Offshore oil and gas safety programs must be continuous as well as robust, a former US Department of the Interior official told President Barack Obama's independent commission on the Gulf of Mexico oil spill and offshore drilling on Aug. 25.
"The history of global offshore regulation is punctuated by tragic accidents that are beyond the prior imagining of the industry and its regulators," said J. Robinson West, who founded Washington, DC-based advisory firm PFC Energy Inc. in 1983 following 2 years as assistant US Interior secretary for policy, budget, and administration. West also initiated the first 5-year US Outer Continental Shelf leasing program in the early 1980s.
"Each is followed by a commission of inquiry and a report. Then governments and the industry introduce better rules and practices that are informed by the accident," he said.
All regulators face a fundamental challenge in the potential mismatch between very dynamic business practices and static regulatory systems, West said. "In every business, there is a tradeoff between production and safety," he said, adding, "The offshore industry progresses, and meets the growing global demand for oil, by constantly advancing the barriers of what is possible and safe. A static regulatory system cannot keep up in this dynamic environment."
Instead, West said, regulations need to reflect industry's dynamic safety paradigm that makes everyone responsible for safe operations; establishes safety as a culture with a way of thinking through and anticipating potential problems that affect all activities; and encompasses not just personal safety, but also safety of the entire process, including the environment.
Offshore safety should be about active performance instead of defensive compliance, West maintained. Well operators and their contractors and suppliers should take responsibility for it, so regulators can supervise and audit instead of simply inspect and approve, he said.
Active collaboration
There should be active collaboration, trust, and sharing among operators, contractors, employees, and regulators to design, implement, and audit performance management system instead of rules, West said. Mistakes and near-misses should be seen as opportunities to learn instead of occasions to try and assign blame or, even worse, cover up weaknesses in the system, he indicated. More transparency among different operators, contractors, and regulators will be necessary to accelerate this kind of learning, he said.
Organizations' structures and compensation systems should emphasize safety instead of undermine it, according to West. "The goal is not 'good enough,' but zero failures: no accidents, no fatalities, [and] no spills," he said.
Seamless, unified systems that cover contractors, operators, and suppliers should replace the patchwork of separate rules for owners and operators of offshore wells and marine vessels, he emphasized. Regulations should not be fixed directives, but approaches that flexibly accommodate changing situations, with a continuous improvement and adjustment process to address new risks arising from new technology and adapt older installations to do work which was not imagined when they were designed, West recommended.
"I am not advocating 'self regulation,'" he emphasized. "Making operators actively responsible under the vigilant supervision of a well designed and well resourced regulatory system is not the same thing as 'just letting the industry regulate itself.' It requires competent and timely supervision by regulators who understand the risks of the operations and can properly evaluate the mitigations the operators propose."
Commission members and other witnesses agreed that more comprehensive, seamless regulations are needed. "It would seem in everyone's interest, when drilling resumes, that each and every operation is safe and run in accord with world class standards," said one of its co-chairmen, former US Environmental Protection Agency Administrator William K. Reilly, in his opening statement. "Though, clearly, our government has to take the lead in ensuring this, industry has a critical part to play as well."
Commission's role
Obama established the independent commission on May 21 to evaluate government policies and regulations covering offshore oil and gas operations after BP PLC's Macondo well in the Gulf of Mexico blew out on Apr. 20, causing the semisubmersible drilling rig working on it to explode, catch fire, and kill 11 workers. When the rig sank on Apr. 22, its subsea connection lines ruptured, triggering leaks that spilled an estimated 4.9 million bbl or crude into the gulf. US Interior Sec. Ken Salazar ordered immediate inspections of the other deepwater rigs there, placed a moratorium on new deepwater drilling permits until the accident could be fully investigated, and issued stronger requirements for shallow-water as well as deepwater operations.
The US Coast Guard and what was then the US Minerals Management Service immediately began a joint investigation, which has continued. MMS became the US Bureau of Ocean Energy Management, Regulation, and Enforcement (BOE) on May 19 as part of a reorganization Salazar ordered, which formally separated its revenue management program from its leasing and resource management responsibilities. The secretary also commissioned a study by the National Academies of Science of scientific questions posed by the accident and spill.
