Citing a ‘renewed culture of safety' taking hold in the offshore oil & gas industry, the co-chairman of the presidential commission set up to investigate the Macondo disaster told attendees at the March CeraWeek conference in Houston that the US could benefit from the implementation of a North Sea-style ‘safety case' approach to deepwater drilling regulation.
William Reilly, co-chairman of the US National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling (OE last month), also called on oil & gas officials to support the Obama administration's request for $358 million in additional funding to beef up staff at the Bureau of Ocean Energy Management, Regulation & Enforcement (BOEMRE).
‘The industry needs regulation . . . and it needs to be as sophisticated as the industry itself,' he said.
The safety case method has been in use in Norway since the late 1970s and was implemented in the UK after the 1988 Piper Alpha disaster (OE July 1988). Unlike US offshore oil & gas regulations, which critics say puts the burden of risk assessment on regulators, the safety case approach requires operators to anticipate possible problems with a specific well and spell out how they would address them.
The method is ‘much more collaborative', Reilly said, while acknowledging that oil & gas companies in the US might be reluctant to embrace the change. ‘Industry has to really want to do this,' he said, noting that implementation of the safety case took nearly a decade in the UK. ‘In that case, the regulator took the initiative, but industry came along and supported it as well, and now is quite accustomed to it.'
The transition in the US could be done more ‘gracefully' because many of the companies operating in the Gulf also do business in the North Sea and are used to the regulations there, he said.
Reilly praised the industry for joining forces to create the Marine Well Containment Company and credited Helix Energy Solution Group's ‘ingenuity' in putting together a rapid-response blowout containment system, both of which have been used to satisfy new BOEMRE permitting regulations.
‘Timely response and containment capability was a vital but missing element in overall safe drilling plans,' he said. ‘Now, thanks to an extraordinary effort, it is coming together in a practical way.'
But he took issue with critics who have blasted the moratorium and pushed back against new regulations, noting that the commission's research turned up 79 cases of well control loss over a 10-year period in the Gulf of Mexico, as well as a troubling number of offshore casualties.
‘In fact, the fatality rate in the Gulf is five times greater than it is in the North Sea, and the North Sea is a more punishing environment,' he said. ‘So we clearly have some issues here.'
Reilly singled out BP for alleged safety lapses. ‘Based on my discussions with people I respect within the industry, there were a lot of concerns about the safety record and practices of BP well before [Macondo] happened,' he said. ‘Yet there was no mechanism to address it. That is what the commission means in identifying a "systemic" problem. It is not to say that every company, or even most companies, do not have strong safety cultures. It is to say that the responsibility for taking necessary steps to avoid another Macondo falls on the industry as a whole.'
One possible response, he said, would be the creation of ‘an industry safety organization to promote and promulgate best practices, to share information, and conduct routine safety audits of its members – and discipline or eject those companies which fail to implement best practices.' The organization could be modeled on the US Institute of Nuclear Power Operations (INPO), formed after the 1979 Three Mile Island nuclear plant accident.
It would seem the industry has already endorsed the idea.
On 17 March, a little more than a week after Reilly's CeraWeek appearance, the American Petroleum Institute announced that its board of directors had approved the creation of a Center for Offshore Safety, modeled in part on INPO and the UK's Step Change in Safety and safety case regime. The center will be based in Houston and open to all companies engaged in deepwater E&P.
Eventually, Reilly said, US regulators could make membership in such an organization mandatory.
Reilly, who served as Environmental Protection Agency administrator under president George HW Bush, rejoined industry critics who disputed the commission's findings of ‘systemic' safety lapses in offshore E&P.
‘I know our use of that term upset many in the industry,' he said. ‘But it seems to me the absence of subsea containment capability, even as thousands of wells have been drilled in deepwater, and then the pro forma character of response plans on the part even of the best companies, speaks for itself.
‘It would be dangerous, and a tragic waste of all that we have learned over the past year, if we allow that complacency to slip back in. OE