A need to tighten up the offshore drilling safety regime and learn from mistakes
Major accidents and disasters in the US can have considerable repercussions for the regulatory regime governing international maritime safety. The Exxon Valdez grounding in 1989 and the 9/11 terrorist attacks in 2001 are the most notable examples, the fallout from which are evidenced in today’s global tanker safety and ship security regimes.
The shipping industry is now waiting to see what impact the Macondo well in the Gulf of Mexico in April 2010 might have on their business. A number of investigations have been carried out into the cause of the accident and reports continue to be issued. While the majority of the findings indicate a need to tighten up the offshore drilling safety regime, there are also important lessons to be learned for all those responsible for maritime safety.
On 20 April 2010 the mobile offshore drilling unit (MODU) Deepwater Horizon was completing drilling operations at the Macondo well on the US outer continental shelf in the Gulf of Mexico as part of preparations to temporarily abandon the well. A loss of well control during these operations resulted in a release of liquid and gaseous hydrocarbons which, in turn, gave rise to explosions, fire and the death of 11 rig workers. The remaining 115 people on board the rig were successfully evacuated, indicating the robustness of the MODU’s underlying marine safety regulatory system, including requirements for redundancy of lifesaving equipment and routine fire/emergency drills.
Deepwater Horizon sank two days later but a badly damaged blowout preventer (BOP) on the well cap on the seabed meant that large quantities of hydrocarbons continued to be released into the Gulf of Mexico. Difficulties in dealing with the unrestrained flow of hydrocarbons from the damaged BOP over 1,500 metres below the sea surface ensured that there would be no early resolution of the Macondo well disaster.
The flow of oil and gas was not stopped until on 15 July 2010 and it was another two months before Macondo was declared sealed. Over the 87 days that the well flowed an estimated 4.4 million barrels of oil escaped as well as 200,000 tonnes of methane – equivalent to about 20% of the total hydrocarbons released. Oil was escaping from the well at a rate of 62,000 barrels/day at its peak, about 12 times above the initial estimate. It was the largest offshore oil spill in US history and the second largest oil spill ever.
The initial response, in terms of both cleanup operations and regulatory impact, was of a similar magnitude to the spill itself. The US Government declared a moratorium on offshore drilling in its territorial waters. BP, the lead owner and operator of the Macondo well, set aside USD 20 billion in a fund to compensate individuals as its share price plummeted and it struggled to control the seabed leak, revamp its in-house safety management regime and deal with the media/public opinion onslaught.
All the accident investigation reports published to date state that in the months prior to the blowout Deepwater Horizon had been inspected by the responsible authorities as required and that the rig was found to be in compliance with the relevant requirements. However, the detailed post-accident investigations also revealed that in fact all was not right.
In January 2011 the investigating panel that President Obama tasked with finding the root causes of the Deepwater Horizon blowout concluded that the disaster was “an avoidable accident caused by a series of failures and blunders by the companies involved in drilling the well and the government regulators assigned to police them”. Furthermore, the causes are systemic and might well recur unless both industry practices and government policies are reformed.
More specifically, the investigators found that the companies – BP, Transocean (the owner of Deepwater Horizon), Halliburton (the principal engineering contractor for the project) and several sub-contractors working for them – took a series of hazardous and timesaving steps without adequate consideration of the risks involved. Nine actions taken by the companies to save time and money were identified. Less risky alternatives to all nine actions were available.
The panel also determined that company officials had failed to consult with one another on critical decisions and that senior management had paid insufficient attention to the troubled well. “The most significant failure at Macondo – and the clear root cause of the blowout – was a failure of industry management”, the study concluded. “Better management of decision-making processes within BP and other companies, better communication within and between BP and its contractors and effective training of key engineering and rig personnel would have prevented the Macondo incident.”
The panel referred to “compartmentalisation” of information within and between companies, like the failure of onshore BP and Halliburton officials to report to rig workers known past problems. A similar tendency to hoard critical information was a crucial shortcoming identified by a similar commission convened to look into the causes of the 11 September 2001 terrorist attacks, which found that federal intelligence and law enforcement agencies failed to share data that might have identified the attackers.
Furthermore, President Obama’s panel also identified the inadequate performance of the regulators, i.e. the US Interior Department’s Minerals Management Service (MMS), a unit that has subsequently been renamed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) and given extended regulatory powers. The panel found that MMS lacked the personnel, training and muscle to do its job. Government officials relied too much on industry assertions of the safety of its operations and failed to create and apply a programme of regulatory oversight that would have properly minimised the risk of deepwater drilling.
Although Obama’s investigating panel did not try to assign specific blame for the catalogue of mistakes and shortcuts taken by the companies involved and their employees, it is clear from the findings that the highly risky behaviour that characterised the final hours of operations on Deepwater Horizon was not unusual in US Gulf offshore operations.
Over the past 12 months a number of remedial measures have been implemented in the US, the most notable of which are as follows:
1. The world’s major energy companies, including BP, Exxon Mobil, Shell , Chevron and ConocoPhillips, have pledged to spend USD 1 billion for Marine Well Containment Company, a new entity that will respond to blowouts and spills in the Gulf. The non-profit company is assembling a fleet of vessels able to handle crude oil spills as large as 100,000 barrels/day in seas as deep as 3,000 metres.
2. New rules mandate offshore well operators to demonstrate that they can control and contain a spill before they receive a permit for a new offshore drilling development project.
3. The American Petroleum Institute Recommended Practices governing well design, especially as regard capping stack configurations, have been amended.
4. Industry has developed a new generation of well capping stack; it is an intervention device that allows full access to the wellbore so that the operator can repair the well or intervene in the mechanical condition of the well and enables the capture of escaping oil.
One of the most recent Macondo accident investigation reports to be issued, in August 2011, is that of the Marshall Islands, the flag state administrator of Deepwater Horizon. Amongst the recommendations made in the Marshall Island report is that specific provisions of IMO’s 2009 MODU Code should be reviewed in light of the casualty and that a communication system be developed between the relevant flag and coastal state regulatory bodies to address issues regarding offshore units operating within the coastal state’s jurisdiction.
In addition, all unit operators should ensure that the initial orientation for new crew members, contracted personnel and visitors on offshore units includes a discussion of the respective roles and leadership responsibilities of the master and the offshore installation manager, including how those roles change based on unit operations and emergency conditions.
Although it is not an issue regulated by the flag state administrator of a MODU, the Marshall Islands report recommends that operators and regulators review and amend, as appropriate, emergency procedures for activating the emergency disconnect system and maintaining the blowout preventer.
The US offshore drilling industry, as a whole, has built up a good safety record over the years, including in deepwater operations. However, the Macondo blowout highlighted the dangers of complacency, the requirement for continuous improvement and weak points in the existing regime. Most notably, senior industry management and government regulators need to exercise proper oversight of the activities within their jurisdiction.
Source: BIMCO, Mike Corkhill
