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US offshore regulator, under spotlight for rule changes, finds serious safety problems in Gulf of Mexico

22 March 2018

In early March, the US Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE) sent teams to the Gulf of Mexico last week to inspect giant cranes used in offshore oil and gas operations that are a significant source of accidents. The inspections uncovered a number of issues, some serious.

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More than 50 inspectors conducted surprise inspections on about 40 offshore platforms and drilling rigs, said Jason Mathews, the head of offshore safety management for the Gulf of Mexico at the BSEE. The results were still being compiled, he said, but the inspectors found serious problems, including some that were potentially life threatening.

Interior Secretary Ryan Zinke had discussed plans for the inspection push this month after the safety bureau issued an alert to offshore oil and gas operators in the Gulf. It warned about a series of “potentially catastrophic crane and lifting incidents” that occurred late last year on platforms and drilling rigs.

No one was killed or injured in those crane incidents, but lifting-related accidents are the second-largest cause of offshore fatalities, outnumbered only by fires and explosions, agency records show. The cranes are used to move workers and supplies from the Gulf up to the decks of the platforms.

The Interior Department and its offshore safety bureau have been under a spotlight since the agency was ordered by President Trump to re-evaluate regulations enacted during the Obama administration in the aftermath of the Deepwater Horizon accident in 2010, which killed 11 offshore workers and created the largest marine oil spill in drilling history.

Many offshore oil and gas operators complained that the regulatory response to the accident had been excessive.

The focus of the regulatory review has been two safety rules that govern offshore drilling and the production of oil and gas. But the deregulatory push has also meant that progress has slowed, if not stopped, on finalising other safety rules, including a 2015 proposal to enact new standards for offshore crane safety.

The New York Times reported on March 10 that several of the independent companies seeking a lightening of the regulatory burden had been cited for workplace safety violations in recent years at a rate much higher than the industry average.

Interior Department records released to the NYT show the rate of lift-related offshore accidents last year increased by more than 4%, reaching the second-highest annual level in the past decade. On average, there was one incident for every 13.5 offshore platforms or drilling rigs, according to agency data.

The crane inspections resulted in noncompliance notices for some offshore operators, which could result in fines, the BSEE’s Mathews said.

The crane inspections are part of a broader effort to make safety inspections more focused on risks rather than routine scheduling, meaning inspectors concentrate on known hazards like gas leaks, or on companies that have a history of safety violations. The risk-based approach has been suggested to the Interior Department for several years by the Government Accountability Office.

Secretary Zinke announced this month that a risk-based program was formally in place, but the NYT says questions remain about the agency’s commitment to safety.

Last month, a group of 19 Senate Democrats wrote to Zinke questioning why the agency had issued a stop-work order for a study by the National Academy of Sciences that was looking at ways to reduce offshore accidents.

In late December, BSEE sent the White House a proposal to overhaul the Obama well-control rule, estimating that oil companies would save $986 million in the coming decade. The proposal included many changes requested by the industry, such as loosening inspection requirements for blowout preventers and eliminating the need to shut down operations as lift boats approached.

There have also been allegations that the Trump administration’s appointment of Scott Angelle as BSEE Director could lead to conflicts of interest, given his close links to the oil and gas sector.

Angelle rejected the criticism as unfounded, said his agency was committed to safe operations in the Gulf and that the regulatory changes would remove a burden on companies while maintaining standards.

In a January article in USA Today Angelle wrote: “Contrary to recent misleading news reports, the Department of the Interior is not weakening offshore safety or environmental rules. As a Louisiana native, and my state’s interim lieutenant governor at the time of the Deepwater Horizon tragedy, I fully understand the importance of worker safety and environmental protection.

“Our agency is working hard to fulfill Executive Orders, which require an extensive review of our regulations. Our common sense approach is to propose revisions that could potentially reduce burdens on operators without impacting safety and protections of the environment. Our changes will never reduce safety, and will in some cases improve safety.

“Our agency enforces dozens of regulations, but we are currently seeking public input on changes to one: the Production Safety Systems Rule. Enacted in late 2016, this regulation is not related to the Deepwater Horizon incident. The changes we propose are common sense - reducing unnecessary notifications, clarifying when operators must provide documentation, and specifying that safety and pollution prevention equipment that meets required industry standards have achieved third-party verification. We propose to codify 17 updated standards so they bear the force of law as another sign of our commitment to safety. We are examining other rules, but have not reached the public-comment phase.

“We have no plans to alter two significant rules enacted following Deepwater Horizon, the Drilling Safety Rule and the Safety and Environmental Management Systems Rule. The SEMS approach rightly moves operators toward a performance-based safety approach, allowing the government, industry and independent third parties to focus on improving safety outcomes.

“We are also strengthening our inspection program by implementing risk-based process that focus our efforts on potential safety problems.  I am confident that we will be able to achieve the goal of integrating a risk-based inspection protocol in 2018. Through these efforts, and many others, we are moving forward toward meeting the Administration’s goal of achieving energy dominance without sacrificing safety.”

But, according to the NYT, federal safety inspection records hint at the difficulties many smaller operators have faced, and help explain why regulatory changes by the Trump administration are seen as so crucial to the industry’s survival in the shallower sections of the Gulf.

Approximately 240 platforms in the shallow waters of the Gulf, serving over 2,000 oil and gas wells as of last year, are listed by the Interior Department as “idle iron.” This means that they are severely damaged, not operating and no longer economically viable, and that they pose environmental and safety hazards. Most of these platforms are controlled by smaller operators.

One abandoned well, formerly operated by a now-bankrupt company, has been leaking oil for 10 years and is considered to be the second worst source of US oil pollution after the Deepwater Horizon incident.

The rule changes include proposals to ease the burden of set-aside payments by operators to pay for the decommissioning and removal of this “idle iron”.

The Gulf generates 97% of offshore oil in the United States, about 18% of the country’s crude oil and $2.8 billion a year in royalty and lease payments to the federal government. In 2017, the Gulf produced a record 1.65 million barrels a day.

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