The spill report—3

Jan. 31, 2011
A core message of the report to US President Barack Obama on the Macondo tragedy of 2010 is the need for the oil and gas producing industry to improve its safety culture.

A core message of the report to US President Barack Obama on the Macondo tragedy of 2010 is the need for the oil and gas producing industry to improve its safety culture. This is strong medicine. Most operators and service companies probably bristled at that finding of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. Most consider themselves supremely diligent about safety. Many of them probably believe the fatal blowout and subsequent spill couldn't have happened to them. Maybe they're right. But before the Macondo accident, BP, too, considered itself committed to the highest safety standards.

After publication of the commission's report, the offshore industry stands accused of safety lapses that the authors describe repeatedly as "systemic." To that accusation, whatever its validity, the industry must respond systemically. Without such a response, the safety of offshore work will remain subject to public doubt. And that doubt, inflamed by extremists opposed to all oil and gas work, will impede leasing and permitting.

Systemic initiative

The report suggests a systemic initiative that deserves serious attention from the industry. It is the creation of a self-policing function to supplement governmental regulation. The nuclear industry offers a model with its Institute of Nuclear Power Operations (INPO), set up as a nonprofit organization after the partial meltdown in 1979 of the radioactive core of a unit at the Three Mile Island generating facility in Pennsylvania.

INPO regularly inspects nuclear sites and reports individual plant assessments to the companies involved and at a conference of utility chief executives, where all plants receive grades. INPO inspection teams usually have about 20 members—some of them full-time inspectors employed by INPO and others on loan from the industry. Inspections last 5-6 weeks. INPO inspectors visit each of 66 nuclear sites, including 104 reactors operated by 26 utilities, every 24 months.

Obviously, much about the INPO model doesn't apply to offshore drilling and production. As the report notes, the upstream oil and gas industry is more fragmented than the nuclear industry. Its operations are more mobile and transitory. Drilling and production technologies also are more diverse; there can be more than one right way to drill and complete a well. Furthermore, collective action by oil and gas executives raises antitrust concerns that don't as intensely bedevil regulated utilities. And operators and service companies legitimately would worry about exposure of proprietary information.

Still, the oil and gas industry should find the concept of a self-policing safety mechanism, adapted to its special characteristics, intriguing. The presidential commission notes similarities between the oil-and-gas and nuclear industries that the former industry should find persuasive.

One similarity is self-interest following a blow to public confidence. "As the Deepwater Horizon disaster made unambiguously clear," the report says, "the entire industry's reputation and perhaps its viability ultimately turn on its lowest-performing members." Another similarity is the need to secure governmental approval—and therefore public acceptance—for work. A third parallel is the potential for industry self-policing to supplement regulation. The report calls for regulatory improvement but says regulators "are unlikely ever to possess technical expertise truly commensurate with that of private industry."

Constructive suggestions

As argued earlier in this series of editorials, the commission report overreaches in some areas, including its tendency to condemn an entire industry on the basis of a single disaster, to advocate new layers of environmental regulation that would limit activity without enhancing safety, and generally to assume that more regulation means better regulation.

Overall, however, the commission is right to call for change. And it offers constructive suggestions—among them a shift in the regulatory approach toward the European "safety-cases" model, as described here last week, and adoption by the industry of some form of collaborative inspection. Self-policing would not only help restore public confidence in offshore drilling and production but also, if structured properly, improve practice in the most important dimension of industry work.

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