Regulatory Action: Non-Jones Act Vessels and BLM Methane Rule

In the final days of the Obama Administration, U.S. Customs and Border Patrol (CBP) published a notice to change long-standing interpretations of rules for vessels transporting equipment used by the offshore oil and gas industry. If finalized, the notice would restrict the use of certain “non-Jones Act” vessels from performing a variety of functions (laying pipeline, well intervention, dive support, etc.). These vessels are critical to current and future exploration and development activities on the Outer Continental Shelf (OCS)

PESA joined a Joint Trade effort to voice opposition to CBP’s action that could curtail exploration and production on the OCS and impact PESA member companies’ operations. On May 10, CBP withdrew its proposal. PESA continues to work with the Joint Trade coalition to oppose future actions of this nature that would adversely affect the industry.

One of the oil and natural gas industry’s near-term priorities has been the passage of a Congressional Review Act (CRA) resolution overturning the methane venting and flaring rule from the Bureau of Land Management (BLM).

BLM finalized a rule in December 2016 requiring oil and gas producers on public and tribal land to cut well flaring in half and to limit storage tank venting. Industry has expressed concern with the rule indicating the added cost of compliance could lead to the shutting in of a significant number of wells on federal lands, reducing domestic energy production and decreasing revenues to the U.S. Treasury.

While the CRA passed the U.S. House of Representative in February, the U.S. Senate failed to vote on the measure prior to the May deadline for using the CRA.

Industry now looks to work with the Department of the Interior (DOI) in addressing its concerns with the rule. Per a Presidential Executive Order on promoting energy independence and economic growth, the Secretary of the Interior was requested to review the subject rule for consistency with current policy. If the Secretary finds the rule is not aligned with current policy, DOI is to suspend, revise or rescind the rule.

Given DOI’s review may take an extended period of time, PESA requested in a letter to Interior Secretary Ryan Zinke that compliance dates for the subject rule be extended for at least two years. PESA believes it is prudent to postpone these deadlines so that companies do not take actions and make expenditures that may eventually be deemed unnecessary if the rule is suspended, revised or rescinded.

Industry’s fundamental position has been the BLM methane rule is unnecessary, since there has been significant reduction in methane emissions during the past decade despite increased natural gas production. Technologies and innovations by PESA’s member companies have been instrumental in providing safer and more environmentally sustainable production methods.

PESA will work with the American Petroleum Institute and other trade associations as the issue moves to the regulatory arena.