The Obama administration will reportedly release a new offshore well control rule on Thursday that some energy firms believe will cost several billion dollars to implement.
A source close to the matter told Bloomberg Politics that the Bureau of Safety and Environmental Enforcement (BSEE) is expected to release new offshore well control regulations that the Department of Interior has estimated will cost less than $1 billion over 10 years.
The new regulations are part of a broader plan launched in response to the April 2010 Deepwater Horizon accident that killed 11 people and caused the largest oil spill in U.S. history.
Details about the new rule have not been released yet.
Several energy firms have expressed concern about the rule change, arguing that the new regulations will make offshore development more costly amid a nearly two-year long oil price slump.
In a letter to the Department of Interior, Exxon estimated that the new rule could cost as much as $25 billion and could heighten the risk of blow outs by taking decision making authority away from onsite engineers, Bloomberg said.
According to the October 2015 letter, Exxon’s estimate is “not intended to be all-inclusive” but the estimate “incorporates anticipated costs of certain aspects of the rule and leverages a number of BSEE’s key activity assumptions to build up a low-side estimated total cost to the industry.”
The letter added that Exxon’s estimate does not consider “any resulting impacts associated with a potential reduction in offshore activity or production stemming from the rule’s requirements.”
“Exxon Mobil supports revising regulations with the goal of strengthening operations integrity of oil and gas drilling in the United States Outer Continental Shelf (OCS). However, we are concerned that as currently proposed, the rules if adopted would have the opposite effect than intended and would ultimately prove detrimental to both safety and the environment,” Exxon said in a July 2015 letter to the Interior Department.
The American Petroleum Institute, an energy industry group, said its concerned that rule may have “unintended negative consequences for safety and affect future offshore energy projects.”
“The Well Control Rule will affect offshore energy projects for years to come. If left unchanged from the proposal, the flaws in the rule could lead to increased risks and decreased safety in offshore operations,” API upstream group director Erik Milito said.