[Federal Register Volume 66, Number 218 (Friday, November 9, 2001)]
[Proposed Rules]
[Pages 56620-56627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-28221]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250

RIN 1010-AC83


Oil and Gas and Sulphur Operations in the Outer Continental 
Shelf--Procedures for Dealing With Sustained Casing Pressure

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This proposed rulemaking amends Subpart E (Oil and Gas Well-
Completion Operations) of MMS operating regulations. It describes 
procedures for dealing with sustained casing pressure (SCP) in oil and 
gas wells on the Outer Continental Shelf (OCS). Currently, lessees must 
request a departure from MMS regulations to operate a well that has 
SCP. When granting a departure, MMS requires that lessees perform 
periodic checks and evaluations to ensure that the pressure is not a 
danger to personnel, equipment, or the environment. This proposed rule 
will codify these procedures and ensure uniform regulatory practices 
among MMS regional offices. The proposed changes will also help ensure 
that lessees will continue to conduct operations in a safe manner.

DATES: MMS will consider all comments we receive by January 8, 2002. We 
will begin reviewing comments then and may not fully consider comments 
we receive after January 8, 2002.

ADDRESSES: Mail or hand-carry comments (three copies) to the Department 
of the Interior; Minerals Management Service; Mail Stop 4024; 381 Elden 
Street; Herndon, Virginia 20170-4817; Attention: Rules Processing Team 
(RPT). If you wish to e-mail comments, the RPT's e-mail address is: 
[email protected]. Reference 1010-AC83, SCP in your e-mail subject 
line. Include your name and return address in your e-mail message and 
mark your message for return receipt.
    Mail or hand-carry comments with respect to the information 
collection burden of the proposed rule to the Office of Information and 
Regulatory Affairs; Office of Management and Budget; Attention: Desk 
Officer for the Department of the Interior (OMB control number 1010-
New); 725 17th Street, NW., Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Larry Ake, Engineering and Operations 
Division, at (703) 787-1600.

SUPPLEMENTARY INFORMATION: Sustained casing pressure (SCP) is pressure 
between the casing and the well's tubing, or between strings of casing, 
that rebuilds after being bled down. Data gathered by MMS has shown 
that SCP is most often caused by leaks in the production tubing and 
tubing connectors. It is also caused by poor casing cement bond, 
channeling in the cemented annulus, and leaks in seals or other 
equipment. If left uncontrolled, this SCP represents an ongoing safety 
hazard and can cause serious or immediate harm or damage to human life, 
the marine and coastal environment, and property. During the period 
1980 to 1990, the oil and gas industry in the Gulf of Mexico (GOM) 
suffered four serious accidents as a result of high SCP, and the lack 
of proper control and monitoring of these pressures. In response, MMS 
developed a policy for the GOM OCS under which lessees could 
effectively monitor the SCP of wells in an attempt to avoid future 
accidents.
    As far back as 1977, OCS Order No. 6, ``Completion of Oil and Gas 
Wells,'' required the testing and repair of all wells that exhibit SCP. 
The current regulation at 30 CFR 250.517 addresses tubing and wellhead 
equipment. Paragraph (a) of Sec. 250.517 requires that tubing strings 
must maintain pressure integrity. Paragraph (c) requires that wellheads 
be equipped to monitor SCP in all casing annuli, and stipulates that 
the lessee must notify the District Supervisor if SCP is observed. The 
primary intent of this regulation with respect to SCP is to achieve and 
maintain pressure control of wells. Since that regulation was issued in 
1988, MMS has interpreted 30 CFR 250.517(c) [previously designated 30 
CFR 250.87(c)] to mean that no SCP is to be maintained on any annulus 
of an OCS well.
    With over 8,000 affected wells in the GOM, immediate elimination of 
all SCP has proved to be impractical. It would also be exceedingly 
costly. MMS conservatively estimates the cost of workovers to eliminate 
SCP on these wells at over $800,000,000 (at $100,000 per well). The 
upper limit of potential costs could reach as high as $4,000,000,000, 
if a major workover rig would have to be used on each well at an 
average cost of $500,000. Through recent policy, however, MMS has 
sought to identify and eliminate SCP in only those cases that represent 
a hazard and establish a monitoring system for the rest, all the while 
working towards elimination of the problem.
    In 1988 and 1989, the MMS GOM Region met with the Offshore 
Operators Committee (OOC) several times to discuss conditions that 
required a variance from the requirements of 30 CFR 250.517. The OOC 
recommended that SCP be divided into two broad categories: production 
casing SCP that can be eliminated relatively easily and SCP on outer 
casings where no consistently successful solution has been developed. 
They also recommended criteria for classifying SCP.
    On August 5, 1991, MMS (GOM Region) issued a Letter to Lessees 
(LTL) that identified policy changes concerning SCP based on the OOC 
advice, thereby initially clarifying the provisions contained in 30 CFR 
250.517(c). This LTL streamlined the reporting procedures for wells 
with SCP conditions. The intent of this initial policy was twofold: to 
permit continued production from existing completions, subject to 
specific monitoring requirements, and to allow for the retention of 
records at the operator's field office. This policy also addressed 
wells with SCPs that were less than 20 percent of the minimum internal 
yield pressure of the affected casing and that bled to zero pressure 
through a \1/2\-inch needle valve in 24 hours or less. Wells that met 
these criteria were put in a ``self-approved'' category, and MMS 
approval of a departure from the regulatory requirement was not 
required.

