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New Federal Offshore Drilling Regulations and Proposed Safeguards Will Fail to Prevent Another Catastrophic Spill in U.S. Waters

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Oceana Analysis of New BOEMRE Rules and Systemic Safety Obstacles Show Dangerous Risks Remain


October 21, 2011
Miami, FL
Contact:
Jackie Savitz ( jsavitz@oceana.org | 202-833-3900)
( )




Despite the Obama administration’s and oil industry’s claims to the contrary, a new Oceana analysis of newly-implemented safety measures concludes that they do not sufficiently reduce the great risks associated with offshore drilling, and would not have prevented the Macondo blowout and spill.

Oceana’s analysis addresses systemic problems in the regulatory and drilling processes, the weaknesses of new federal requirements in preventing new oil spills, questionable well-design and equipment rules, and the evidence that Safety and Environmental Management Systems (SEMS) do not adequately reduce risks.

“When you compare the new rules to the things that went wrong on the BP rig, it’s obvious that those same problems could go terribly wrong again, in spite of the so-called safety rules,” said Oceana senior campaign director and senior scientist Jacqueline Savitz. “Since Department of Interior officials can’t assure safety, Oceana urges them to stop issuing new drilling permits, because that’s the only way to prevent new oil spills,” Savitz added.

Following are the key findings of Oceana’s new analysis, which focuses on systemic problems in the regulatory process and flaws in the new rules:

Systemic Problems in the Regulatory and Drilling Processes

Systemic problems continue to undermine efforts to improve drilling safety.   These include:

  • BSEE can grant exceptions or “departures” from the rules and its predecessors BOEMRE and MMS have done so often.  Prior to the spill, BP was granted 12 departures, including one allowing improper placement of the Macondo well’s cement plug, which may have contributed to the blowout.
  • Blowout preventers continue to have critical deficiencies.  The standard design for oil and gas well blowout preventers may still be deficient.   An independent study by Det Norsk Veritas (DNV) found that blind shear rams designed to cut through and block a pipe failed because the pipe had buckled.   The new safety rules do not address this deficiency.
  • Oversight and inspection levels are woefully inadequate.  While BSEE has increased the number of inspections, low funding prevents the agency from strong oversight of the tens of thousands of wells in the water.  In spite of the new rules, this will result in lower compliance and greater odds of violations.  The Deepwater Horizon incident highlights an urgent need for oversight of critical operations in real time, as they are occurring, even when rigs have previously been inspected for safety.
  • Industry approaches to safety have not changed enough.  Oil and gas industry approaches to safety have not changed dramatically during the past year.  The industry’s continued lobbying to expedite permits and limit safety reviews underscores its “business as usual” approach.

Interim Drilling Safety Rule:  Training and maintenance, well testing requirements, and well design and equipment rules

  • Training and maintenance regulations won’t significantly improve safety.  The Department of Interior’s current inspection capabilities are insufficient to ensure operators adhere to training and maintenance requirements.  With a current cap on company fines for breaking federal regulations set at $40,000 per day and average operating costs for a rig estimated at $1,000,000 per day, violators have no financial incentive to adhere to the rules.
  • Equipment testing requirements are unlikely to prevent another oil spill.  Economic incentives increase a company’s likelihood to skip or ignore equipment tests and testing methods don’t sufficiently mimic “real world” conditions. Drilling companies are also not required to demonstrate that blind shear rams can shear tool joints.
  • New well design and equipment rules are too weak to prevent accidents.  For example, the requirement for two independently tested barriers could help prevent a blowout by stopping hydrocarbon flow within a well.  But the new rules allow the use of dual float valves to meet this requirement, despite being described as unreliable by industry itself.   Moreover, limited funds for inspection and oversight, and incentives that reward progress over safety, may result in hurried, improper installation of these required barriers.  
  • The American Petroleum Institute (API), currently allowed to license third parties, has a serious conflict of interest.  Many aspects of well-design regulations are required to be verified by an independent third party. Regulations allow the American Petroleum Institute, the leading trade association for the oil and gas industry, to license these third parties, which is a clear conflict of interest.

Notices to Lessees (NTLs)

BOEMRE issued two Notices to Lessees, which clarify or reinforce existing drilling regulations.  One key aspect of these NTLs requires detailed information on spill response and cleanup in exploration plans, which is intended to help BSEE evaluate drilling risks.

  • The federal government has not set standards or limits to evaluate company estimates of worst case oil discharges, response times and cleanup capacities.
  • In the absence of these minimum standards or limits, BSEE continues to rubberstamp drilling permits, regardless of great disparities in stated potential spill volumes and response capabilities.

 

This Oceana analysis concludes that the “new,” underfunded safety regulations fail to reduce the great risks of offshore drilling and will fail to prevent another expensive spill in U.S. waters.  Oceana believes the best strategy is to stop issuing new drilling permits, and begin to wean the nation off oil and gas now.  “We urge the Obama administration to stop issuing drilling permits unless and until these safety concerns are addressed, while investing much more in clean energy innovation and jobs,” added Jacqueline Savitz.