Legal Issues One Faces When Drilling for Oil

RyanD
December 11, 2013

The oil industry is one of the largest operations in the world, with oil companies worldwide collectively generating more than 82 million barrels of oil per day. Despite oil’s purported plenteousness and lucrative nature, the legal aspects of drilling for oil are technical, complex, and onerous.

Permits: Where and When Can Drilling Occur?

In order to avoid some serious legal repercussions (for which you may need a Maritime Lawyer), an oil drilling company must obtain a legal permit to drill for oil. If the drilling is occurring within the United States, then a permit can be applied for within the state where the drilling will occur, through the state government offices. In this sense, oil and drilling regulations are primarily the responsibility of individual states. In most cases, in order for the application for the permit to be filed, the applicant must have Water Rights approval; ownership of the land or permission from the land owner where the drilling will take place; a plan for pressure control; plans for protecting water, oil, and minerals; and a variety of other technical things. As far as ownership of the oil goes, laws on the books state that whoever owns the land where the oil extraction occurs also owns the oil.

Offshore Drilling: What’s That All About?

The process for getting a permit for drilling within the United States can be lengthy, but most drilling occurs offshore. Following the 2010 BP Oil Spill in the Gulf of Mexico, a plethora of legislation regulating permits and bans concerning offshore drilling has been created. For example, a moratorium on drilling in the Gulf of Mexico was passed; South Carolina passed legislation requiring profits from drilling that occurs in the water surrounding the state to be shared with the state; Florida and Virginia have completely banned drilling along their beaches; and Alabama heavily taxes offshore drilling.

Most offshore drilling legislation isn’t about banning or taxing drilling, though. Rather, oil drilling legislation focuses on liability. California, North Carolina, and Texas are three states that have heavily committed to liability legislation, requiring that all drilling done in their waters or near their coastlines is done responsibly. If any spills occur as a result of drilling, the party responsible for the drilling is fully liable for all cleanup and must pay any and all reparations owed to damaged parties.

Drilling Equipment: Keeping Drilling Safe and Clean

Even if a company has a permit to drill and a full understanding of any liability and taxing issues surrounding drilling, it is still responsible for ensuring that the drilling is done safely, cleanly, and efficiently. In 2010, the United States Congress passed an array of new laws concerning offshore drilling safety, including laws governing well casing and cementing, safety certification, and emergency response practices and the proper training of workers. Oil rigs and wells must undergo routine safety inspections, must be checked for oil leakage, and must be in compliance with government safety regulations. The legislation was passed as a result of the BP Oil Spill and was targeted at protecting against another large oil spills as well as securing worker safety. The Drilling Safety Rule is applicable to all drilling that occurs within the Outer Continental Shelf.

This article was contributed on behalf of Sentis, a leader in oil and gas safety. Check out their website today and see how they can help you keep your employees safe!