Oil and gas leaders are fighting back against the presidential spill commission’s recommendation for major changes in the way the industry and federal regulators prioritize offshore safety.
Significant changes are already under way, stressed Erik Milito, upstream director for the American Petroleum Institute. He cited API’s work to develop an industry safety program for deep-water operations.
“We hope that the administration recognizes the work already done and the need to rapidly restore vibrancy to the nation’s offshore oil and natural gas production program,” Milito said. “Both the nation’s energy security and our recovering economy demand it.”
In a statement, Chevron said it was “confident in the safety of our drilling practices, and we are working diligently with the industry to ensure that robust drilling practices are used by all.”
The company added:
“The Deepwater Horizon incident was a call to action for the industry, and the industry has responded. The industry has taken significant steps since the April 20th incident to identify and capture opportunities for improvement in prevention, intervention and spill response. As has been the custom, the industry will continue to make improvements. It has committed to initiatives that will drive sustained improvements through enhanced best practices sharing and adoption and by working with government and academia on research and technology development to improve safety and environmental performance of drilling operations.”
Marvin Odum, the president of Shell Oil Co., thanked the commission for its work and promised to carefully review the panel’s report and recommendations.
“This is an opportunity for the industry operators and regulators to learn, improve and avoid another Macondo-type event,” Odum said. “We have been eager to learn what occurred at this well that did not occur at other deep-water wells that have been successfully drilled around the world.”
Odum noted Shell’s ‘safety-case approach’ to its drilling activities worldwide:
“A safety case requires the drilling contractor and the operator to thoroughly assess, document, and choose mitigation measures for offshore drilling risks. It enables all parties involved to view the upcoming operations through the same safety-conscious lens and drives necessary actions for safe risk mitigation. In addition, a valued safety culture is vital to strengthen any set of systems and processes.”
Randall Luthi, the president of the National Ocean Industries Association, said the commission gave short shrift to “industry efforts to correct and improve the system, particularly since April 20, 2010.” He noted the work of joint industry task forces to assess what went wrong and suggest changes to well design standards and safety devices. Luthi also noted the collaboration by some oil companies on a Marine Well Containment Corp., that is developing equipment that could be dispatched immediately to control a runaway well. Luthi added:
“We object to the commission’s insistence on there being a ‘systemic’ problem throughout the industry. This is not supported by the facts. Over 43,000 wells have been drilled in the Gulf of Mexico without a Macondo-like accident. Over 14,000 wells have been drilled in the deep-water Gulf without a Macondo-like accident. This is not because the industry has been lucky. Nor does this disaster-free record show a culture of complacency. The April 20 accident cannot be taken lightly, but it should not be used as a dam to halt efforts for energy security and reliability.”
Bruce Vincent, the president of Houston-based Swift Energy Co., and the head of the Independent Petroleum Association of America, took aim at the commission’s recommendation to boost a current $75 million ceiling on the economic and natural resource damages oil companies can be forced to pay for oil spills. Is that is lifted entirely, it could effectively block smaller and independent operators from drilling offshore.
Proposals for $10 billion, $20 billion and unlimited liability caps “would empower multinational and foreign oil companies while creating an impossible financial challenge to America’s independent producers who compete with these corporations in the offshore,” Vincent said. He added:
“Unrealistic liability proposals would not achieve any of our national security, domestic energy or economic priorities, namely to provide for more American-produced energy, jobs and fewer oil imports. It’s vitally important that such policies must not create an unworkable regulatory framework for our industry, including smaller independent producers, to effectively and safely deliver job-creating, taxpayer-owned energy to American consumers while ensuring environmental safeguards.”
David Holt, the president of the Consumer Energy Alliance, said the commission failed to “move the current energy debate past politics and toward a reasonable consensus on the best and safest way to allow Americans continued access to the energy resources they own offshore.”
Commission Co-Chairman William Reilly, who previously served on the board of ConocoPhillips, said he recognized that companies want to avoid being tainted by a single horrific episode.
“I have heard from CEOs from companies who dislike, who are revolted of the idea of being painted with the same brush, companies that have exemplary records for safety and environmental protection,” Reilly said. “We do not say those companies have been remiss.”
Reilly said the commission was chiefly worried about problems at the contractor level — by companies used to help drill and seal wells for numerous operators working offshore.
- Read more about the report here.
- View the commission’s key recommendations.
- View the response from environmental advocates.
- Find out what lawmakers had to say.
Photo: The Chevron Genesis platform in the Gulf of Mexico near New Orleans, La. (AP file photo/Mary Altaffer)
