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Chief Offshore Drilling Regulator Criticizes Lack of Oversight for Contractors

The top U.S. regulator of offshore oil drilling said it made no sense that his agency is not conducting direct oversight of contractors who work on offshore oil rigs.

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Offshore oil rigs are seen at night near Santa Barbara, Calif.

The top regulator of offshore drilling said this week that his agency is exploring expanding its oversight to include thousands of contractors on offshore rigs. The majority of offshore oil workers in the Gulf of Mexico are contractors and their central role in safety issues came into focus after last year's Gulf oil spill. BP had leased the Deepwater Horizon rig from the contractor Transocean and relied on the contractor Halliburton to provide casing for the Macondo well.

The government currently regulates only operators of offshore drilling rigs, such as BP, and in turn holds them responsible for any contractors they hire. Experts say that by delegating the supervision of contractors the government is essentially taking the word of rig operators that facilities are safe and comply with regulation. 

As Reuters reported, the director of the Bureau of Ocean Energy Management, Regulation and Enforcement, Michael Bromwich, first raised the issue Monday, saying he thinks his agency has the authority to oversee contractors and that he intends to do so.

Brownwich expanded on his comments Tuesday at a recruiting event at Columbia University attended by a ProPublica reporter. "It makes absolutely no sense to me why we should not regulate contractors as well as operators," said Bromwich. "Historically we have only gone against the operator. My question is: why?"

Overseeing contractors could drastically expand Bromwich's mandate, and it's not clear whether his agency has sufficient resources to do it.

In the Gulf of Mexico, almost all of the personnel involved in offshore oil exploration are contractors, said Robert Bea, an engineering professor at Berkeley who specializes in offshore drilling. For oil production, Bea said, the proportion of offshore workers employed by operators varies significantly depending upon the site and the operating company, ranging from 20 percent to 60 percent.

Bea said he was concerned that regulators lack the staff and technical knowledge to take on what would be the sweeping new responsibility. "You need to have greater experience, knowledge and expertise than the entity that is being regulated," he said. The agency "has no such expertise."

Others have stressed that any changes must be implemented carefully so as not to allow drill operators to evade any responsibility.

"It's important to maintain the accountability, the responsibility, the authority of the primary leaseholder and permit holder and not allow that to be diffused," Bob Simon, staff director for the Senate Committee on Energy and Natural Resources, said on an April 15 conference call. The current approach has a chain of command and accountability that leads directly to the operator, Simon said.

Melissa Schwartz, spokeswoman for the offshore drilling regulator, emphasized that Bromwich's proposal "would in no way change the responsibility of operators." But she said her agency was still reviewing critical aspects of how the new system would work, including whether federal inspectors would examine additional facilities themselves or simply obtain greater authority to hold contractors responsible for violations.

The agency is also beefing up its enforcement capacity and hiring more inspectors as well as personnel for a new environmental compliance unit. It plans to hire 33 staffers for the environmental enforcement unit by the end of the 2012 fiscal year, as well as 24 new inspectors as funding permits, Schwartz said.

There are currently 60 inspectors charged with oversight for about 3,500 drilling rigs and pumping platforms in the Gulf of Mexico, according to the Wall Street Journal.

Bromwich told the Columbia graduate students who attended Tuesday's recruiting meeting that he was making new hires to carry out his agency's growing regulatory mandate.

"You're looking for an interesting new job," Bromwich told the students. "How would you like to be an environmental cop?"

Tawanda Kanhema

April 27, 2011, 4:20 p.m.

Good job. It seems the biggest challenge in regulating any sector is that the best brains in the industry are hired by the key players, leaving government agencies in a position of authority without expertise… which is hardly useful. Thanks for staying on the ball with this.

Theodore Radamaker

April 27, 2011, 4:34 p.m.

Bromwich might just as well start packing. He won’t last long going counter to what the oil companies and Obama want: less, not more, regulation.

I would think that Mr. Bromwich would be recruiting ex oil field drillers and mudmen instead of recruiting A bunch of inexperienced ivy league kids from some University…Unless of course they are for the “Staffer” positions mentioned and not hands on Inspection…

Like the tiltle of the article. Ummm, what Walll Street financial company, or oil company, did he work for before being a regulator?

