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ENERGY 5/12/2014 @ 8:12AM
Offshore regulators had a stern warning last week for oil companies and contractors with poor track records for operating in the Gulf of Mexico: we’ve got our eye on you. The warning came during a panel discussion on the final day of the Offshore Technology Conference, the industry’s mega trade show in Houston.
The Coast Guard’s assistant commandant for prevention policy, Rear Adm. Joseph Servidio, and Brian Salerno, director of the Bureau of Safety and Environmental Enforcement, warned that they intend to crack down on companies that cut corners.
According to the Houston Chronicle:
Servidio said the Coast Guard will consider launching unannounced inspections of oil and gas industry vessels after some logged more than five deficiencies during scheduled probes.
“There are significant areas of concern, and we have a ways to go with some vessels and some companies,” Servidio said.
Servidio said the Coast Guard may even resort to unannounced inspections of vessels with bad track records, similar to a program it already has in place for some cruise ships. Salerno promised much the same for rig operators, as the Chronicle noted:
Salerno said the safety bureau he heads, which regulates offshore drilling, also sees evidence of spotty performance, with a few repeat offenders mingled among companies with deep commitments to the safety and environmental management systems now required to minimize process risks offshore.
“There are companies we have encountered that think they can cut corners or regard SEMS as just a plan on a shelf,” Salerno said. “In some tragic cases, lives have been lost – needlessly – for failure to follow established safety processes.”
The biggest question, left unanswered, is what will the regulators do when they identify recidivist safety violators? So far, the regulators have shown little desire to boot companies from the gulf for repeated safety infractions.
Salerno’s comments seem to refer to the Black Elk Energy accident in late 2012 that killed three workers and injured others. Salerno’s predecessor declared that the company “failed to operate in a manner consistent with federal regulations,” and it wasn’t the first time. Black Elk had been cited 315 times in the two previous years for rules violations. Yet even after the 2012 accident, BSEE simply told the company to develop a better safety plan.
Black Elk had paid some piddling fines prior to the accident – the biggest was $307,500 for failing to fix a gas leak on one its platforms for 117 days – but the company continued to operate in the Gulf.
As OTC attendees were frequently reminded at the conference, the Gulf is one of the most lucrative and active areas for offshore drilling in the world, yet companies that fail to operate safely have little worry of being kicked out of the party.
If Servidio and Salerno really want to catch the industry’s attention, they need to come armed with stricter consequences for recidivist safety violators. Fines currently are so low, they aren’t enough to change companies’ behavior. Only the threat of losing access to the Gulf will get their attention.
Similarly, the feds need to consider an operator’s safety record when awarding new leases in the Gulf. Instead, as we saw after the Deepwater Horizon disaster, BP – a company with a decade of repeated safety and operating failures – was among the first companies to return to the Gulf, and it now is more active there than it was before the accident.
The Environmental Protection Agency, not offshore regulators, briefly banned BP from bidding on new Gulf leases, and, as part of the inevitable lawsuit that BP filed, set up an independent auditor to keep an eye on the company’s operations.
BSEE and the Coast Guard should consider a similar program for repeat offenders.
Talking tough is a good start, but it needs to be backed up with more than finger wagging and penny ante fines.
Special thanks to Richard Charter
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