Report

The 2016 Blowout Preventer Systems and Well Control Rule: Should It Stay or Should It Go?

May 3, 2018 | Alan J. Krupnick, Isabel Echarte

Summary

As part of a series examining US oil and gas sector regulations, this report analyzes the cost and benefits of repealing or modifying a safety rule for offshore drilling activity under several scenarios.

Key Findings

  • Keeping the rule would result in net benefits over the next 10 years that are $65 million larger than what was estimated in the original cost-benefit analysis by the Bureau of Safety and Environmental Enforcement (BSEE).
  • Because of a deregulatory provision in the rule, benefits to industry alone outweigh the costs by over $500 million. Repealing the entire rule would therefore harm industry.
  • BSEE admitted that it underestimated the benefits from reducing oil spills, which could make it easy for the agency to argue that repealing regulatory provisions results in minimal forgone benefits.
  • Calculating a defensible external benefits estimate may not even be possible without more research into how much the rule or its individual requirements reduce oil spill risk.