As oil and gas companies increasingly venture into deeper waters in search of new hydrocarbon reserves, industry experts and regulators are calling for significant changes to the existing regulatory framework.
The shift comes amid mounting technical, economic, and environmental challenges, as well as heightened scrutiny from governments and the public.
According to Global Energy Monitor’s Global Oil and Gas Extraction Tracker, 2024 saw the announcement of approximately eight billion barrels of oil equivalent in new offshore discoveries.
With shallower reserves dwindling, deepwater drilling has become essential — but it brings added complexity.
Offshore platforms face unpredictable weather, require specialised technology, and are costly to supply and maintain, especially in remote locations.
On top of these hurdles, operators must contend with rigorous and expensive regulatory requirements.
“While there are several international conventions involving the maritime energy industry, it is mainly a country-by-country regulatory approach,” explained Steven Otillar, partner at global law firm White & Case.
He points to the International Maritime Organization (IMO), a United Nations body, which sets regulations for drilling vessels and modular drilling units.
Otillar highlights MARPOL — the International Convention for the Prevention of Pollution from Ships— as one of the most significant conventions impacting the global offshore energy sector.
“The 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,” Otillar said.
The Gulf of Mexico (GOM), one of the world’s most active deepwater drilling basins, exemplifies the shifting regulatory environment.
In January, outgoing US President Joe Biden withdrew more than 625 million acres of federal waters from future oil and gas leasing under the Outer Continental Shelf Lands Act (OCSLA), a move that limited future drilling operations.
President Donald Trump has pledged to “unban it immediately”, but legal uncertainty remains over whether a president can restore or modify previous withdrawals under the OCSLA.
One constant is Trump’s vocal support for the industry’s right to “drill, baby, drill”.
In February, the National Energy Dominance Council was established to advise the President on permitting and regulatory processes, with the goal of “seeking to eliminate longstanding, but unnecessary, regulation”.
The US Bureau of Ocean Energy Management forecasts a decline in shallow-water production and a rise in deepwater output in the GOM through 2031.
Josh Ortega, vice-president of safety, sustainability, and procurement at Veriforce, notes that US regulations will “continue to serve as a global benchmark in worker safety, environmental protection, well control, blowout prevention and emergency response, especially after the Deepwater Horizon disaster”.
The North Sea remains another key region for deepwater drilling, overseen by a complex mix of national and international authorities.
The UK and Norway are the primary producers, but the Netherlands, Denmark, and Germany also regulate drilling activities, each with their own frameworks.
The Norwegian Continental Shelf boasts the world’s deepest oil well, drilled to a depth of 10 kilometres from a floating rig that came online in 2021.
In the UK, the Labour Government is steering the basin toward clean energy, with regulations set by the Department for Energy and Net Zero and implemented by the North Sea Transition Authority (NSTA).
The NSTA is pushing for platform electrification, confirming in February that “cross-sector efforts are ongoing to map out a clear regulatory pathway for electrification schemes, which includes work on grid connections”.
However, drilling activity has slowed due to the Energy Profits Levy, which raised the headline tax rate to 75 per cent until 2030.
Regulators are increasingly focused on the environmental impacts of deepwater drilling.
In January, a Scottish court overturned UK government approvals for two North Sea hydrocarbon projects, citing downstream emissions — a strong signal for future regulatory decisions.
The International Monetary Fund notes that between 2015 and 2019, “climate policies led to a global decline of 6.5 per cent in investment among publicly traded oil and gas companies, with European companies experiencing the most significant impact”.
Emerging technologies are reshaping both the risks and regulatory requirements of deepwater drilling.
Ortega identifies “AI-enabled remote monitoring and diagnostics, real-time well surveillance, and cybersecurity” as key risk areas.
While advanced technology enables real-time tracking and enhanced transparency, it also complicates regulatory oversight.
Satellite imagery and seismic sensors — crucial for locating reserves — are now heavily regulated to minimise environmental impact.
As operators invest in new drilling technologies, they can expect stricter regulations on their use.
International standards, such as those published by the International Organisation for Standardisation (ISO), provide technical guidance for offshore drilling.
“Standards provide critical technical guidance and enable global harmonisation, often advancing ahead of formal rule-making and promoting continuous improvement across the industry,” explained Ortega.
“But without a regulatory framework to enforce compliance and close systemic gaps, even the best standards risk becoming aspirational rather than operational.”
Efforts to harmonise regulations continue, but challenges remain.
The United Nations recently called for nations to “adequately regulate and control” offshore drilling, warning that “the main challenge is the complexity and difficulty of coordinating and implementing current ocean management regulations and initiatives”.
Otillar added: “As we see more drilling beyond the continental shelf and exclusive economic zones, it will be interesting to see how matters develop.
“There will most likely be a patchwork of regulations and internal corporate safety policies to be applied, which will vary greatly among operators.”
Health and safety regulations add another layer of complexity.
In the US, “varying 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,” said Alana Genderson, environmental health and safety partner at Sidley Austin.
Europe has made some progress in aligning compliance across offshore assets.
In October 2024, the European Commission expanded the Monitoring, Reporting and Verification regulation to include greenhouse gas emissions from drilling ships.
While such efforts may simplify compliance in the long term, they require ongoing international collaboration.
Ortega concluded: “Effective 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.”
