Deep sea oil drilling drillers are now subject to new safety regulations in the US

The Bureau of Safety and Environmental Enforcement, or BSEE, released new rules on Tuesday for U.S. off-shore drillers. This is because breakthrough technology allows them to operate in extreme subsea conditions and unlock untapped oil reserves worth billions of dollars.

BSEE final rule was issued after Chevron, in August, started production on its Anchor asset. It is owned by TotalEnergies and it was the first project ever to operate with 20,000 pounds per sq inch (PSI) pressure. The reservoir depths reached 34,000 feet (10.363 m).

Analysts have stated that the new technology may unlock 5 billion barrels previously unaccessible crude worldwide, which is about 50 days' worth of current production. However, safety concerns are looming.

British oil giant BP was drilling with 15,000 PSI pressure when a blowout occurred on its rig.

Deepwater Horizon

In 2010, the project spilled 3,19 million barrels of crude oil into the U.S. Gulf of Mexico and killed 11 workers.

The final BSEE rules are applicable to any project with a pressure greater than 15,000 PSI or a temperature higher than 350 degrees Fahrenheit.

In some cases, they will require that third parties review certain information before submitting it to BSEE for projects which will operate offshore under high pressure and high temperature conditions.

The final rule of BSEE states that "most oilfield equipment was not designed historically to withstand high temperatures and pressures." "High-pressure, high temperature-associated operations require the use of equipment that exists at the limits of current technology and lacks a long operational history."

The new regulations are intended to improve safety for the industry and to provide clarity, as the number of ultra high pressure projects is expected to rise.

BP will start ultra-high pressure (20,000 PSI) drilling at its Kaskida Field in the Gulf of Mexico early next year. The oil major awarded SLB, an oilfield services company, a contract on Tuesday for a subsea booster system for the project.

BP approved the Kaskida Project in July. The estimated 10 billion-barrel reserves of the field were discovered 20 years ago, before high-pressure technology was available. Gulf of Mexico oil production is about 14% of U.S. output and will reach 1,88 million barrels a day by 2025. This compares to 1.63 million barrels a day as of September.

According to Energy Aspects, Chevron expects its Anchor production to reach around 15,000 barrels per day by the end this year and to rise to 45,000 by 2025.

Matthew Hale is senior vice president for drilling wells and research at Rystad. He says that the increase in production comes from operators looking to lower breakeven costs, as well as lower carbon emission intensity, in deepwater resources compared to shale assets.

Hale says that the global average for deepwater breakeven oil is $40 per barrel. The emission intensity of major oil supply segments is also lower. Enverus Intelligence estimates that breakeven prices for the Permian Basin, the largest U.S. oilfield on land, are nearer $50 per barrel. (Reporting and editing by Marguerita Choy in Houston)

(source: Reuters)