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Before and After Macondo: Offshore Safety and Environmental

Regulation in Historical Context

Tyler PriestC.T. Bauer College of Business

University of Houstontpriest@uh.edu

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The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling

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A Competent and Nimble Regulator

“The industry needs a robust, expertly staffed, and well-funded regulator that can keep pace with and augment industry's technical expertise. A competent and nimble regulator will be able to establish and enforce the rules of the road to assure safety without stifling innovation and commercial success.”

Testimony of Marvin Odum, President, Shell Oil Company, and Upstream Americas Director, Royal Dutch Shell, before National Commission, November 9, 2010

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Safety and Environmental Protection

• Inseparable concepts – especially offshore• Occupational vs. Process Safety

Management• Prescriptive vs. Performance-Based, or

Risk-Based Regulation• Historical Background on Safety and

Environmental Management Systems (SEMS) rule

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Major Offshore Accidents, 1980s

South Pass Block 60 explosion, Louisiana (1989)

• Report by National Research Council Marine Board of the National Academy of Sciences, (1990)

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SEMP to SEMS

• OSHA PSM Rule – did not apply to OCS• Safety and Environmental Management Program

proposed by MMS in 1991• API RP 75 – Recommended Practice for Development

of a Safety and Environmental Program for Outer Continental Shelf (OCS) Operations and Facilities

• MMS decision in 1994 to make SEMP a “voluntary” standard

• Proposed “SEMS” (Safety and Environmental Management Systems) rule of 2006 – included only 4 of 12 elements of API RP 75

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MMS Resource Constraints

MMS InspectionsOCS Oil Production and MMS Budget

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“Streamlined” Regulatory Apparatus at MMS

• Inspections– Plummeting number of unannounced inspections– MOU with USCG (2002)

• Training– Reduced MMS requirements

• Reporting– Incident reporting requirements lagged by

international standards• Technical Cooperation– Disappearance of MMS from industry technical

literature

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New SEMS - Post-Macondo

• Transformation of API RP 75 from voluntary to required standard, with added elements.

• Applicable to all operations and to all operators. Not required of contractors, but must have documented agreement with operator.

• Addresses both occupational and process safety.

• Must be in place by November 15, 2011

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SEMS – Basic Elements

1. General provisions2. Safety and Environmental Information3. Hazards Analysis4. Management of Change5. Operating Procedures6. Safe Work Practices7. Training8. Mechanical Integrity9. Pre-start up Review10. Emergency Response and Control11. Investigation of Incidents12. Audits13. Records and documentation

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SEMS - Issues

• Implementation – interpreting the rules• Costs of compliance – differential impact on

international and domestic operators• Enforcement – jurisdictional overlaps and

conflicts; audits• Efficacy – effect of SEMS in making positive

impact on safety culture of companies

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For More Information on SEMS

• BOEMRE, http://www.boemre.gov/semp/• PEC/Premier Safety Management

http://pecpremier.wordpress.com/

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For More Information on National OSC

Web Site: www.oilspillcommission.gov

• Final Report: Deep Water – also available in paperback from the Government Printing Office, Amazon.com, and Barnes and Nobel

• Chief Counsel’s Report: Macondo – also available in interactive multimedia mode on web site

• The Gulf Spill – A multimedia summary of the Commission’s findings available on the web site

• Summary Report: Deep Water: Recommendations• Resources: Testimony, Correspondence, Research, Staff Working Papers

Reports – All available in PDF format from web site