Regulation and Environment: Reviewing the safety record three years after Macondo

We just hit the three-year mark on the Macondo anniversary. In this week’s Regulation & Environment column from Oilgram News, Gary Gentile reviews the industry’s record on safety, and efforts to prevent another Macondo, since that time.

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Three years after the disastrous explosion and oil spill at BP’s Macondo well in the Gulf of Mexico, much of the action taken to make offshore drilling safer has been ad hoc — some by federal regulators, some by industry, and almost none by Congress.

The result, some argue, has been a patchwork of fixes that have made the regulatory landscape confusing and have not enhanced the ability to nimbly and effectively apply state-of-the-art safety technology and systems to frontier areas, such as ultra-deepwater and the Arctic.

Most players say that offshore drilling is safer now than it was on April 20, 2010, when the Deepwater Horizon drilling rig shuddered and burst into a ball of flame some 50 miles off the coast of Louisiana, killing 11 crew members.

Some players say it is safer because government has issued a host of new regulations and notices to operators detailing extra steps to be taken, all the while dropping hints as to what new rules might be forthcoming.

Others point to the steps independently taken by industry, including adopting real-time monitoring systems, creating groups to make spill containment systems widely available, and organizing a Center for Offshore Safety to identify and encourage best practices.

Others take a more backward-looking approach — improved offshore safety is self-evident, they say, because of the fact that we have not had a similar disaster since Macondo.

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The members of President Obama’s National Oil Spill Commission last week issued their second report card to the key groups with the power to implement the commission’s recommendations. They acknowledged safety gains, while detailing steps that still need taking.

“Because of actions taken by the administration and by industry, we can say with confidence that offshore drilling is safer than it was three years ago,” co-chair Bob Graham said in a statement.

Clearly, activity in the Gulf is well on track to recovering, as evidenced in the appetite for offshore leases shown in the last few federal sales. While some companies have exited the gulf, others have stepped in because, to paraphrase the famous bank robber Willie Sutton, “that’s where the oil is.”

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But the recent experiences in Alaska’s Chukchi and Beaufort Seas demonstrates that offshore operations are always a towing rope away from potential disaster. Even one of the industry’s safest players — Shell — operating under the greatest regulatory scrutiny in a post-Macondo world, couldn’t prevent the types of problems that are seemingly inevitable in complex industrial systems such as offshore drilling.

There have been a number of attempts to correct these problems, or at least mitigate them, in the past three years.

Industry has stepped up, creating the Center for Offshore Safety, which is led by Charlie Williams—one of the most respected drilling experts in the world. Companies have been developing more sophisticated blowout preventers and other devices, as will soon be on display at next month’s Offshore Technology Conference in Houston.

The US Interior Department overhauled its regulatory structure, splitting the former Minerals Management Service into three new, more focused, agencies in an effort to better define their previously conflicting missions. New regulations now require more attention to safety, including third-party certification of well construction and cementing plans.

And Congress has….well, there’s the rub.

As the National Oil Spill Commission and others have pointed out, the nation’s offshore regulatory regime is subject to the whim of each succeeding administration.

The new Bureau of Ocean Energy Management, Bureau of Safety and Environmental Enforcement and Office of Natural Resource Revenue exist only by the order of the Interior Department secretary. Unlike the Bureau of Land Management, which governs onshore oil and gas exploration, none of the groups overseeing offshore activities is written into law.

Offshore regulation in the US, as robust as it has become since Macondo, still faces serious challenges.

The thorny issue of regulating the actions of contractors — the companies that operate the rigs, cement the wells and perform other services — has not been resolved. Overseeing the work of contractors is one of the major reasons why Shell’s Arctic efforts foundered.

Clarifying offshore regulatory authority and expectations also remains a challenge according to companies that operate in the Gulf and elsewhere. Who is in charge of supervising this incredibly risky business—the US Coast Guard? The Environmental Protection Agency? The Interior Department? The confusing answer, it seems, is often yes.

Everyone agrees that much has been done to boost offshore safety. Getting everyone to agree on what comes next may not be as easy.

–Gary Gentile in Washington

See the Platts feature: US Gulf activity soars three years post-Macondo


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