that review, the recommendations contained in the report to the President, and further evaluation of the issue, I find at this time and under current conditions that offshore drilling of new deepwater wells poses an unacceptable threat of serious and irreparable harm to wildlife and the marine, coastal, and human environment as that is specified in 30 C.F.R. 250.172(b). I also have determined that the installation of additional safety or environmental protection equipment is necessary to prevent injury or loss of life and damage to property and the environment. 30 C.F.R. 250.172(c).

Therefore, I am directing a six month suspension of all pending, current, or approved offshore drilling operations of new deepwater wells in the Gulf of Mexico and the Pacific regions. This suspension does not apply to drilling operations that are necessary to conduct emergency activities, such as the drilling operations related to the ongoing BP oil spill. For those operators who are currently drilling new deepwater wells, they shall halt drilling activity at the first safe and controlled stopping point and take all necessary steps to close the well. In addition, MMS shall not process any new applications for permits to drill consistent with this directive. All applicable regulations shall apply to the implementation of this directive.

Please ensure that appropriate Letters of Suspension and any other appropriate documentation, including any additional instructions and details regarding this directive, are sent to all affected lessees, owners, and operators immediately.

Drilling Moratorium Guidance
Operations with Subsea BOP Stack – Water Depth Greater Than 500 Feet
Activity type	6 Month No Drilling Moratorium Applies
Drilling of new well	Yes
Wellbore Sidetrack on current drilling operations	Yes
Wellbore Bypass on current drilling operations	Yes
Workover Operations	No
Completion Operations	No
Abandonment Operations	No
Intervention (Non emergency)	No
Intervention ( Emergency)	No
Waterflood, Gas Injection, Disposal Wells	No
Operations with Surface BOP Stack – Water Depth Greater Than 500 Feet
Drilling of new well	Yes
Wellbore Sidetrack on current drilling operations	Yes
Wellbore Bypass on current drilling operations	Yes
Workover Operations with stack	No
Completion Operations with stack	No
Abandonment Operations	No
Intervention (Non emergency)	No
Intervention (Emergency)	No
Waterflood, Gas Injection, Disposal Wells	No

 

1

MINERALS MANAGEMENT SERVICE

UNITED STATES DEPARTMENT OF THE INTERIOR NTL No. 2010-N04 Effective Date: May 30, 2010

NOTICE TO LESSEES AND OPERATORS OF FEDERAL OIL AND GAS LEASES IN THE

OUTER CONTINENTAL SHELF REGIONS OF THE GULF OF MEXICO AND THE PACIFIC TO IMPLEMENT THE DIRECTIVE TO IMPOSE A MORATORIUM ON ALL DRILLING OF DEEPWATER WELLS

Background

The events resulting from the April 20, 2010, Deepwater Horizon included the deaths of 11 people, and an oil spill of national significance that continues to harm the marine ecosystem, wildlife, and property along the Gulf Coast. Although the causes are still under investigation, these events highlight the importance of ensuring safe operations on the Outer Continental Shelf (“OCS”).

Directives

The Six-Month Deepwater Moratorium as set forth in this Notice to Lessees and Operators (“Moratorium NTL”) directs you to cease drilling all new deepwater wells, including any wellbore sidetracks and bypasses; prohibits you from spudding any new deepwater wells; and puts you on notice that, except as provided herein, MMS will not consider for six months from the date of this Moratorium NTL drilling permits for deepwater wells and for related activities as set forth herein. For the purposes of this Moratorium NTL, “deepwater” means depths greater than 500 feet.

If you are currently drilling any well covered by this Moratorium NTL, you must proceed at the next safe opportunity to secure the well and take all necessary steps to cease operations and temporarily abandon or close the well until you receive further guidance from the Regional Supervisor for Field Operations. You must submit to the appropriate District Manager your plans to stop operations and secure the well before 5:00pm EDT, June 1, 2010.

If you have an approved Application for a Permit to Drill (“APD”) or other required permit for wells covered by this Moratorium NTL, but have not spud the well, you may not start drilling for the duration of this Moratorium NTL.

