Apr 17, 2025 (MarketLine via COMTEX) --
With moves into deeper waters becoming more common as the search for new hydrocarbons continues, the regulatory framework needs to change.
Deepwater drilling is becoming increasing important in the oil and gas (O&G) industry as shallower reserves are depleted. A
According to Global Energy MonitoraEUR(TM)s Global Oil and Gas Extraction Tracker, in 2024, resources totalling approximately eight billion barrels of oil equivalent were announced in new offshore discoveries.A
Moving into deepwater environments is generally harder than onshore O&G extraction thanks to a combination of technical, economic and environmental factors. A
Offshore platforms are generally more exposed to unpredictable weather, require specialised equipment and technology, while supplying and maintaining offshore platforms, especially in remote areas, can be expensive. Then comes the rigorous (and also expensive) regulatory frameworks.
Exploring and extracting in deeper waters requires operators to pay ever-closer attention to regulatory compliance and developments, as the offshore environment comes with a range of challenges aEUR" from environmental impacts to health and safety.AA
Offshore Technology examines the current and future regulatory terrain for deepwater drilling as O&G operators come under more scrutiny.A
The regulatory landscape"While there are several international conventions involving the maritime energy industry, it is mainly a country-by-country regulatory approach," explains Steven Otillar, partner at global law firm White & Case.AA
The International Maritime Organization, the regulatory body under the United Nations (UN) for the maritime industry, has regulations relating to drilling vessels and modular drilling units.?A
Otillar highlights MARPOL, the International Convention for the Prevention of Pollution from Ships, as one of the most significant maritime environmental conventions that impacts the global offshore energy industry.AA
This is because any vessel or drill-ship flagged under a member country must comply with MARPOL requirements. As such, regardless of where a drill-ship may be operating, the regulations would apply, and activity is followed by assets as opposed to just a geographical region.?
aEURoeThe importance of MARPOL cannot be understated and even ASEAN [the Association of Southeast Asian Nations], which has established its own regulatory system, for the?most part follows MARPOL standards,aEUR Otillar says. A
The Gulf of Mexico The Gulf of Mexico (GOM) offers a key example as one of the most active basins for deepwater drilling globally. It has become a tumultuous regulatory environment in recent months with the handover of the US presidency from Joe Biden to Donald Trump.
During his final days in office in January, Biden made a historic withdrawal of more than 625 million acres of federal waters from future oil and gas leasing under the Outer Continental Shelf Lands Act (OCSLA), limiting future drilling operations.AA
Trump declared he would aEURoeunban it immediatelyaEUR, but there continues to be legal uncertainty over whether a president can restore or modify previous withdrawals under the OCSLA.
One thing is certain in this debate aEUR" TrumpaEUR(TM)s seemingly endless support for the O&G industry to aEURoedrill, baby, drillaEUR. In February, the National Energy Dominance Council was established to advise the President on permitting, production and regulatory processes while aEURoeseeking to eliminate longstanding, but unnecessary, regulationaEUR. A
TrumpaEUR(TM)s agenda is likely to enable deeper drilling in the GOM to match or surpass that of the Stones field approximately 200 miles south-west of New Orleans, Louisiana, which has a depth of approximately 2.9km and came online in 2016.A
Indeed, the US Bureau of Ocean Energy Management's forecast for O&G in the GOM shows a downward trend in shallow-water production and an upward trend in deepwater production through to 2031.A
Josh Ortega, vice-president of safety, sustainability and procurement at supply chain risk management solutions provider Veriforce, confirms that US regulations will aEURoecontinue to serve as a global benchmark in worker safety, environmental protection, well control, blowout prevention and emergency response, especially after the Deepwater Horizon disasteraEUR.A
North Sea activityAnother significant area for deepwater drilling is the North Sea, which is managed by a complex web of national authorities and international organisations.
The UK and Norway are primary producers of oil in the basin but the Netherlands, Denmark and Germany also regulate production, with different frameworks for each country to monitor and ensure safe drilling activities.AA
The North Sea is home to the worldaEUR(TM)s deepest oil well in the Norwegian Continental Shelf drilled to a depth of 10km from a floating rig that came online in 2021. This is regulated by the Norwegian Petroleum Directorate and the Petroleum Safety Authority and extracts an average of 6,000 barrels of oil per day.
