Regulations in the Oil Industry

Oil industry professionals have to learn about various regulations that affect the work they do. Even before drilling begins, oil and natural gas exploration companies must comply with state and federal regulations. States regulate the distance between wells that are drilled, and drillers must obtain permits. For example, the New York State Department of Environmental Conservation regulates the drilling of oil, natural gas, and storage wells: According to its Web site: “DEC uses well drilling permits to require environmentally sound operation and safe plugging of wells.” Oil and gas exploration companies want to hire employees knowledgeable about environmental compliance to manage the permitting process for their operations.

Companies that wish to drill on federal or Native American lands must obtain leases from the Bureau of Land Management (BLM) within the Department of the Interior (DOI). The BLM has authority over development and production on these lands, and along with state governments, it offers leases at auctions. Oil and gasoline companies must participate in these auctions to gain access to these projects.

Regulations in the Oil Industry

The U.S. Environmental Protection Agency ( EPA) regulates many aspects of the oil and gasoline industry. The EPA regulates drilling or production operations such as the development of secure storage tanks (i.e., to prevent waste from contaminating rivers or oceans); the control of emissions from storage tanks, refineries and natural gas plants; and even the types of storage tanks that gas stations must use. Many oil and gas companies hire environmental experts to ensure compliance with both current and proposed regulations.

The DOI also manages offshore federal leases. According to its Web site: “The Department of the Interior’s (DOI) Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) is the federal agency responsible for overseeing the safe and environmentally responsible development of energy and mineral resources on the Outer Continental Shelf.” Following the Deepwater Horizon spill, the BOEMRE has increased offshore drilling regulations and implemented higher standards for safety.

Oil companies also focus on safety since hazardous working conditions could potentially cost them lives as well as money. Safety officers must ensure regulation compliance on each oil platform. Refineries must follow regulations related to nitrous oxide emissions and that of other byproducts as well as regulations on the products they can manufacture and sell. For example, a state may regulate which type of gasoline a refinery may produce and when. These restrictions may be based on where the gasoline is sold and may influence refinery operations.

Pipelines that transport crude oil, natural gas, and refined products are also regulated by the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA). The PHMSA inspects pipelines to ensure that they comply with safety regulations. Inspections might include testing for corrosion along the line, checking water crossings, and making sure that the line’s pressure is not too high. Because of this, pipeline operators must hire employees to perform safety and reliability tests and to ensure the pipelines are in compliance.

Gas station owners are regulated by individual states as well as the EPA. Florida recently implemented new regulations requiring many station owners to replace existing underground storage tanks with double-walled tanks that can hold gasoline containing up to 10% ethanol. The double-walled tanks are necessary to protect the groundwater but may require station owners to spend as much as $200,000. Gas station owners who cannot afford to switch their storage tanks, and thus are unable to comply, can be forced to close.

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