OFFSHORE DRILLING:

Companies should audit safety procedures internally -- expert panel

Greenwire:

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HOUSTON -- Large oil and gas companies should be allowed to audit their own offshore safety processes internally, a National Research Council panel said in a report released today.

The NRC's offshore safety review group largely agreed with the direction taken by the new federal Bureau of Safety and Environmental Enforcement on the development of safety and environmental management systems (SEMS) for offshore drilling.

The review committee says it joins the bureau in favoring a "holistic approach" to fostering an offshore safety culture rather than checklist compliance enforced by stiff fines.

SEMS rules -- adopted in the wake of the 2010 Deepwater Horizon rig explosion and spill in the Gulf of Mexico -- mix federal rules and the American Petroleum Institute's recommendations for best practices in safety and environmental management. SEMS cover facility design, staff responsibilities, job safety and hazardous analysis, worker safety training, and SEMS auditing standards.

A point of disagreement between the bureau and the NRC panel is the agency's move to require most oil and gas companies to hire third-party auditors to review SEMS plans and infrastructure.

The NRC committee instead advocates internal auditing by the companies themselves.

"A truly independent internal audit team is preferred to an external, third party team," the committee writes in the new NRC report, titled "Evaluating the Effectiveness of Offshore Safety and Environmental Management Systems."

Third-party audit firms can be called in for smaller offshore energy companies, the group suggests, but such teams should be staffed from other departments of the same company when possible and when the offshore energy firm is large enough to allow for that. For very small companies, top executives may be needed to internally audit SEMS systems, the group says.

The committee's main argument is that having firms hire external agencies to audit their SEMS leads to a "compliance mentality," in which passing screenings is equated with safety, whereas having firms audit themselves "encourages an appropriate culture of safety."

In other areas, the NRC team of 10 industry-related academics and consultants agrees with the federal agency's approach. The panel favors routine inspections, especially of larger offshore installations, and encourages having extended-stay regulatory visits to platforms and drilling rigs to assess SEMS procedures.

The committee also favors having the bureau establish whistle-blower protections to encourage company workers and contractors concerned about safety or environmental compliance to speak up.

Overall, the 106-page NRC report mostly favors having regulators seek out SEMS compliance via a softer, more collaborative approach with industry that lays much of the responsibility for maintaining a robust system on the companies.

The committee says it favors allowing companies to develop their own SEMS audit plans and to conduct audits when they think they are necessary, rather than on a preordained schedule.

The SEMS effectiveness committee says it reached its conclusions partly by analyzing the approaches taken by foreign governments' offshore energy regulators, in particular Norway's Petroleum Safety Authority, which it described in favorable terms as taking a "risk-based approach."

"The agencies have found that engaging with the industry is more productive than punishment, although they maintain the threat of punishment if needed," the report says.