Meanwhile, the UK Labour Government, which came to power just under a year ago, is aiming for a transition towards clean energy in the basin, with offshore regulations set by the Department for Energy and Net Zero and implemented by the North Sea Transition Authority (NSTA). A
An increasing focus on reducing operating emissions has led the NSTA to push for adaptations to drilling operations, such as platform electrification. In February, the body confirmed that aEURoecross-sector efforts are ongoing to map out a clear regulatory pathway for electrification schemes, which includes work on grid connectionsaEUR.A
Drilling activity in the North Sea was hampered in 2024 by the Energy Profits Levy, which brought the headline tax rate to 75%. This is set to expire in 2030, but in the meantime, drilling campaigns and field development projects have been decelerated by a range of companies. A
Across the board, the increasing significance given to the environmental impacts of deepwater drilling by regulators is becoming difficult to ignore. In January, a Scottish court overturned UK Government approvals for two North Sea hydrocarbon projects citing downstream emissions.A
This is a strong regulatory signal to the oil and gas industry, one that operators must consider for future drilling campaigns in existing fields and investment in new projects.
According to the International Monetary Fund (IMF), between 2015 and 2019, "climate policies led to a global decline of 6.5% in investment among publicly traded oil and gas companies, with European companies experiencing the most significant impact".
Drilling technologies and regulationsOrtega identifies technology as a key emerging risk area for deepwater drilling regulations, including aEURoeAI-enabled remote monitoring and diagnostics, real-time well surveillance, and cybersecurityaEUR.A
Indeed, the advanced technologies that deepwater drilling relies on present both an opportunity and challenge for regulators. As solutions such as AI develop at rapid pace, international cooperation on monitoring operational usage becomes more complex. A
However, digital data collection also enables the real-time tracking of drilling operations for enhanced regulatory compliance and transparency.AA
Satellite imagery can be used by regulators to map offshore infrastructure and monitor environmental indicators from drilling activities, as demonstrated by the European Maritime Safety Agency.AA
The use of seismic sensors aEUR" a crucial tool for locating potential O&G reserves for deepwater drilling aEUR" is also heavily regulated to minimise environmental impact, alongside standards and guidelines set by the Global Seismographic Network. A
As operators increasingly invest in new drilling technologies they can expect stricter regulations on usage.AA
Regulatory cooperationStandards and regulations are likely to remain heavily interconnected and intertwined. The International Organisation for Standardisation (ISO) publishes certifications for offshore drilling covering environmental and asset management as well as health and safety. A
aEURoeStandards provide critical technical guidance and enable global harmonisation, often advancing ahead of formal rule-making and promoting continuous improvement across the industry,aEUR explains Ortega.A
aEURoeBut without a regulatory framework to enforce compliance and close systemic gaps, even the best standards risk becoming aspirational rather than operational.aEURAA
Harmonisation is a key sticking point in O&G drilling regulations, as the UN recently called for nations to aEURoeadequately regulate and controlaEUR offshore drilling, cautioning that aEURoethe main challenge is the complexity and difficulty of coordinating and implementing current ocean management regulations and initiativesaEUR.A
aEURoeAs we see more drilling beyond the continental shelf and exclusive economic zones, it will be interesting to see how matters develop,aEUR states Otillar. aEURoeThere will most likely be a patchwork of regulations and internal corporate safety policies to be applied, which will vary greatly among operators.aEURA
Health and safety regulations can pose further difficulties. Sidley Austin environmental health and safety partner Alana Genderson explains that in the US aEURoevarying agencies claim jurisdiction over workplace health and safety for offshore drilling. Employers face enforcement claims from multiple agencies and are left to parse out their complex web of safety and health regulations.aEURA
In Europe, there have been some consolidation efforts by regulators to align compliance across offshore assets, which could set an example for other regions. In October 2024, the European Commission expanded the Monitoring, Reporting and Verification regulation?to include greenhouse gas emissions from drilling ships.AA
Coordinating regulations across O&G assets should simplify compliance for operators, but this will be a long-term process requiring international collaboration.AA
Ortega summarises that aEURoeeffective regulation is about shared responsibility, transparency and agility. As technology and expectations evolve, regulators, industry leaders and safety partners must work together to ensure that offshore operations remain safe, sustainable and resilient.aEURA
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COMTEX_464645963/2227/2025-04-17T09:35:20
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