[[Page 56621]]

    MMS (GOM Region) SCP policy was further revised with the issuance 
of a January 13, 1994, LTL. This document provided further 
clarification regarding wells with SCP, the time retention of field 
records, and the criteria to be used to determine unsustained casing 
pressure due to thermal effects. Using the procedures of this LTL, 
departures from the requirement for no SCP were granted according to 30 
CFR 250.142 [formerly 30 CFR 250.103(b)]. These procedures essentially 
ensured that the SCP on a well's annuli would bleed to zero within 24 
hours through a \1/2\-inch needle valve, would be monitored regularly, 
and would be eliminated as soon as practical or immediately in cases of 
severe pressure. Since the January 13, 1994, LTL was issued, MMS has 
identified many misconceptions and areas of concern and uncertainty 
with the established reporting, testing, and monitoring procedures. 
Therefore, this rulemaking has been designed to further clarify the 
intended policy and procedures, and to include technology that was not 
being utilized or was not developed in 1994.
    During this same time period, and on a much smaller scale, SCP was 
also a problem for the MMS Pacific OCS Region. An LTL, dated November 
8, 1991, and a Notice to Lessees (NTL), dated April 12, 2000, described 
procedures for operators on the Pacific OCS. These requirements are 
less prescriptive, and because of the smaller number of wells involved, 
cases of SCP are handled on a case-by-case basis.
    The process of granting departures to operate wells with SCP has 
served both industry and MMS well since it was initiated. By using the 
monitoring and reporting steps in the proposed rule, both MMS and 
industry can focus resources on those wells that need prompt 
maintenance and remediation. This rulemaking will primarily place into 
the regulations those procedures for maintenance and recordkeeping on 
wells with SCP that have been MMS GOM Region policy for several years.
    Two new requirements should be noted in the proposed rule. In the 
event of a lease transfer, MMS proposes that operators provide a report 
on the status of all wells with SCP to both the MMS and the new owner/
operator. MMS also proposes that subsea trees installed after January 
1, 2005, have a method for monitoring all casing annuli for SCP. This 
requirement is consistent with current regulations; however, it has 
been MMS policy to waive this requirement for subsea tree 
installations.

Procedural Matters

Public Comments Procedures

    Our practice is to make comments, including names and home 
addresses of respondents, available for public review during regular 
business hours. Individual respondents may request that we withhold 
their home address from the rulemaking record, which we will honor to 
the extent allowable by law. There may be circumstances in which we 
would withhold from the rulemaking record a respondent's identity, as 
allowable by the law. If you wish us to withhold your name and/or 
address, you must state this prominently at the beginning of your 
comment. However, we will not consider anonymous comments. We will make 
all submissions from organizations or businesses, and from individuals 
identifying themselves as representatives or officials of organiza-
tions or businesses, available for public inspection in their entirety.

Regulatory Planning and Review (Executive Order 12866)

    This proposed rule is not a significant rule and is not subject to 
review by the Office of Management and Budget (OMB) under Executive 
Order 12866.
    (1) This proposed rule will not have an effect of $100 million or 
more on the economy. It will not adversely affect in a material way the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities. The major purpose for this proposed rule is to codify and 
provide nationwide consistency in the interpretation of the current 
rule. This will not lead to major changes in the way operators must 
deal with SCP and will not result in any large economic effects to 
small or large entities.
    One proposed technical revision will have an economic effect on 
lessees. The proposed rule requires that any subsea tree installed 
after January 1, 2005, must provide a means to monitor all casing 
annuli for SCP. MMS has been granting departures to our requirement 
that all casing annuli be monitored for all subsea wells installed to 
date. A subsea tree/wellhead system costs approximately $3.5 million. 
We conservatively estimate that the incremental cost of providing a 
method to monitor all casing for SCP should not exceed 5 percent of 
this cost, or $175,000 per well. Currently, fewer than 25 subsea well 
installations are made on the OCS per year. Therefore, MMS estimates 
the cost to implement the proposed rule would be $4,375,000 per year. 
These costs will not cause an annual effect on the economy of $100 
million.
    (2) This proposed rule will not create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency. 
The proposed rule does not affect how lessees or operators interact 
with other agencies. Nor does this proposed rule affect how MMS will 
interact with other agencies.
    (3) This proposed rule does not alter the budgetary effects or 
entitlements, grants, user fees, or loan programs or the rights or 
obligations of their recipients. The proposed rule only addresses the 
regulatory requirements for obtaining permission to continue to produce 
oil and gas on the OCS with wells that exhibit SCP.
    (4) This proposed rule does not raise novel legal or policy issues. 
The proposed rule does involve a new policy issue, requiring that all 
subsea trees installed after January 1, 2005, be equipped so that all 
casing annuli can be monitored for SCP. This requirement will require 
manufacturers to modify present equipment. This is not a novel 
requirement though, since it will simply make subsea installations 
conform to the same standards as wells with surface trees. At the 
present time, operators may be granted a departure from this 
requirement when installing a subsea tree.

