Commentary: Offshore energy is a bigger challenge and a safer one

By Glenn Legge

There’s been a lot of debate lately about whether the federal government has gone far enough to prevent another disastrous oil spill in the Gulf of Mexico.

Here’s the reality: From an industry perspective, exploration and production in the Gulf now is more challenging than ever, and it’s safer than it was at the time of the Deepwater Horizon spill four years ago. The government has dramatically stepped up oversight with a significant increase in the amount of fines and penalties. The number of regulatory investigations is rising, too.

And it’s not just fines and penalties. The current administration is reinforcing its position that violations – including submitting false, inaccurate, or misleading reports – can lead to criminal charges. That means possible prison time, not just money.

In just the past few weeks, the Bureau of Safety and Environmental Enforcement (BSEE), which regulates offshore energy development, proposed a rule that exploration and production activity forms now include certification stating that false submissions are subject to criminal penalties. This is another sign of the bureau asserting its authority, making sure everyone understands the severity of failing to comply.

Here are some of the other big changes that make offshore drilling both tougher and safer:

• Now it’s everyone’s fault. Federal regulators are demanding that everyone have skin in the game for major casualties or lesser violations. Offshore regulations require all interested parties – the oil companies and their oil services contractors – to be jointly responsible for complying.

• BSEE’s enforcement is aggressive, with fines up to $40,000 per safety and environmental violation per day. Last November, it ordered five companies to halt all operations on the outer continental shelf because they failed to submit timely safety and environmental audits which show, among other things, that their contractors are trained and experienced to do their work in a safe and environmentally acceptable way.

• Industry standards and regulations have been tightened for well design, as well as for drilling, production and plugging of offshore wells.

• BSEE has also proposed new rules for subsea safety systems used in offshore production. In addition, BSEE wants to determine when the best available and safest technology (BAST) is necessary – a role historically filled by industry.

• BSEE is seeking new members for its Outer Continental Shelf Scientific Committee, which determines the scientific, social and economic impacts of offshore development.

• There has been technological progress, too, toward stopping massive spills. Leading energy companies collaborated to develop deepwater containment systems to respond rapidly to blowouts in the Gulf. These new systems have passed BSEE’s tests with flying colors.

Recently, Elizabeth Birnbaum, the former head of the Minerals Management Service which BSEE replaced, criticized the administration for not making offshore drilling as safe as possible. But her comments were countered by Michael Bromwich, who led the reorganization that replaced the conflict-of-interest-plagued MMS. He says it’s undeniable that offshore drilling now is safer.

Critics will continue to express concern about offshore exploration, and industry will respond with superior technology, improved safety, and increased production. Sitting above the social debate is a new regulatory body that is attempting to increase its governance of offshore oil and gas development as it pushes into new depths. Without question, BSEE is expanding and strengthening its oversight – mostly with input from the energy industry.

While it’s impossible to guarantee absolute safety when human beings are working with massive equipment in harsh deepwater conditions hundreds of miles from land, the fact is that the environment and offshore energy workers in U.S. waters are far safer now than four years ago.

Glenn Legge, who represents major oil companies, contractors and their insurers, is a partner with the Houston law firm Legge, Farrow, Kimmitt, McGrath & Brown L.L.P.

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