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A Year After BP Oil Spill, Robust Regulation Is Years Away

Source: NY Times

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Posted on 18 Apr 2011

A year after BP’s Macondo well blew out, those who run the agency formerly known as the Minerals Management Service concede that it will be years before they can establish a robust regulatory regime able to minimize the risks to workers and the environment while still allowing exploration offshore.

“We are much safer today than we were a year ago,” said Interior Secretary Ken Salazar, who oversees the agency, “but we know we have more to do.”

Oil industry executives and their allies in Congress said that the Obama administration, in its zeal to overhaul the agency, has lost sight of what they believe the agency’s fundamental mission should be — promoting the development of the nation’s offshore oil and gas resources. Environmentalists said the agency, now known as the Bureau of Ocean Energy Management, Regulation and Enforcement, has made only cosmetic changes and remains too close to the people it is supposed to regulate.

Even the officials who run it, Mr. Salazar and the new director, Michael R. Bromwich, admit that they have a long way to go before government can provide the kind of rigorous oversight demanded by the complex, highly technical and deeply risky business of drilling for oil beneath the sea.

The blowout preventers in use today remain incapable of handling a well rupture of the force of the BP blast. The containment system developed by the industry to respond to another blowout has not been tested in real-life conditions and, by the industry’s own estimate, could still allow hundreds of thousands of barrels of oil to spew before a runaway well could be capped.

The seven-member commission named by President Obama to investigate the BP accident looked at the regulatory failures that contributed to it, and its conclusions were blunt.

“M.M.S. became an agency systematically lacking the resources, technical training or experience in petroleum engineering that is absolutely critical to ensuring that offshore drilling is being conducted in a safe and responsible manner,” the panel said in its final report, issued in January. “For aregulatory agency to fall so short of its essential safety mission is inexcusable.”

Many of those flaws remain, according to William K. Reilly, a former Environmental Protection Agency administrator who was one of two chairmen of the commission. He said last week that Mr. Bromwich was doing a creditable job, but that the agency still lacked the technical expertise needed to oversee such a specialized industry. “They changed the name, but all the people are the same,” Mr. Reilly said. “It’s embarrassing.”

The job of repairing the agency has fallen to Mr. Bromwich, a former federal prosecutor and Justice Department inspector general who was pressured into leading the agency by Mr. Obama. While defending the employees of the agency, Mr. Bromwich, who took over last June, made no excuses for its past misbehavior, including a scandal at the Denver office that involved agency officials and oil company employees having sex and sharing drugs.

Mr. Bromwich acknowledged that accident rates for offshore drilling were several times higher in the United States than in Australia, Canada, Norway and the United Kingdom, in part because those countries imposed effective new rules after major accidents.

After the Deepwater Horizon spill, the regulatory agency was broken into parts, dividing the revenue collection office from the oversight division to eliminate conflicts of interest. A series of new rules involving well design, spill response and environmental review were imposed. Permitting and production were set back months while the industry absorbed the changes.

But Mr. Bromwich says his agency still lacks the resources, personnel, training, technology, enforcement tools, regulations and legislation it needs to do its job properly. He lays a large part of the blame on insufficient financing.

The bureau’s budget has been basically flat since it was created in 1982, even as drilling activity in the deep-water gulf has drastically increased and the technology has grown more complicated.

“Without more resources, we can keep doing what we’re doing, but we can’t grow,” Mr. Bromwich said in an interview during a recruiting trip to nine West Coast universities, where he was trying to lure young scientists and engineers to apply for relatively low-paying government jobs. “We need more people, and we need new people.”

Mr. Bromwich has asked the Office of Personnel Management to adjust pay schedules so his office can compete with oil companies, which in some cases are paying twice the government salary for petroleum engineers. Mr. Obama has asked for an increase of more than $100 million to the agency’s roughly $250 million annual budget. Congress provided about half that amount in the short-term budget deal reached last week, but discussions have not begun on next year’s budget.

The House is considering three bills that would force the agency to move more quickly on drilling permits, to open vast new areas along the Atlantic and Pacific Coasts to drilling and to reopen lease sales that had been canceled after the Deepwater Horizon spill. A separate bill would ease environmental rules for drilling off the shores of Alaska.

“Much of the legislation that I have seen being bandied about, especially with the House Republicans, is almost as if the Deepwater Horizon-Macondo well incident never happened,” Mr. Salazar said last week. “If another Macondo happened and we didn’t have the ability to contain it, it would probably mean the death of energy development in the nation’s oceans.”

Employees of the remade agency are candid about its persistent shortcomings. At a recent industry-government forum in New Orleans, officials from the Bureau of Ocean Energy Management repeatedly admitted that they could not answer many of the questions and could not account for many of the delays in responding to applications.

Valerie Land, regulatory supervisor at W & T Offshore, complained that agency officials sent back permit plans with questions that had been answered in the applications. Even some simple questions, like whether a blowout preventer would be above or below water, seemed to flummox some officials, she said.

Michael Tolbert, a senior engineer with the bureau, shrugged and said, “We have a lot of new people looking at the plans.”
Randall B. Luthi, a Wyoming rancher who was once a Congressional aide to Dick Cheney, served as head of the Minerals Management Service for two years in the administration of President George W. Bush. He said morale in his former agency is low because of the constant charges of corruption and coziness with industry, accusations echoed last year by Mr. Obama.

Mr. Luthi, who now leads an industry group representing offshore drilling contractors, said the new leadership had centralized much of the decision making in Washington.

The offshore operators Mr. Luthi represents are frustrated with the moratorium on deep-water drilling that has just recently begun to ease, saying companies that had nothing to do with the BP disaster believe that they were being indiscriminately punished. Although he refrained from criticizing Mr. Bromwich directly, Mr. Luthi suggested that the new director was making decisions based on inadequate knowledge and experience.

“They have instituted a lot of changes that would ordinarily require a year of research,” he said. “Here, Interior was forced to announce the changes and then do the legwork.”

The oil and gas industry has, mostly, been cooperating in the regulator’s efforts. Two industry groups helped create systems for capping out-of-control wells like BP’s Macondo, which spewed nearly five million barrels of oil into the gulf over 87 days.

The Interior Department held off granting new deep-water permits until new systems were in place; 10 have been issued since the moratorium was formally lifted in October. An additional 15 deep-water permits are pending.
Representative Edward J. Markey, Democrat of Massachusetts, has been equally critical of industry and government regulators.

“We should be requiring more of the oil companies to continue deep-water drilling than passable response plans, unreliable blowout preventers and a containment system that has only been used once and can’t be deployed past 8,000 feet,” Mr. Markey said.
Rig inspectors, most of whom are from the same towns and culture as the industry employees they are supposed to police, are trying to adopt a more professional stance and no longer accept free transportation and meals from the rig operators.

“They’re bringing their own lunches when they make visits,” said Mark Shuster, Shell’s manager for gulf operations. He described inspections as more effective and comprehensive, but said the agency remained woefully understaffed and apparently lacking in resources to hire enough qualified new talent.

“They need experienced people who really do know what they are doing,” he said.


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