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On the Oil Spill Commission Report

As many of you know, your humble correspondent is a veteran of 32 years of service in the oil and gas industry, currently serving as the operations manager for a small Gulf of Mexico exploration and production company. This week, the President’s Oil Spill Commission published its 380-page report on the BP blowout and spill on the Deepwater Horizon. I won’t pretend to have read the thing, but there are a few recommendations and outcomes worth commenting upon.

Panel: More reform needed to prevent future spills

When asked about the likelihood Congress would enact some of its suggestions, especially with a Republican majority in Congress looking to curb government regulation and spending, panel co-chair and former Florida Democratic Senator Bob Graham said that the magnitude of the disaster “would override an ideological preference for less government, less government intrusion, less government cost.” …

The panel said Congress should draft legislation to create within the Interior Department an independent safety agency and a separate environmental office to evaluate the risks of oil drilling to natural resources. Such a change would not require any additional funding.

Two new bureaucracies, eh? Color me unsurprised.

Reading these government reports, one gets the impression that the oil and gas business would conduct itself like the Seventh Fleet on shore leave, were it not for the stalwart defenders of safety and the environment embodied in the Department of the Interior’s inspectors.

In the wake of the BP Spill, we’ve seen a raft of new regulatory initiatives from the BOEMRE, the Interior agency which has oversight responsibilities for offshore oil and gas operations. Many of the new regs have nothing to do with addressing the problems of BP or Transocean at Macondo. Some of the new requirements for drilling wells arguably don’t add a margin of safety and may even increase the risk of a well’s failure. Industry’s attempts to convince the regulators of this, however, have fallen upon deaf ears. There’s a new sheriff in town, and he aims to let everyone know who’s boss.

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How do you stop a blowing oil well? Don't send a bureaucrat. #rsrh

Clipped from www.ogj.com

MMS shortcomings changed government response to Macondo well spill

WASHINGTON, DC, Nov. 24
The federal response to crude oil spilling from BP PLC’s Macondo well in the deepwater Gulf of Mexico involved more experts from the oil and gas industry and from government departments and agencies once it became apparent the US Minerals Management Service’s scientific knowledge was limited, according to a new staff working paper prepared for US President Barack Obama’s independent oil spill commission.
It said teams at BP’s US offshore exploration headquarters in Houston concentrated on different ways to either stop the flow of oil or collect it at the source. “Each team also had what amounted to a blank check,” the working paper said. “As one contractor put it, ‘Whatever you needed, you got it. If you needed something from a machine shop and you couldn’t jump the line, they bought the machine shop.’ Several MMS officials agreed that, for BP, money was no object: If a team needed equipment, whether it was a ship, freestanding riser, or flexible hose, BP would buy it.”
BP also sought help and advice from the oil and gas industry, according to the working paper. “One well control expert recalled a meeting in early May with at least 35 people, including representatives from the four companies in the world that specialize in well control; BP’s major competitors, including ConocoPhillips, ExxonMobil, and Shell; and academic petroleum engineering departments,” it said. “The expert remembered BP forthrightly admitting that it was seeking all of the help it could get. According to Suttles, nearly everyone in the industry recognized the magnitude of the emergency and answered BP’s calls for assistance.”
“MMS was the sole government agency charged with understanding deepwater wells and related technology, such as BOP stacks,” the paper said. “Its supervision of the containment effort, however, was limited, in line with its established role in overseeing deepwater drilling more generally. Its staff did not attempt to dictate whether BP should perform an operation, to suggest consideration of other options, or to determine whether an operation had a significant likelihood of success. Rather, MMS focused on minimizing the safety risks of operations BP proposed and ensuring conformity with MMS regulations.”
It said that MMS’ limited role was partly due to limited resources. “At most, MMS had four to five employees in Houston trying to oversee BP’s efforts,” it said. “One employee described his experience as akin to standing in a hurricane. Despite working more than 80 hr a week, this individual recalled having to miss more than half of the BP engineering team meetings he was supposed to attend each day.”
The resource constraints don’t fully explain MMS’ role, the working paper continued. It said interviews with agency staff members suggested MMS considered itself neither capable of, nor responsible for, providing more substantive oversight.
“One MMS employee asserted that BP, and industry more broadly, possessed 10 times the expertise that MMS could bring to bear on the enormously complex problem of deepwater containment,” the paper said. “Another pointed out that MMS has trouble attracting the most talented personnel, who are more likely to work in industry where salaries are substantially higher. A third MMS employee stated he could count on one hand the people from the agency whom he would trust to make key decisions in a source control effort of this magnitude. Perhaps most revealingly, two MMS employees recalled high-level officials at [DOI] asking what they would do if the US Government took over the containment effort. Both said they would hire one of the major oil companies.”
Read more at www.ogj.com