Drilling Contractors Might Quit US Gulf Work

IADC Criticizes BSEE Policy for Citing Drilling Contractors

The International Association of Drilling Contractors (IADC) say they are gravely concerned with the Interim Policy Document issued this week by the U.S. Bureau of Safety and Environmental Enforcement (BSEE). By affirming that BSEE inspectors can issue Incidents of Noncompliance (INCs) to drilling contractors as well as oil companies, this unprecedented policy demonstrates a significant deviation from the global paradigm of holding operators ultimately responsible for accidents at the well site.

“Drilling activity is strong around the world, with significant rig demand in areas like Brazil, West Africa and Asia Pacific. Drilling contractors could well decide to leave the Gulf for places where they won’t have to bear the same risks."

“BSEE’s guidance is inconsistent with the industry model and creates a whole new area of ambiguity,” said Brian Petty, IADC executive vice president – government affairs. “Global government regimes have always held operators responsible. This new guidance opens the door to unknown levels of liability for contractors and additional uncertainty for contractors. At a minimum it could increase contractors’ insurance premiums, but it also could potentially eliminate coverage for many companies in the U.S. altogether.”

These additional costs and risk exposure, combined with the possibility for civil penalties and fines, could drive drilling contractors out of the U.S. Gulf of Mexico, where experienced and high-quality drilling contractors are desperately needed. “Drilling activity is strong around the world, with significant rig demand in areas like Brazil, West Africa and Asia Pacific. Drilling contractors could well decide to leave the Gulf for places where they won’t have to bear the same risks,” Petty said.

Under the standard IADC drilling contracts, drilling contractors are already liable to oil companies for any gross and willful negligence.