Under 30 C.F.R. 250.172, the Regional Supervisor for Production and Development will issue Suspensions of Operations (“SOO”) to all OCS Lessees and Operators currently drilling or proposing to drill new deepwater wells consistent with this Moratorium NTL. 2

Findings

This Moratorium NTL is based on a May 28, 2010, Memorandum from the Secretary of the Interior to the Director of the MMS finding that, under current conditions, deepwater drilling poses an unacceptable threat of serious and irreparable harm or damage to wildlife and the marine, coastal and human environment , as set forth in 30 C.F.R. 250.172(b). The Secretary also determined that the installation of additional safety or environmental protection equipment is necessary to prevent injury or loss of life and damage to property and the environment, as set forth in 30 C.F.R. 250.172(c).

The Secretary’s determination that deepwater drilling activities on new wells must cease for six months, and that MMS will not process permits for such activities accordingly, is based on the recommendations in the May 27, 2010, Report from the Secretary of the Interior to the President,

Based on the Secretary’s May 28, 2010, Memorandum, the recommendations in the Report, and the authority of 30 C.F.R. 250.172, the Director of MMS has determined that this Moratorium NTL is warranted because of the significant risks of OCS drilling in deepwater without implementation of the safety equipment, practices and procedures recommended in the Report.

Therefore, under 30 C.F.R. 250.172, the Regional Supervisor for Production and Development will issue SOOs to all OCS Lessees and Operators currently drilling or proposing to drill new deepwater wells covered by this Moratorium NTL.

Increased Safety Measures for Energy Development on the Outer Continental Shelf (“Report”). Activities Not Affected by This Moratorium NTL

This Moratorium NTL does not apply to intervention or relief wells for emergency purposes, including the 2 relief wells related to the ongoing BP spill.

This Moratorium NTL does not apply to operations that are necessary to sustain reservoir pressure from production wells.

This Moratorium NTL does not apply to workover operations.

This Moratorium NTL does not apply to waterflood, gas injections, or disposal wells.

This Moratorium NTL does not apply to drilling operations or other activities that are necessary to safely close or abandon a well, or to accomplish well completion operations under 30 C.F.R 250.500.

All activities not affected by this Moratorium NTL must be performed in compliance with all applicable regulations. For the duration of this Moratorium NTL, MMS will process only those APDs and other permits that are necessary to perform the activities not affected by this Moratorium NTL, as set forth above. 3

Requirements for Existing Deepwater Production

To obtain approval to conduct an activity in support of existing deepwater production, you must submit your request to the Regional Supervisor for Field Operations. Your request must include the following:

A new APD or Application for Permit to Modify, as appropriate;

Purpose of the well (disposal, injection, water flood);

Type of rig/BOP;

Water depth;

Safety systems in place; and

Location/placement of safety system devices (hydraulic accumulators located in a protected area).

In addition, you must submit a structured risk analysis that identifies and discusses the risks of the requested drilling or activity. The discussion must address risks of losing well control, risks of not conducting the requested activity, and your planned use of best practices. This analysis must be specific for each situation and include a detailed description of the activity.

Guidance Document Statement

The MMS issues NTLs as guidance documents in accordance with 30 C.F.R. 250.103 to clarify, supplement, or provide more detail about certain MMS requirements. NTLs may also outline what must be provided as required information in submissions to the MMS.

The MMS will provide additional guidance on this Moratorium NTL and the recommendations contained in the Report through the issuance of additional NTLs, rulemaking, or by other appropriate means.

Authority

This Moratorium NTL provides guidance and requirements pursuant to 30 C.F.R. 250.106, which requires safe lease operations, and pursuant to 30 C.F.R. § 250.172(b), which states that the Regional Supervisor may grant or direct a suspension when activities pose a threat of serious, irreparable, immediate harm or damage, this would include a threat to life, property, mineral deposit, or marine coastal or human environment and 30 C.F.R. § 172(c), which states that the Regional Supervisor may grant or direct a suspension when necessary for the installation of safety or environmental protection equipment.

Paperwork Reduction Act of 1995 Statement

This Moratorium NTL does not impose additional information collection requirements subject to the Paperwork Reduction Act of 1995. 4

Contact

If you have any questions regarding this Moratorium NTL, please contact Mike Saucier by e-mail at michael.saucier@mms.gov or by telephone at (504) 736-2503 in the Gulf of Mexico Region, or Rishi Tyagi by e-mail at rishi.tyagi@mms.gov or by telephone at (805) 389-7775 in the Pacific Region.

_______ __________________________

Dated Deputy Director

Minerals Management Service