OFFSHORE DRILLING:

Federal oil spill probe finds U.S. regulations lacking

An ongoing federal investigation into last year's massive rig explosion and oil spill in the Gulf of Mexico has found that a particularly lax U.S. regulatory regime was a significant factor in the events leading up to the disaster.

The U.S. Chemical Safety and Hazard Investigation Board (CSB) is conducting an extensive examination at the request of Congress of the April 2010 Deepwater Horizon accident, which killed 11 workers. Its probe, which will likely take another year to complete, will analyze all factors that may have contributed to the accident.

CSB has already found one issue to be particularly worrisome: how U.S. regulations stack up to those of other countries where offshore drilling occurs.

In particular, CSB is raising questions about why the United States does not adopt the "safety case" hazard system used internationally.

"Nearly every regime where there is significant oil exploration has adopted the safety case," Don Holmstrom, a CSB investigator, told Greenwire.

The safety case requires oil companies to submit a set of documents outlining the potential hazards posed by their rigs. Those documents must include an analysis of the complexity of various risks, the safety measures the company has put in place to address them and what protocols have been established in case an accident occurs.

While it sounds straightforward, the safety case is an entirely different paradigm from what is used in the United States, said Ian Whewell, a retired director of the United Kingdom's Health and Safety Executive's Offshore Division.

The safety case relies on setting objectives, meaning oil companies must constantly re-evaluate their safety programs and improve them if new information becomes available, Whewell said. The U.S. regulatory system, he added, is set up so "people only do what is required at minimum."

Whewell summed up the difference with a basic example. If a warning sign on a rig needs to be painted for safety reasons, U.S. regulators would tell oil companies what color to paint it. In a safety case system, regulators would say it has to be painted but leave it up to industry to decide what color to paint it and prove why.

"It is far more challenging to the industry to try to comply with a goal-setting regime with a requirement to demonstrate in a document that they are complying with the law," Whewell said. "The goal-setting regime gives you a push toward continuous improvement."

CSB held a hearing late last year on this topic with regulators from the United Kingdom, Norway and Australia. The general consensus, CSB officials said, was that the safety case is far more challenging and, consequently, more effective than the U.S. system leading up to the Deepwater Horizon spill.

That conclusion was bolstered by BP PLC's internal probe from September 2010, investigators said. BP recommended that oil companies conduct a hazard assessment to be submitted to federal regulators, noting that such a document was not required by the Department of the Interior's then-Minerals Management Service.

"A hazard analysis is a very basic component of safety management," said Dan Tillema, the lead CSB investigator. "Lack of a hazard analysis reveals just how far behind the offshore programs are with respect to process safety management."

BOEMRE response

The CSB investigation is not the first to look at the safety case. A presidential spill commission report released in January also recommended implementing such a regime.

"The Department of the Interior should develop a proactive, risk-based performance approach specific to individual facilities, operations and environments, similar to the 'safety case,'" the report says.

And Interior's Bureau of Ocean Energy Management, Regulation and Enforcement has taken steps to improve safety on oil rigs that are reminiscent of the safety case.

BOEMRE Director Michael Bromwich said in a recent speech that the Deepwater Horizon spill highlighted regulatory problems, including "the adequacy of the agency's regulations, especially as they related to offshore safety and environmental protection."

Bromwich pointed to new rules BOEMRE has since enacted. The first was a "drilling safety" rule, which set in place "tough new standards" for well design, casing and cementing. It also established regulations for well control procedures and equipment, including blowout preventers.

BOEMRE has also implemented a "workplace safety" rule that requires drillers to develop a "comprehensive safety and environmental management program." Those protocols must identify potential hazards and risk-reducing strategies.

The agency also has adopted the American Petroleum Institute's (API) "recommended practice 75," which the industry dubs the first comprehensive safety and environmental management standard of its kind in the world.

While at first blush the new rules appear similar to the safety case's general principles, CSB said it is evaluating how drillers are putting them into practice.

Whewell, of the United Kingdom, said they are a step in the right direction but that he is skeptical of API's program because it was developed by industry. He added that it is not as strenuous as other governments' regulations.

"The degree of challenge under the sorts of demonstrations that are required are not of the scale of the European regimes or the Australian regimes," he said.

Transocean's 'unusual lack of cooperation'

CSB Chairman Rafael Moure-Eraso said his agency's efforts to examine the safety procedures on Deepwater Horizon have been hamstrung by Transocean Ltd., the owner of the rig.

"We have had an unusual lack of cooperation among the participants and the stakeholders in this Deepwater investigation," he said. "Especially Transocean. We are really having serious problems with them."

Brian Kennedy, a spokesman for Transocean, strongly denied those allegations.

"Transocean has cooperated with every agency that has investigated the Macondo incident, including the CSB," Kennedy said. "In fact, the company's cooperation with the CSB has gone above and beyond the limits of the agency's jurisdiction in the matter. Any suggestion to the contrary is simply untrue."

Transocean's internal probe into the incident largely blamed BP for the spill and the worker deaths (Greenwire, June 22).

Kennedy also defended his company's record on safety protocols.

"Transocean has played a critical role in the development of the U.K.'s offshore oil and gas exploration industry for decades," he said. "The Transocean Explorer was the world's first offshore drilling installation to gain acceptance by the U.K. Health and Safety Executive for its safety case."

Multiple calls to BP for this story went unreturned. However, CSB officials said that company has been cooperative.

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