Regulatory Flexibility (RF) Act

    The Department of the Interior certifies that this proposed rule 
will not have a significant economic effect on a substantial number of 
small entities under the RF Act (5 U.S.C. 601 et seq.). This proposed 
rule applies to all lessees that produce oil and gas on the OCS. Small 
lessees that operate under this proposed rule would fall under the 
Small Business Administration's (SBA) North American Industry 
Classification System Code, 211111, Crude Petroleum and Natural Gas 
Extraction. Under this code, SBA considers all companies with fewer 
than 500 employees to be a small business. We estimate that there are 
130 lessees that explore for and produce oil and gas on the OCS, and 
approximately 70 percent of those 130 lessees fall into the small 
business category.
    This proposed regulation codifies many procedures that MMS 
currently requires as a condition of departure from our current 
regulations. For this reason, the estimated costs of the proposed rule 
are not great. As shown earlier, MMS conservatively estimates the total 
economic effects of the proposed new requirements to be less than $5 
million per year. This cost will be a small percentage of the cost of

[[Page 56622]]

establishing and operating the many producing wells on the OCS. We 
believe that the cost will affect large and small lessees equally. 
Based on the very low percentage of well cost involved, we believe that 
these proposed revisions to the regulations will not have a significant 
economic effect on any small lessee.
    Most of the estimated additional cost of the proposed rule is due 
to the requirement that subsea trees installed after January 1, 2005, 
be equipped to monitor casing pressure. The subsea tree requirement 
should not hinder a lessee's ability to conduct business on the OCS. 
The proposed rule provides for a several-year period after the 
effective date so that equipment manufacturers can develop and 
manufacture the trees and associated equipment. This will also allow 
lessees sufficient time to obtain the equipment.
    Your comments are important. The Small Business and Agriculture 
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were 
established to receive comments from small businesses about Federal 
agency enforcement actions. The Ombudsman will annually evaluate the 
enforcement activities and rate each agency's responsiveness to small 
business. If you wish to comment on the enforcement actions of MMS, 
call toll-free (888) 734-3247.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

    This proposed rule is not a major rule under (5 U.S.C. 804(2)) the 
SBREFA. This proposed rule:
    (a) Does not have an annual effect on the economy of $100 million 
or more. The proposed rule will not cause any significant costs to 
lessees or operators. Lessees and operators currently operating on the 
OCS with SCP operate under similar requirements, which are imposed by 
MMS as a condition for granting a departure. The proposed regulation 
will codify procedures that MMS normally stipulates to an operator 
requesting a departure to operate with SCP.
    (b) Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions. The proposed rule will not change the 
way the oil and gas industry conducts business, nor will it affect 
regional oil and gas prices; therefore, it will not cause major cost 
increases for consumers, the oil and gas industry, or any Government 
agencies.
    (c) Does not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or ability of United 
States-based enterprises to compete with foreign-based enterprises. All 
lessees, regardless of nationality, will have to comply with the 
requirements of this rule. So the rule will not affect competition, 
employment, investment, productivity, innovation, or the ability of 
United States-based enterprises to compete with foreign-based 
enterprises.
    We do not expect this rule to have a significant effect because, as 
discussed earlier, this proposed rule will codify procedures already in 
use.

Paperwork Reduction Act (PRA) of 1995

    The proposed rule requires information collection (IC), and an IC 
request (form OMB 83-I) has been submitted to OMB for review and 
approval under section 3507(d) of the PRA. However, our submission 
includes only certain requirements as explained in subsequent 
paragraphs. The title of the collection of information is ``Proposed 
Rulemaking--30 CFR 250, Subpart E--Procedures for Dealing With 
Sustained Casing Pressure.'' Respondents include approximately 130 
Federal OCS oil and gas lessees. The frequency of reporting and 
recordkeeping is generally on occasion. Responses are mandatory. The IC 
does not include questions of a sensitive nature. We will protect 
information considered proprietary according to 30 CFR 250.196 (Data 
and information to be made available to the public) and 30 CFR part 252 
(OCS Oil and Gas Information Program).
    The collection of information required by the current 30 CFR 250, 
subpart E, regulations is approved by OMB under control number 1010-
0067. As indicated earlier in the preamble, the proposed revisions to 
subpart E primarily will only place into regulation many of the 
procedures for wells with SCP that have been policy in the MMS GOM 
Region for several years. Pending final regulations taking effect, the 
GOM Region has updated its policy in the form of an NTL. To comply with 
the PRA, we obtained OMB approval of the NTL's SCP IC requirements. 
This process was initiated with a Notice in the Federal Register on 
March 8, 2001 (66 FR 13960). OMB approval of those information 
collection requirements (submitted to OMB as a revision of the subpart 
E information collection to include the NTL procedures) covers most of 
the paperwork burden proposed in this rulemaking.
    The following table lists the entire paperwork burden of the 
proposed rule. However, there is only one new requirement 
(Sec. 250.530) that is not covered by a currently approved information 
collection. We estimate a total annual paperwork ``hour'' burden of 
1,300 hours for the additional requirement. This represents an average 
burden of 10 hours per respondent (1,300 total hours/130 lessees = 10 
hours per lessee).