Mr Bromich might want to start with implementing oversight on US manning laws so as to insure the US worker the same protection for maritime jobs as are afforded to Norwegian, Brazilian, British and other nations whose vessels are rushing to fill the deep water drilling projects in US GOM. These countries all have strict protections that demand minimum national crew manning standards yet the USA offers “waivers” to anyone who applies despite there being ample US professional labor readily available. Lest he forget, President Obamas close ties with George Soros aka Petrobras Brazil might not be too keen on his actions but as usual “friends and family” waivers are always left as an option.

An amusing read, because it’s the same rhetoric as usual in a slightly modified package. For decades regulations have been descriptive rather than directive, and it is the weakness of that as a process that had undercuts the value of regulations. Or, in plainer terms, the problem is quality of regulations rather than quantity. More is only better if they are focused and relevant. The same is true of inspections, which generally fail because they are not focused on relevancies.

All this speaks to the basic problem of safety being mistaken for a process, rather than recognised as an outcome. Until that changes, and companies are faced by regulations that are directive in terms of proper process, we will see nonsense disasters again and again—the kind of nonsense that BP got caught with. (I say with, rather than caught by, because the fact is had they a clue they would have known the risks, and they claim they didn’t.)

As to the holding of contractors accountable, the idea itself is sound, but the mechanism is problematic. Large entities (not just oil companies, either) are barely able to manage their own internal structures, and don’t really manage their contractors any more effectively. Worse, is that they often rely upon horribly inappropriate statistics, like safety indices, as predictors, when they are, at best, post-event reflections. And this, sadly, is the side-effect of awful regulatory impositions, which actually mandate the use of these stats rather than seek to clarify the real advantages of process-driven risk management.

I would be more impressed, by far, if these regulators took a half-step back and realised the problem, at its core, is one of weak management. See safety as an outcome of the process of risk management, and a lot of the oddities of the current models are exposed for what they are—excuses for management failures, and a lack of basic business sense. (It is not cheaper to destroy an ecosystem than it is to manage actual risks, but you have to recognise them first—and ignorance is why disasters like the Gulf mess occur.)

Gregg Stoerrle

April 27, 2011, 9:42 p.m.

Deepwater survivor Daniel Baron on CNN stated"You could call time out for safety they wouldnt fire you for it but they would find a way to fire you for it"in front of four other survivors and they all agreed.This is why we need real whistleblower protection.This could have been prevented i know im a whistleblower.After what i have been through for being a whistleblower i would warn them to keep their mouth shut.
Two more techs have even come forward from my former employer and still no justice.
You would not believe how they handeled my case from the begining and with all the evidence i provided.
REMEMBER KEEP YOUR MOUTH SHUT AND LOOK THE OTHER WAY THERE IS NO PROTECTION!

Typical—a political appointee calling for more regulation, based on no hands-on work experience.  As for recruiting new graduates to be environmental cops, it sounds like a sure way to get in-experienced people killed during mechanical operations that they don’t have the slightest understanding for.

It takes extensive on the deck training to work on a production or drilling platform.  A person does not just show up and know what hundreds or thousands of valves and fittings do.  When new people show up on a rig they have a babysitter who’s sole job is keeping the newby from getting themself killed.  Maybe Bromwich should go back and read ALL of the industry incident reports before saying he knows best. 

Too much game playing and not enough engineers with real experience shaping the discussion

What part of don’t you understand are you missing? the oil companies don’t want regulation, it cramps their style.

MAKE GOVERNMENT SMALLER-NO REGULATORY AGENCIES-THEY STOP US FROM MAKING MONEY FOR THE 1% OF THE POPULATION. RUINING THE ENVIRONMENT DOES NOT MATTER-ONLY MONEY MATTERS-WAKE UP AMERICA!

