The oil and gas industry’s main trade group will launch a new offshore safety institute, a move that partially answers a recommendation made by a presidential commission that looked into last year’s deadly Deepwater Horizon accident.
The new Houston-based Center for Offshore Safety will be operated by the American Petroleum Institute but walled off from the trade group’s lobbying work. It will fall under API’s global industry standards group, which has a decades-long history establishing guidelines and standards for industry equipment and practices.
API President Jack Gerard said in a statement the center would “promote the highest level of safety for offshore operations, through an effective program that addresses management practices, communication and teamwork.”
Details on how the institute will be staffed and funded are still under discussion, according to an API spokesman, but it will most likely have its own full-time staff and offices and won’t be housed with one of the many local member companies.
The institute would be subject to independent, third-party auditing and verification to ensure its integrity, API said.
The safety institute was one of many recommendations made by The Presidential Spill Commission earlier this year, although API has said it started looking at the issue itself soon after the spill.
Originally the commission wanted the institute to be similar to the Institute of Nuclear Power Operations, an industry-funded watchdog born of the Three Mile Island accident in 1979.
INPO grades nuclear facilities on a score of one to five, with the top earners getting breaks in insurance rates and winning kudos at an annual safety conference. The poor performers are publicly shamed at the same summit.
Spill panel co-chairman William Reilly personally championed the idea of a safety institute independent from existing industry groups like API because of the potential conflict of interest.
“In our view it’s very difficult for the institute to play the role we envision if it’s also involved in advocacy,” Reilly said in an interview in Houston earlier this year. “API’s history of taking positions contrary to those who want to have higher standards or more rigorous regulation would naturally make if very difficult to have full confidence in its evaluations of its own members.”
But the oil industry resisted the stand-alone model from the beginning. In hearings API and others argued what works for the nuclear industry – which has just 104 reactors around the country — might not be well suited for the offshore drilling industry which has thousands of operators, contractors and suppliers working on hundreds of constantly changing work sites.
Reilly praised the creation of the safety institute in a prepared statement on Thursday, but he didn’t address the independence issue.
“This is a significant initiative responsive to the recommendation made by the President’s Oil Spill Commission and I congratulate the industry,” Reilly said. “It recognizes a fundamental need to raise the standard of safety for all operators in the off shore deep water. This new entity should substantially reduce the risk of another Macondo oil spill by giving the industry the means to ensure audits are rigorous and best practices are enforced against all companies undertaking high risk exploration and development.”
The institute will operate around an existing safety framework created by API in 2004 known by the unwieldy title: “Recommended Practice for Development of a Safety and Environmental Management Program (SEMP) for Offshore Operations and Facilities,” or RP75.
When using the voluntary RP75 system companies first do an assessment of operating and design requirements for a project and then a hazards analysis. It also requires setting up safe operating procedures, management-of-change procedures and other training, recommends periodic auditing of safety programs, and requires emergency response and incident investigations.
Frances Ulmer, a panel member and chancellor of the University of Alaska at Anchorage, said she can understand why some in the industry wanted to keep the institute tied to API.
A standalone institute might have been difficult to fund and challenged at attracting full participation and buy-in from companies.
“But you know that old saying, ‘the proof is in the pudding’? That’s what it will be,” said Ulmer. “Over time it will become clear to the people in the industry, to the public, to regulators, to the media whether or not this is a successful approach.”