                                                Burden Breakdown
----------------------------------------------------------------------------------------------------------------
                                                                                        Annual burden hours or
           30 CFR 250 section                    Reporting and          Hour burden   explanation of current OMB
                                           recordkeeping requirement    (in hours)             approval
----------------------------------------------------------------------------------------------------------------
517(c)(1); 520(a); 521(a); 522(a);        Notify MMS if SCP is                 \1/4\  Burden covered under
 526(b); 528(a); 529(a)(1); 531(a).        observed on a well;                         current approval for
                                           request instructions or                     subpart E, 1010-0067.
                                           procedures for special
                                           conditions.
517(c)(2); 521; 523; 525(c); 526(b),      Submit results of                        2  Burden included in pending
 (c); 528(d), (f); 529(b)(1)(ii); 531.     diagnostic tests,                           OMB approval for subpart
                                           departure requests and                      E, 1010-0067.
                                           supporting information,
                                           including plan of action
                                           for non-producing wells.
522(b); 525(a), (b); 526(b), (c);         Perform diagnostic test                  4  Burden included in pending
 527(c), (d), (e); 528; 529(a)(4)(i)(D).   and record results;                         OMB approval for subpart
                                           perform under current                       E, 1010-0067.
                                           follow-up tests at least
                                           annually to determine
                                           departure status.
522(b); 525(a); 527(g)..................  Retain complete record of            \1/4\  Burden included in pending
                                           well's casing pressure                      OMB approval of revised
                                           and diagnostic test                         subpart E, 1010-0067.
                                           results for 2 years.
524(a)..................................  Submit procedure for                   N/A  Burden covered under
                                           remediation of SCP on                       current approval of form
                                           form MMS-124.                               MMS-124, 1010-0045.
524(c)..................................  Appeal departure request               N/A  Burden covered under
                                           denial.                                     approval for 30 CFR part
                                                                                       290, 1010-0121.

[[Page 56623]]

 
530 NEW.................................  Provide report on status                 2  650 Reports = 1,300 annual
                                           of all SCP to MMS and new                   burden hours.
                                           owner/operator upon
                                           transfer of lease.
532.....................................  Submit form MMS-124 to                 N/A  Burden covered under
                                           report workover and                         current approval of form
                                           notify MMS of results of                    MMS-124, 1010-0045.
                                           workover repairs to
                                           eliminate SCP.
----------------------------------------------------------------------------------------------------------------

    MMS district and regional offices will use the information 
collected to determine whether production from wells with SCP continues 
to afford the greatest possible degree of safety under these 
conditions. MMS will base decisions to grant or deny departures based 
on the information submitted.
    As part of our continuing effort to reduce paperwork and respondent 
burdens, MMS invites the public and other Federal agencies to comment 
on any aspect of the reporting burden in the proposed rule. You may 
submit your comments directly to the Office of Information and 
Regulatory Affairs, OMB. Please send a copy of your comments to MMS so 
that we can summarize all written comments and address them in the 
final rule preamble. Refer to the ADDRESSES section for mailing 
instructions.
    The PRA provides that an agency may not conduct or sponsor a 
collection of information unless it displays a currently valid OMB 
control number. Until OMB approves the collection of information and 
assigns a control number, you are not required to respond. OMB is 
required to make its decision on the information collection aspects of 
this proposed rule between 30 to 60 days after publication in the 
Federal Register. Therefore, a comment to OMB is best assured of having 
its full effect if OMB receives it by December 10, 2001. This does not 
affect the deadline for the public to comment to MMS on the proposed 
regulations.
    a. We specifically solicit comments on the following questions:
    (1) Is the proposed collection of information necessary for MMS to 
properly perform its functions, and will it be useful?
    (2) Are the estimates of the burden hours of the proposed 
collection reasonable?
    (3) Do you have any suggestions that would enhance the quality, 
clarity, or usefulness of the information to be collected?
    (4) Is there a way to minimize the information collection burden on 
those who are to respond, including the use of appropriate automated 
electronic, mechanical, or other forms of information technology?
    b. In addition, the PRA requires agencies to estimate the total 
annual reporting and recordkeeping ``non-hour'' cost burden resulting 
from the collection of information. We have not identified any and 
solicit your comments on this item. For reporting and recordkeeping 
only, your response should split the cost estimate into two components: 
(1) The total capital and startup cost component, and (2) annual 
operation, maintenance, and purchase of services component. Your 
estimates should consider the costs to generate, maintain, and disclose 
or provide the information. You should describe the methods you use to 
estimate major cost factors, including system and technology 
acquisition, expected useful life of capital equipment, discount 
rate(s), and the period over which you incur costs. Capital and startup 
costs include, among other items, computers and software you purchase 
to prepare for collecting information; well control simulators, and 
testing equipment; and record storage facilities. Generally, your 
estimates should not include equipment or services purchased: before 
October 1, 1995; to comply with requirements not associated with the 
information collection; for reasons other than to provide information 
or keep records for the Government; or as part of customary and usual 
business or private practice.

Federalism (Executive Order 13132)

    According to Executive Order 13132, this rule does not have 
Federalism implications. This proposed rule does not substantially and 
directly affect the relationship between the Federal and State 
Governments. The rule applies to lessees that operate oil and gas 
facilities on the OCS. This rule does not impose costs on States or 
localities. Any costs will be the responsibility of the lessees.

Takings Implication Assessment (Executive Order 12630)

    The proposed rule expands upon existing operating regulations and 
proposes to codify current MMS procedures now in effect in the GOM OCS 
Region. It does not prevent any lessee or operator from performing 
operations on the OCS, provided they follow the regulations. We have 
determined that this rule does not represent a governmental action 
capable of interference with constitutionally protected property 
rights. Thus, MMS did not need to prepare a Takings Implication 
Assessment according to Executive Order 12630, Governmental Actions and 
Interference with Constitutionally Protected Property Rights.

Energy Supply, Distribution, or Use (Executive Order 13211)

    This proposed rule is not a significant rule and is not subject to 
review by OMB under Executive Order 12866. The rule does not have a 
significant effect on energy supply, distribution, or use because it 
essentially only codifies procedures that have been in effect for 
nearly a decade. Companies operating on the OCS in both the Gulf of 
Mexico and Pacific OCS Regions have been following similar requirements 
since 1991, when comparable procedures were provided to them by a 
Letter to Lessees. This proposed rule has very few new requirements, 
and the incremental costs will be low.

