Feds won’t lift threat to ban Black Elk Energy as violations persist

Black Elk Energy needs to make more safety improvements before regulators will lift a year-old threat to ban it from federal waters, following a fatal platform fire last year.

The Houston company must “demonstrate further improvement in reducing” offshore violations, the Bureau of Safety and Environmental Enforcement said in a Sept. 4 letter to Black Elk CEO John Hoffman that was publicly released Wednesday.

Federal investigators are still probing what caused an explosion and fire last November at Black Elk Energy’s West Delta 32 production platform. Three people died and two others were injured in the accident.

A third-party investigation funded by Black Elk and conducted by ABSG Consulting linked the incident back to a pipe welding operation conducted by contractors and subcontractors on the facility. According to the probe, an open pipe was not cleared of flammable vapors before the workers began welding a flange, ultimately triggering an explosion in connected oil tanks.

Financial fallout: Fatal fire hit finances, production

Since the accident — and a bureau directive last November to boost the safety of Black Elk operations — the company is racking up fewer violations per offshore inspection. Also declining is the ratio of those violations, known as incidents of noncompliance, to the number of covered devices and components.

But the company’s performance when facilities are visited a second time falls short of the mark, bureau regional director Lars Herbst said.

“Although the … ratios have improved,” Herbst said, “further work needs to be done in reducing the number of (incidents of noncompliance) issued on reinspections, in order to achieve compliance closer to the Gulf of Mexico industry average.”

Herbst also ordered Black Elk to “eliminate the serious violations that could lead to possible civil penalty assessments.”

Since the start of this year, Black Elk has been notified of four violations for individual components and four incidents of noncompliance that required structures to be shut in.

Two of those shut-in violations were of a requirement that the company “maintain all equipment in a safe condition to provide for the protection of the lease and associated facilities.” A third was for failure to “perform all operations in a safe and workmanlike manner.” The fourth dealt with taking necessary precautions to remove hazardous oil and gas accumulation or other fire and safety hazards.

Offshore dangers: Accidents show depth of danger in shallow waters

Overall, the safety bureau said Black Elk has demonstrated “an ongoing commitment . . . to improve the safety and environmental compliance of actions.”

At the safety bureau’s request, Black Elk Energy gave the federal regulators a “performance improvement plan” last December and submitted an analysis of its previous violations in January. Facilities that were not producing at the time of the explosion were forced to stay offline temporarily.

Black Elk representatives did not respond to a request for comment.

Repairs of the damaged production platform were completed earlier this year. The safety bureau has not yet authorized Black Elk to resume production at the site.

Founded in 2007 by a former BP and Amoco executive, Black Elk now holds interests in more than 1,000 wells connected to 176 platforms in the Gulf of Mexico. It has been operating facilities in the Gulf of Mexico since 2010.

Its aggressive acquisition strategy has focused on buying old facilities and reworking offshore wells to eke out more hydrocarbons.

BSEE 9/2013 letter to Black Elk Energy