Spill Commission full report seeks big changes

The National Oil Spill Commission set up by President Obama after the Deepwater Horizon tragedy has now issued its full report. It had already released the key findings in a prerelease of one chapter of the 398 page document. As could be expected it is packed with recommendations for policy changes, many of them far reaching and onerous. The report also beats up on industry — and government — unsparingly.

You can download the report HERE

If there’s any good news in the document, it’s towards the end where it says:

“It will take several years to fully implement the stringent new safety regime this Commission has recommended — essential changes from doing business as usual in the Gulf of Mexico. But it is not necessary to put deepwater drilling on hold until all the changes are in place. “

The report comes with no easy to digest “executive summary” or “summary of recommendations.”

Those looking to see what changes the Commission is looking for should study the reports extensive “Lessons Learned” section.

“The Deepwater Horizon blowout, explosion, and oil spill did not have to happen,” says the report, and notes that, the “American public, government, and the oil and gas industry need to understand what went wrong so they can pursue the changes required to prevent such devastating accidents from recurring.”

NEEDED: INDUSTRY SAFETY INSTITUTE

Among the changes to “business as usual” that the report proposes is the creation of an industry self-policing entity. The report pays a lot of attention to the successes of the Institute of Nuclear Power Operations (INPO) created by the nuclear power industry in December 1979 in the aftermath of the Three Mile Island disaster as a nonprofit organization with the ambitious mission “to promote the highest levels of safety and reliability–to promote excellence–in the operation of commercial nuclear power plants.”

Though it makes it clear that a wholesale adoption of the INPO model would not work for oil and gas, which is a very different industry to nuclear, the spill Commission report says oil and gas “needs now to embrace the potential for an industry safety institute to supplement government oversight of industry operations” and says that “the basic, successful principles upon which the INPO model is premised can serve as the touchstones for the oil and gas industry in establishing its own [equivalent].

“It is essential,” says the report, that the safety enterprise operate apart from the API (American Petroleum Institute) whose “longstanding role as an industry lobbyist and policy advocate — with an established record of opposing reform and modernization of safety regulations — renders it inappropriate to serve a self-policing function.”

The Commission’s recommendations to government come under seven headings:

1. Improving the Safety of Offshore Operations
2. Safeguarding the Environment
3. Strengthening Oil Spill Response, Planning, and Capacity
4. Advancing Well-Containment Capabilities
5. Overcoming the Impacts of the Deepwater Horizon Spill and Restoring the Gulf
6. Ensuring Financial Responsibility
7. Promoting Congressional Engagement to Ensure Responsible Offshore Drilling

To create a new approach to risk assessment and management, the Commission offers the following three recommendations:

A1: The Department of the Interior should supplement the risk-management program with prescriptive safety and pollution-prevention standards that are developed and selected in consultation with international regulatory peers and that are at least as rigorous as the leasing terms and regulatory requirements in peer oil-producing nations.

A2: 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” approach in the North Sea.

A3: Working with the International Regulators’ Forum and other organizations, Congress and the Department of the Interior should identify those drilling, production, and emergency-response standards that best protect offshore workers and the environment, and initiate new standards and revisions to fill gaps and correct deficiencies. These standards should be applied throughout the Gulf of Mexico, in the Arctic, and globally wherever the international industry operates. Standards should be updated at least every five years as under the formal review process of the International Organization for Standardization (ISO).

NEED FOR A NEW INDEPENDENT AGENCY

Though the Commission commends the efforts made to reinvent the former MMS as BOEMRE, the report says the reorganization of Interior’s offshore leasing, safety, and revenue management program represents a significant improvement, it does not adequately address the deeper problem of fully insulating the Department’s safety and environmental protection functions from the pressures to increase production and maximize lease revenues.

Recommendations

A4: Congress and the Department of the Interior should create an independent agency within the Department of the Interior with enforcement authority to oversee all aspects of offshore drilling safety (operational and occupational), as well as the structural and operational integrity of all offshore energy production facilities, including both oil and gas production and renewable energy production.

A5: Congress and the Department of the Interior should provide a mechanism, including the use of lease provisions for the payment of regulatory fees, for adequate, stable, and secure funding to the key regulatory agencies–Interior, Coast Guard, and NOAA–to ensure that they can perform their duties, expedite permits and reviews as needed, and hire experienced engineers, inspectors, scientists, and first responders. (See Recommendation G2.)

More, much more, in the report.

January 11, 2011