Clarity of This Regulation (Executive Order 12866)

    Executive Order 12866 also requires each agency to write 
regulations in plain, understandable language. This proposed revision 
of subpart E, ``Procedures For Dealing With SCP,'' uses ``plain 
English'' structure and text. We realize that it will differ from the 
style of the surrounding text. Eventually, all MMS regulations will be 
written in this new format. These changes include:
     Breaking down lengthy sections into multiple sections;
     Using lists in place of lengthy paragraphs;
     Using tables where possible; and
     Using ``you'' to refer to the lessee, operator, or person 
acting on behalf of a lessee.
    We encourage your comments on any of these innovations. We further 
invite

[[Page 56624]]

your comments on how to make this proposed rule easier to understand, 
including answers to questions such as the following:
    (1) Are the requirements in the proposed rule clearly stated?
    (2) Does the proposed rule contain technical language or jargon 
that interfere with its clarity?
    (3) Does the format of the proposed rule (grouping and order of 
sections, use of headings, paragraphing, etc.) aid or reduce its 
clarity?
    (4) Would the proposed rule be easier to understand if it were 
divided into more (but shorter) sections?
    (5) Is the description of the proposed rule in the SUPPLEMENTARY 
INFORMATION section of this preamble helpful in understanding the 
proposed rule? What else can we do to make the proposed rule easier to 
understand?
    Send a copy of any comments that concern how we could make this 
proposed rule easier to understand to: Office of Regulatory Affairs, 
Department of the Interior, Room 7229, 1849 C Street, NW., Washington, 
DC 20240. You may also e-mail the comments to this address: 
[email protected].

Civil Justice Reform (Executive Order 12988)

    With respect to Executive Order 12988, the Office of the Solicitor 
has determined that this proposed rule does not unduly burden the 
judicial system and does meet the requirements of sections 3(a) and 
3(b)(2) of the Executive Order.

National Environmental Policy Act (NEPA) of 1969

    This proposed rule does not constitute a major Federal action 
significantly affecting the quality of the human environment. A 
detailed statement under the NEPA is not required.

Unfunded Mandates Reform Act (UMRA) of 1995 (Executive Order 12866)

    This proposed rule does not impose an unfunded mandate on State, 
local, or tribal governments or the private sector of more than $100 
million per year. The proposed rule does not have any Federal mandates 
nor does the proposed rule have a significant or unique effect on 
State, local, or tribal governments or the private sector. A statement 
containing the information required by the UMRA (2 U.S.C. 1531 et seq.) 
is not required.

List of Subjects in 30 CFR Part 250

    Continental shelf, Environmental impact statements, Environmental 
protection, Government contracts, Investigations, Mineral royalties, 
Oil and gas development and production, Oil and gas exploration, Oil 
and gas reserves, Penalties, Pipelines, Public lands-mineral resources, 
Public lands-rights-of-way, Reporting and recordkeeping requirements, 
Sulphur development and production, Sulphur exploration, Surety bonds.

    Dated: October 25, 2001.
J. Steven Griles,
Assistant Secretary, Land and Minerals Management.

    For the reasons stated in the preamble, the Minerals Management 
Service (MMS) proposes to amend 30 CFR part 250 as follows:

PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER 
CONTINENTAL SHELF

    1. The authority citation for part 250 continues to read as 
follows:

    Authority: 43 U.S.C. 1331 et seq.

    2. In Sec. 250.517, paragraph (c) is revised to read as follows:


Sec. 250.517  Tubing and wellhead equipment.

* * * * *
    (c) When the tree is installed, you must equip the wellhead so that 
all annuli can be monitored for sustained pressure. You must not 
operate a well that has sustained casing pressure (SCP) in any casing 
annulus unless:
    (1) You immediately notify the District Supervisor when you first 
observe SCP in the well; and
    (2) You obtain permission from the District Supervisor to operate 
the well as described in Sec. 250.521.
* * * * *
    3. Sections 250.518 through 250.532 are added to subpart E to read 
as follows:


Sec. 250.518  How does MMS define pressure found in a well?

    MMS defines pressure found in a well as follows:
    (a) Unsustained casing pressure is pressure in a well that is self-
imposed (e.g. gas-lift pressure, gas or water-injection pressure), or 
pressure that is entirely thermally induced.
    (b) SCP means a pressure that is:
    (1) Measurable at the casinghead of an annulus that rebuilds when 
bled down;
    (2) Not due solely to temperature fluctuations;
    (3) Not a pressure that has been applied deliberately; and
    (4) A result of one or more leaks.


Sec. 250.519  What is the MMS policy for the prevention of sustained 
casing pressure (SCP)?

    You must design and maintain your casing, completion, and tubing 
programs according to the requirements of subparts D, E, and F of this 
part, to prevent the occurrence of SCP on wells.


Sec. 250.520  What are the MMS requirements for monitoring casing 
pressure?