While companies need to be held to a standard, the problems with the Deepwater Horizon can be worked and mitigated.  A process problem was not caught by a faulty blowout preventer and there we go.
Two factors here are VERY important.  Our country needs to be self sufficient in oil production.  The Administration’s failure to move aggressively in developing more well resources and refineries is having it’s effect at the pump.  The other factor is the impact.  Scientists tell us that the predicted impact of the Deepwater Horizon did not come to pass.  Perceptions about how much oil the environment could handle successfully were woefully undersized.  These are the same perceptions that have been around for every oil “disaster” that has occurred.  Unless we get our collective crap together, these high fuel prices will tank our economy, perhaps this time, irreparably.
Perhaps I am underestimating the capacity of our economy in the same way that folks wrung their hands over the Horizon spill.  I really hope so.  I just know that the last time Gas went over $4, the damage was devastating. That was coupled with a mortgage meltdown, but I’m not sure that our present economy has the buffer necessary to absorb this current shock.
Direct and bold policy shifts would have a DIRECT effect on futures prices, and an indirect effect on current prices.  Concentrated effort on development (removed from a toxic demonetization of the oil industry) would allow us to reach the goal of self-sufficiency.  It would also produce economic strength that would allow working on other energy sources.  Right now, we are on a course that assumes failure.  That, in my mind, is unacceptable!

Excuse…  Demonization rather than demonetization.  Gotta love spell Czech.

We went too far away.
We earned a benefit to live on this earth with lots of nature and we tried to destroy it.
If we don’t stop here and pay some respect to the earth, we have to move to the space some day in a very near future.
Lets think about it, conserve it, and thank it.

I like “he thinks his agency has the authority”  I think he might consider recruiting some law students.
The reference to inspectors lacking the technical expertise (Bea) is very telling, and an earlier comment on jobs following the cash flow, the industry is bound to enforce itself.  When the best and brightest take the corporate positions, and the experienced but demoralized take the regulatory job, regulators will always be a step behind.
It is counter productive to pay less than industry standards for the broad knowledge required, and then spend a fortune fighting in court or cleaning up the pollution.

Good Story, I wonder how far Micheal Bromwich will get.  At least he’s willing to step up.

Sorry,  didn’t mean to imply that the “experienced” couldn’t do an excellent job.  My concern is that we are consistantly playing catch up, instead of setting the standard and unwaiveringly enforcing it.

Medbob   I have to say I agree with you on the economic effects of oil dependence, but I respectfully say you are wrong about the degree of damage done to the enviroment by these “disasters”.  Look into the latest science on the gulf spill, just because we can’t see it does not mean it isn’t there.  Greenpeace has some interesting info on thier website, not to mention PBS.  Have you read PP’s coverage on it?

Thanks.

Michael Hiner

May 6, 2011, 11:56 p.m.

The science documentation is incomplete.  There is a back story that out of some uncertain number of tests (thousands) that only a few instances of spill related contamination can be found in fish samples.  The testing by a government agency is ongoing…

I wish the enviros would do another calculation on the volume of oil contamination from natural seeps that don’t seem to destroy the environment.  I wish too—they would go back and research ITOX and explain how we somehow survived that spill.  There is too much junk science on single minded issues, and precious little integration of facts and data.

Well I respect your observation, but there are after effects we will not see for years, and better to do the right decision now, than after the damage. We do know many dead baby porpoises, have shown up on beaches. The Blue Fin Tuna has its mating grounds in the gulf, and a lot of oil is just setting on the ocean floor. Npt worth it, for a bunch of SUV/BigFTruck drivers, that frankly, don’t participate in the good of all of society. We as a society, are mandated to wear seatbelt, obey traffic laws, etc, just as good common sense. And the oil reglators have been shown to be relaxed in enforcement, with some companies strenthening there procedures. Sorry can’t dismiss safety for short term profits, long term lost profits.

Michael L Hiner

May 9, 2011, 11:34 a.m.

I would suggest that ProPublica perform an economic analysis for increasing the number of inspectors and providing them with the required training which should include course work and field experieince in mechanical engineering and fluid dymanics.  And please don’t just ask the politicians (or academics who have no up to date experience in the oil industry)  what the training requirements should be.  Talk directly to experienced rig personnel and drilling engineers who have lived their careers working the oil fields.  It is not simple, requires years of experience, and the only people with that experience are the ones who are usually demonized.

As for the SUV comment—try pulling a boat or a camping trailer with a Prius.  Or, in my case hauling a 1000 pounds of satellite gear to a disaster site.  If you can’t understand that you need to get out of the big cities and see some of the rest of America.  We all don’t live by subways and trains.