Compliance with a new regulation proposed in June 2009 by the United States Minerals Management Service (MMS) could require offshore operators to develop and implement new Safety and Environmental Management Systems (SEMS) for their oil and gas operations on the Outer Continental Shelf of the United States.

AMEC Paragon’s subject matter experts are preparing implementation plans to address the anticipated need that many offshore operators may face in the coming year. Based upon statements from MMS representatives at a public hearing in New Orleans in September, 2009, the rule will be finalized in the third quarter of 2010.

The proposed SEMS rule bears considerable similarity to the well-established Safety and Environmental Management Programs (SEMP) that most offshore operators have had in place for many years. A key difference is that SEMS — if implemented in its current form — is a new regulation, not just a set of recommended practices. Offshore operators may require the expert assistance of engineering service companies to adjust and audit their existing programs or to develop entirely new ones that comply with the new regulation.

With a few exceptions, the proposed SEMS rule does not change or add to the technical requirements for safe and clean operations that are already included in many guidance standards and recommended practices as established by the American Petroleum Institute (API). The biggest change is that their implementation will now be a legal requirement. The MMS will have oversight and a wide range of enforcement authority, from issuing reports of non-compliance, to civil penalties up to $35,000.00 per day per violation, and criminal penalties of $50,000.00 and up to two years in prison.

In its preamble to the proposed rule, the MMS states, “Each SEMS program [will] be tailored to the scale and complexity of the company’s operation.” The MMS also requires that the SEMS be “structured to include accountability for contractors and subcontractors.” There will not be a detailed, prescriptive, one-size-fits-all rule. Instead, each company will develop SEMS to address its own circumstances.

AMEC Paragon can assist offshore operators in complying with the refocused management elements specified in the new rule: Hazards Analysis, Management of Change, Operating Procedures, and Mechanical Integrity.

AMEC Paragon also can assist operators with the required audit process. Specifically, the SEMS program must be audited at least once every three years “by either an independent third party of by qualified personnel designated within the company.” The audits are to be conducted both in an office environment and in the field by “a knowledgeable and experienced auditor.” Operators that have a poor performance record are more likely to be audited than those whose record is good.

The MMS does not provide specific guidance as to how the SEMS program is to be implemented, partly because what needs to be done varies considerably depending upon the companies involved. Once a plan is developed, an auditor evaluates what has been done and generates a gap analysis. The facility management then takes corrective action based upon those findings. Even if the audit does not generate any significant findings, management can still use the insights and lessons generated by the audit to improve their risk management plan.