    (a) You must monitor all of your wells for casing pressure. This 
includes wells that have never exhibited SCP. You can achieve this by 
using either a Supervisory Control and Data Acquisition system or 
equipping each casing annulus so that a pressure gauge can be used. If 
any casing annulus in your well exhibits SCP for the first time, you 
must immediately notify MMS and request approval to operate the well as 
prescribed in Sec. 250.521.
    (b) You must monitor your wells for casing pressure according to 
the following table:

------------------------------------------------------------------------
           If your well . . .                  Then you must . . .
------------------------------------------------------------------------
(1) Shows no sustained or unsustained    Monitor each annulus at least
 casing pressure when checked.            once every 6 months in
                                          conjunction with the test of
                                          the surface controlled
                                          subsurface safety valve to
                                          ensure the continued absence
                                          of pressure.
(2) Exhibits SCP.......................  Monitor the well at least daily
                                          on a manned structure and at
                                          least weekly on an unmanned
                                          structure.
(3) Exhibits unsustained casing          Monitor the well at least daily
 pressure.                                on a manned structure and at
                                          least weekly on an unmanned
                                          structure.
(4) Is part of a nonconventional         Monitor the well according to
 (tension leg platform, SPAR, etc) or     Sec.  250.529.
 subsea (wet tree) development..
------------------------------------------------------------------------


[[Page 56625]]

Sec. 250.521  How do I obtain permission to operate with SCP?

    (a) When you first determine that a well exhibits SCP in one or 
more casing annulus, you must notify MMS immediately. You must then 
conduct a diagnostic test of the casing pressure in all annuli as 
required in Sec. 250.527. To obtain permission to operate the well with 
SCP, you must then submit the diagnostic test results along with a 
departure request to MMS within 10 working days of the date of the 
test. You must submit pressure information on each annulus in the well, 
because any MMS approval to operate a well that has SCP is granted for 
the entire well.
    (b) Your departure request must include all of the following.
    (1) A request for a departure from the requirement that you must 
not operate a well that has SCP in any casing annulus (30 CFR 
250.517(c)).
    (2) A summary containing information about you and your facility, 
such as: operator name, address, lease, area/block, facility type and 
whether it is manned or unmanned, and the number of wells on the 
facility. The summary should also give the well particulars, such as 
well name, API number, well status, current well production data, and 
current shut-in and flowing tubing pressures.
    (3) A current wellbore schematic with all tubing, cementing, and 
casing data including: size, weight and grade, minimum internal yield 
pressure (MIYP) of each string, and depths of each tubing and casing 
string. This information is only required for your initial submittal on 
each well and following a major workover or sidetrack procedure which 
changes the wellbore.
    (4) The casing pressure on each annulus (including those with zero 
pressure before diagnostic testing); percent of internal yield 
pressure; origin of pressure, if known; any known casing damage or 
wear; and any known cementing problems.
    (5) A complete record of the diagnostic test, conducted as required 
by Sec. 250.527.
    (6) Any specific operational information that is needed to explain 
unusual occurrences, such as a large increase or decrease in casing 
pressure(s) from the previous report, presence of oil in the fluids 
bled, pressures imposed on production casings, and delays during 
diagnostic testing due to weather or equipment failure.


Sec. 250.522  What if I believe my well exhibits unsustained casing 
pressure (self-imposed or thermally induced)?

    (a) If you believe that the pressure appearing on a well is self-
imposed (e.g., gas-lift pressure, gas or water-injection pressure), you 
must contact MMS for instructions on providing documentation for the 
well.
    (b) If you believe that the pressure appearing on a new well or new 
completion is entirely thermally induced, you may conduct a shut-in 
diagnostic. For this test, you must shut in the well and record the 
fall of the pressure. If pressure falls to zero, this diagnostic test 
is sufficient, and no further notifications or submittals to MMS are 
necessary. You must retain the results of this test on the platform.


Sec. 250.523  How will MMS respond to my request for a departure to 
operate my well with SCP?

    Your request for a departure to operate your well with SCP will 
result in one of the results in the following table:

------------------------------------------------------------------------
              If MMS . . .                     Then you must . . .
------------------------------------------------------------------------
(a) Denies your request................  Follow the procedures outlined
                                          in Sec.  250.524.
(b) Places your well in ``life of        Follow the procedures in Sec.
 completion'' status.                     250.525. This means that you
                                          have obtained a departure
                                          which allows you to operate
                                          the well as long as the
                                          sustained pressure conditions
                                          do not increase more than 200
                                          psig. MMS normally grants this
                                          type of departure when the SCP
                                          is less than 20 percent of the
                                          MIYP, and bleeds to zero for
                                          all annuli.
(c) Places your well in ``fixed term''   Follow the procedures outlined
 status.                                  in Sec.  250.526. This means
                                          that you have obtained a
                                          departure that allows you to
                                          operate the well for a fixed
                                          term, usually 1 year. MMS
                                          normally grants this type of
                                          departure when the SCP bleeds
                                          to zero for all annuli, but
                                          the SCP is greater than or
                                          equal to 20 percent of the
                                          MIYP for one or more annuli.
------------------------------------------------------------------------

Sec. 250.524  What if MMS denies my departure request or cancels an 
existing departure?

    (a) When MMS denies a departure request for cause, we will issue a 
certified mail denial letter. Within 30 days after you receive the 
denial letter, you must submit a detailed procedure for remediation of 
the SCP on form MMS-124 to the applicable District Supervisor. Unless 
otherwise directed, you must begin remediation operations within 30 
days of the District Supervisor's approval of your remediation 
procedure.
    (b) MMS may rescind any departure approval and require you to take 
corrective measures if casing pressure conditions deteriorate or 
present a hazard to personnel, the environment, the platform, or the 
producing formation. Should conditions dictate, MMS can order the 
immediate shut-in of the well.
    (c) You may appeal a departure request denial as stated in 30 CFR 
250.104. However, the filing of an appeal will not suspend the 
requirement for your compliance with the decision.


Sec. 250.525  What if MMS places the well in a ``life of completion'' 
departure status?