It quickly became apparent that the presidential commission would consider other investigations' work and findings, but concentrate on the accident and spill's broader offshore energy policy implications. "Many of the causes of this disaster go back many decades and are attributable across the spectrum," said its other co-chairman, former Florida Gov. and US Sen. D. Robert Graham, in his opening statement at the Aug. 25 hearing.
"We should be clear: This disaster represents an enormous, and shared, failure of public policy," Graham declared. "We will be holding all responsible parties to account, not so that we can play a blame game, but because we must diagnose what happened before we can credibly prescribe new directions for the future."
The oil and gas industry also responded promptly to the spill and accident by looking at every aspect of safety and ways to improve its operations, a witness told the commission. "We have assembled the world's leading experts to conduct a top-to-bottom review of offshore drilling and procedures, from operations to emergency response," said Erik Milito, the American Petroleum Institute's upstream director.
Milito noted that API, working with other industry associations, also formed two additional task forces to review oil spill and blowout response capabilities. These task forces will issue recommendations in 1-2 weeks.
Milito also cited plans by Chevron Corp., ConocoPhillips Co., ExxonMobil Corp., and Royal Dutch Shell PLC to form the Marine Well Containment Co., a $1 billion effort in which engineers will design, develop, and implement systems that go beyond what had to be deployed following the Macondo well blowout and spill.
'A higher level'
Two industry task forces that are addressing short and long-term issues related to offshore equipment and offshore operating practices delivered recommendations to DOI in May, a few weeks after the accident, Milito noted. "While the task forces are not involved in the review of the incident, they brought together industry experts to identify best practices in offshore drilling equipment and operations," he said. "Their objective was to immediately move industry standards to a higher level of safety and operational performance." Many of their recommendations were incorporated into the report Salazar delivered to Obama on May 27, he said.
Milito said one of the primary recommendations from the task forces called for development and integration of safety systems and critical documents for the lease operator and the drilling contractor. "The task forces recommended the adoption of a safety case, which is a comprehensive and structured set of safety documents to ensure the safety of a specific vessel or piece of equipment," he explained. "The safety case will be integrated, or bridged, with the lease operator's safety management system through a well construction interfacing document, or WCID." The industry task forces developed a draft WCID for consideration by BOE and also sent a copy to the commission, Milito said.
Most operators already have a safety management system in place, and the safety case is already used around the world by the drilling community, he noted. DOI has agreed to mandate these programs, and API expects it to release new rules which implement them, he said.
Integrating and bridging these programs would address several critical factors, including well design; identification of hazards related to the geographical location of the well; identification of hazards related to the location of the wellbore, pore pressure and fracture gradients; casing design; well execution; well activity risk assessments; management structure, responsibilities and accountabilities; management of change; personnel management, including competencies, training, experience and certification requirements; and risk management processes, according to Milito.
Containment response
He added that while the industry collectively is working to find ways to enhance safety, individual companies are also closely reviewing their own equipment and procedures. "The accident was a shocking reminder, unprecedented or not, that terrible events are possible," Milito observed. "This was a powerful incentive to the operators out on the water to redouble their efforts to prevent future possible injury or loss of life, serious environmental damage, or massive economic liability."
He said that API also is studying the potential for enhancing offshore safety through the creation of a new industry oversight program, listing nuclear power's Institute for Nuclear Power Operations and the American Chemistry Council's "Step Change in Safety" as examples.
"However, a program for the US offshore industry would have to take into account its unique characteristics," Milito noted. "Compared to the nuclear industry, it involves a large number of tremendously diverse businesses, some very large and some far smaller, often doing very different kinds of work. The offshore industry also operates under a wide range of existing industry safety programs, and many federal agencies monitor and regulate its activities. All of this would have to be considered in evaluating the viability of a new industry oversight program."
West said that after the 1998 Piper Alpha disaster in the UK North Sea, regulators there developed a requirement that each operator file a comprehensive safety case demonstrating that it has anticipated every hazard that could lead to a severe accident, and has developed management systems and emergency responses to address those hazards.
Each safety case must also address the role of contractors and subcontractors, and consider how to keep accidents from escalating if the management systems don't work, the PFC Energy executive said. "I urge you to look seriously at this approach and consider what our regulatory system can learn from it," he told the commission. "It is a rigorous, but not adversarial, system under which the industry, government, and other stakeholders have worked rigorously for close to 20 years."
More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com
