August 20, 2010
California State Lands Commission
Staff Presentation
1
Purpose of Report
Chair of the Commission requested staff to review
oil production operations in State waters,
specifically in light of the British Petroleum (BP)
Deepwater Horizon oil spill in the Gulf of Mexico:
 CSLC’s oil spill prevention activities and programs
 Effectiveness of these programs
 Evaluate opportunities for improvement of these
programs.
2
Presentation Outline
 Oil & Gas Operations
 Marine Terminal Operations
 Surface Leasing
 Environmental Planning and Management
3
Mineral Resources Management Division
Functions and Responsibilities
 Oversee offshore mineral leases
 Regulate offshore oil and gas activities
 Development of resources in safe and environmentally
responsible manner
 Implement safety and pollution prevention programs
 Maximize revenue to the State
4
Oil & Gas Offshore Operations
 18 producing offshore state oil & gas leases
 4 offshore platforms and 2 man-made islands
5
Oil & Gas Offshore Operations
 Over the past 10 years:
 168 million barrels of oil produced
 $2.4 Billion revenue to the State
 Oil spill incidences from drilling and production
 Less than 12 per year
 Generally in drops or ounces
 Less than half a barrel average total per year
6
Oil & Gas Offshore Operations
Regulations
 Drilling Regulations
 Individual Well Program Review by Engineers
 Production Regulations
 Oil Spill Contingency Plans
 Operations Manuals & Emergency Planning
7
Oil & Gas Offshore Operations
Platform inspection Program
 Monthly Inspections — Require 2-3 days
 Production and Safety systems
 Average of 317 devices reviewed
 Deficiencies are corrected immediately
 Inventory on-site spill response equipment
 Daily Inspections
8
Oil & Gas Offshore Operations
Safety Audit Program
 Safety system design
 Verification of alarms and controls
 Compliance with regs and industry standards
 Reviews of Facility Operating Manual and Spill Prevention Plan
 Organization safety culture (SAMS)
9
Oil & Gas Offshore Operations
Gulf BP Spill Preliminary Analysis -- State Regulations
 Offshore Environment
 Water Depth
 Formation Depth
 Pressures
 Blowout Prevention Equipment
 Redundancy
 Well Casing
 Cementing of Casing
 Time = Compressive Strength
 Bond Logs
 Daily Reports - Review
10
Oil & Gas Offshore Operations
Recommendations
 Update Current Regulations
 Legislation
 Enforcement (Cease & Desist Authority)
 Fill MRMD vacancies left by recent retirements
 Resubmit reclassification of Inspector series
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Marine Terminal Operations
Inspection & Management
12
Marine Terminal Operations
Regulations
 Article 5.0 Marine Terminals Inspection and Monitoring
 Article 5.3 Marine Terminal Personnel Training and
Certification
 Article 5.5 Marine Terminal Oil Pipelines
 Article 5.1 MOT Physical Security
 CCR Title 24, Part 2, CBC Chapter 31F MOTEMS
13
Marine Terminal Operations
Stats/Effectiveness
Billions of Gallons
Amount of Oil Transferred
In Past 10 Years
36.6
36.2
36
38
36
33.3 33.3
32.8
34
32
29.6
30
27.7
26.7
28
25.5
26
24
22
20
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Billion…
Number of Spills
Number of Oil Spills In Past 10 Years
36
40
32
35
28
27
30
25
21
25
19
17
20
14
15
9
10
5
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Number of Spills
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Marine Terminal Operations
Stats/Effectiveness
Total Number of Transfers In Past 10 Years
Number of Transfers
8000
7500
7443 7392
7374
6961
6920
7000
6242
6500
6525 6595
6281
5993
Total Transfers
6000
5500
5000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Number of Transfers Monitored In Past 10 Years
Number Monitored
3500
3300
3175 (43%)
3100
3046 (41%)
2900
2700
3315 (45%)
3223 (47%)
2849 (46%)
3080
(44%)
2977 (45%)
Total Monitors
2869 (48%)
2803 (45%)
2751 (42%)
2500
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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Marine Terminal Operations
MOTEMS
• MOTEMS Audits document existing conditions, determine
safe operating parameters, and identify remedial action
priorities.
• 27 Terminals have submitted MOTEMS Audits for review
– 11 High Risk Terminals (Submitted August 2008)
– 16 Moderate Risk Terminals (Submitted February 2010)
– 3 Low Risk Terminals will Submit February 2011
• 2015 deadline for compliance for high/moderate risk
16
Marine Terminal Operations
Recommendations
Changes are needed to increase scope of oversight:
 Two Engineering Inspector positions to monitor and
enforce compliance of MOTEMS.
 Three Specialists to establish and carry out terminal Safety
Systems Audits.
 Support legislation to increase the Oil Spill Prevention and
Administration Fund per barrel fee.
17
Surface Leasing
LMD Programs
 Leasing of Marine Oil Terminals and ROW for
pipelines and other conduits.
 Key leasing provisions:
 Construction plans and as-builts;
 Inspection, repair, testing, maintenance records;
 Prior approval for pipeline repair/maintenance;
 Training classes and pipeline leak simulations.
 Commercial Marinas – Best Management Practices
18
Surface Leasing
LMD Recommendations
 Review leases for adequacy of bond and insurance
amounts (for example: today’s Calendar Item C42)
 Requirements to modify/retrofit old pipelines to allow
for smart pigging
 SLC review of oil spill contingency plans
19
Environmental Planning
Programs
Primary role:
 Ensure compliance with the California Environmental
Quality Act (CEQA)
 Ensure that the Commission has sufficient information
to approve, approve with conditions, or deny proposed
projects that could result in an oil spill.
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Environmental Planning
What We Do and How We Do It
 Prepare EIRs for oil development projects and
marine terminals (new and renewals)
 Provide agencies and the public with
opportunities to review and comment on EIRs
 For approved projects, ensure that Commission
adopted measures to mitigate environmental
impacts are implemented and effective
21
Environmental Planning
Recommendations
 Continue to effectively communicate and coordinate
with agencies, the public, and applicants
 Continue to evaluate mitigation measures
 Provide information related to impacts associated with
mitigation measures (e.g., use of dispersants)
 Assess effectiveness of oil spill mitigation measures and
incorporate “lessons learned” during mitigation
monitoring
22
Environmental Planning
Recommendations
 Enhance EIR data and information gathering
 Continue to require oil spill modeling-trajectory studies
for offshore oil/marine terminal projects subject to
CEQA review
 Seek to make studies available in GIS format .
 Become a repository of oil spill modeling data to make
them more readily available to regulatory and resources
agencies and the public.
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Recommendations
Summary
 Update Current Regulations
 Legislation:
 Cease & Desist Authority
 Increase the Oil Spill Prevention and Administration Fund
per barrel fee.
 Fill MRMD vacancies left by recent retirements
 Resubmit reclassification of Inspector series
 Expand Marine Terminal personnel to enforce MOTEMS
 Review leases for adequacy of bond and insurance
 Enhance EIR data and information gathering using GIS
 Become a repository of oil spill modeling data
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