    (a) If MMS places your well in a ``life of completion'' departure 
status, you must still conduct monitoring and subsequent diagnostic 
tests. You are not required, however, to submit the results of your 
diagnostic tests to MMS as long as your well remains in this status. 
Instead, the results of the diagnostic tests must be kept at your field 
office nearest the OCS facility.
    (b) You must conduct diagnostic tests annually. The test must be 
conducted sooner if your well monitoring shows that the pressure in any 
annulus has increased more than 200 psig over the pressure measured 
during the previous diagnostic test. Each time you conduct a diagnostic 
test, the pressures recorded become the benchmark pressures, and they 
determine the need for the next diagnostic test.
    (c) The well remains in the ``life-of-completion'' status as long 
as the diagnostic test pressure is less than 20 percent of the MIYP of 
each of the evaluated casings and bleeds to zero through a \1/2\-inch 
needle valve within 24 hours for all casing annuli in the well. If any 
diagnostic test fails to meet these criteria, the well is no longer in 
the ``life-of-completion'' status. You must then submit a request 
including the diagnostic information for approval of a ``fixed-term'' 
departure.

[[Page 56626]]

Sec. 250.526  What if MMS places the well in a ``fixed-term'' departure 
status?

    (a) If MMS places your well in a ``fixed-term'' status, you must 
still conduct monitoring and subsequent diagnostic tests. Your ``fixed-
term'' status allows you to operate your well with SCP for a length of 
time determined by MMS. This fixed term is usually 1 year.
    (b) You must perform a new diagnostic test and submit a request for 
a new departure prior to the expiration of the term of your current 
departure. The test must be conducted sooner if your well monitoring 
shows that the pressure in any annulus has increased more than 200 psig 
over that measured during the previous diagnostic test. If any annuli 
fail to bleed to zero through a \1/2\-inch needle valve within 24 
hours, you must notify MMS immediately.
    (c) If all casing pressures fall to pressures that are below 20 
percent of the MIYP of their respective casing, you may perform a new 
diagnostic test and submit the results to MMS. We may then grant you a 
``life of completion'' departure based on the results of the diagnostic 
test.


Sec. 250.527  How must I conduct my diagnostic test?

    (a) When you determine that any casing annulus in a well requires a 
diagnostic test, you must bleed the pressure from all casing annuli 
exhibiting SCP in that well, unless MMS specifically directs otherwise.
    (b) You must not bleed down the casing(s) of wells with SCP, except 
to conduct required and documented diagnostic tests.
    (c) You must record the initial pressures on all annuli of the well 
before bleed-down. You must then record both bleed-down and buildup 
pressures graphically or tabularly in at least 1-hour increments for 
each casing annulus in the wellbore. The graphical or tabular pressure 
response must be recorded and analyzed to detect possible communication 
between annuli.
    (d) You must bleed down the pressure to zero psig in each annulus 
through a \1/2\-inch needle valve. You must bleed down and build up 
each annulus separately, while monitoring the adjacent annuli. If the 
bleed-down takes less than 1 hour, you may simply note the amount of 
time taken. You must record the rate of buildup of each annulus for the 
24-hour period immediately following the bleed-down. During the bleed-
down of the production casing, the tubing pressure must be recorded.
    (e) If you recover fluid during the bleed-down, you must record the 
type and amount. You should conduct bleed-down to minimize the removal 
of liquids from the annulus. This does not mean that you must 
necessarily stop the bleed-down when you encounter liquid. Stopping the 
bleed-down to wait for gas to percolate is permitted, even though this 
may lead to longer bleed-down times. However, you must document any 
such ``waiting times,'' preferably with an annotated pressure chart. 
The total time for a bleed-down, including those waiting periods, must 
not exceed 24 hours. After the diagnostic test, you must replace the 
total volume of any removed liquids with a fluid of equal or greater 
density.
    (f) You do not need to diagnose gas-lift pressure(s) caused by 
active gas- or water-injection as SCP. However, you must monitor gas-
lift pressure(s) during the diagnostic test to confirm that there is no 
communication with another annulus. You must not close subsurface 
safety valves during a diagnostic test.
    (g) You must retain complete casing pressure and diagnostics data 
on each well for a period of 2 years. Casing pressure records must be 
maintained at the lessee's field office nearest the OCS facility for 
review by MMS.


Sec. 250.528  When must I conduct a diagnostic test?

    Your requirements to conduct diagnostic tests are contained in 
Sec. 250.521 through Sec. 250.530. The following table summarizes your 
requirements and directs you to the section with full information:

------------------------------------------------------------------------
                If . . .                            Then . . .
------------------------------------------------------------------------
(a) You initially detect SCP in any      An initial diagnostic test must
 annulus of the well.                     be performed after MMS has
                                          been notified (see Sec.
                                          250.521).
(b) Your well is in a ``life-of-         A diagnostic status'' test must
 completion'' departure status.           be performed annually (see
                                          Sec.  250.525).
(c) Well is in a ``life-of-completion''  A diagnostic test is required
 departure status, and the pressure in    immediately (see Sec.
 any annulus reaches a pressure 200       250.525).
 psig greater than the pressure
 measured during the previous
 diagnostic test.
(d) Your well is in a ``fixed-term''     You must perform a new
 departure status.                        diagnostic test and request a
                                          new departure prior to the
                                          expiration of the existing
                                          departure (see Sec.  250.526).
(e) Your well is in a ``fixed-term''     A diagnostic test is required
 departure status and the pressure in     immediately (see Sec.
 any annulus is at least 200 psig         250.526).
 greater than the pressure measured
 during the previous diagnostic test.
(f) You conduct workover operations on   You must conduct a new
 the well.                                diagnostic and submit a
                                          departure request if any
                                          pressure remains after the
                                          workover (see Sec.  250.532).
------------------------------------------------------------------------

Sec. 250.529  What are the MMS requirements for monitoring casing 
pressure in floating production or subsea developments?

    (a) The MMS policy for wells that are located on floating platforms 
or vessels (Tension Leg Platforms's, Spars, etc.) is as follows:
    (1) You must monitor pressures in the production riser on a 
continuous basis. If you encounter pressure on the production riser, 
you must report it immediately to MMS. As part of this notification, 
you must describe how the pressure will be diagnosed to confirm its 
magnitude and source.
    (2) You must automate pressure monitoring in the tubing/riser 
annulus above the mud-line isolation, and establish high- and low-
pressure set points to provide an indication of either a tubing or 
riser leak.
    (3) MMS will not grant any departures in the ``life-of-completion'' 
category for wells where all annuli cannot be monitored for pressure.
    (4) You must meet the requirements of the following table:

[[Page 56627]]



------------------------------------------------------------------------
                If . . .                            Then . . .
------------------------------------------------------------------------
(i) You have a dual-bore production      MMS will allow you to maintain
 riser.                                   SCP on the inner bore only
                                          under the following
                                          circumstances:
                                         (A) Pressure on the tubing/
                                          riser annulus must bleed to
                                          zero through a \1/2\-inch
                                          needle valve in 4 hours or
                                          less.
                                         (B) The level of SCP approved
                                          will not exceed 10 percent of
                                          the MIYP of the inner bore
                                          riser.
                                         (C) MMS will determine the
                                          acceptable rate and magnitude
                                          of buildup.
                                         (D) You must conduct a
                                          diagnostic test at least every
                                          6 months. You must conduct the
                                          test immediately if the
                                          pressure increases more than
                                          200 psig above the currently
                                          approved level.
                                         (E) You must cease production
                                          if the well experiences
                                          formation-related pressure on
                                          the outer riser annulus.
                                         (F) No pressure may be
                                          maintained on the outermost
                                          riser bore.
(ii) You have a single-bore production   You must either kill the well
 riser and detect pressure in the         or set a plug to eliminate the
 tubing/riser annulus, and the            pressure in the tubing/riser
 diagnostic test confirms that the        annulus.
 pressure is SCP.
------------------------------------------------------------------------

    (b) For subsea wells (wet tree), you must meet the requirements of 
the following table:

------------------------------------------------------------------------
                If . . .                            Then . . .
------------------------------------------------------------------------
(1) You have a subsea well where only    (i) You must conduct
 the production annulus can be            diagnostics as indicated in
 monitored.                               Sec.  250.526, except that the
                                          results for adjacent annuli
                                          will be limited to monitoring
                                          tubing pressure response if
                                          the wellhead was installed
                                          before January 1, 2005.
                                         (ii) You must obtain permission
                                          from MMS for maintaining any
                                          SCP.
                                         (iii) You must monitor the well
                                          for casing pressure
                                          continuously.
(2) You install a subsea tree after      According to 30 CFR 250.517(c),
 January 1, 2005.                         you must provide a method for
                                          monitoring all casing annuli
                                          for SCP.
------------------------------------------------------------------------

Sec. 250.530  What is the MMS policy for SCP during transfer of your 
lease?

    Before a lease transfer, the current owner/operator must review all 
casing pressure on the lease and provide a report on the status of all 
SCP to MMS and the new owner/operator.


Sec. 250.531  What is the MMS policy for SCP in non-producing wells?

    (a) No casing pressure of any kind is permitted on a temporarily 
abandoned well. This does not include newly drilled wells that have 
been temporarily plugged pending the installation of production 
facilities, pipelines, etc. For these wells, if you detect SCP, you 
must contact MMS and submit a plan of action.
    (b) For non-producing wells that are neither temporarily abandoned 
nor continuously injecting, you must meet the requirements of the 
following table:

------------------------------------------------------------------------
                If . . .                            Then . . .
------------------------------------------------------------------------
(1) Your well fails to bleed to zero...  You must submit plans for the
                                          repair of the SCP condition
                                          within 30 days.
(2) You determine the well will not be   You must submit plans for the
 returned to production.                  repair of the SCP condition
                                          within 30 days.
(3) You have not used the well for       Before the end of the year of
 continuous production or injection for   non-production/injection, you
 1 year.                                  must have assessed the well
                                          and presented a plan to MMS.
                                          The plan must include both
                                          diagnostic test results and a
                                          plan of action. The plan must
                                          describe when and how:
                                         (i) the well will be returned
                                          to production; or
                                         (ii) the SCP will be
                                          eliminated.
------------------------------------------------------------------------

Sec. 250.532  What if I conduct a workover on a well with SCP?

    If you perform a workover requiring the submission of Sundry 
Notices and Report on Wells (form MMS-124) according to Sec. 250.613, 
it invalidates any existing SCP departure for that well. When you 
conduct a workover on a well with SCP, you must make all repairs 
feasible to eliminate SCP consistent with the use of the equipment used 
for the workover. You must then notify MMS of the results using form 
MMS-124. A new diagnostic test is required on any remaining SCP.

[FR Doc. 01-28221 Filed 11-8-01; 8:45 am]
BILLING CODE 4310-MR-P