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Industry indicates support for a Safety Case approach in the Gulf of Mexico

19 April 2011

The US National Commission report on the Deepwater Horizon Oil Spill was issued on 11 January 2011 and contains conclusions and recommendations that will undoubtedly have far reaching implications for the oil and gas industry.

The report concludes that deepwater oil and gas exploration and production, particularly in the frontiers of experience to date, involves risks for which neither industry nor government has been adequately prepared, but for which they can and must be prepared in the future.

The report presents both a significant challenge and an opportunity for companies operating in the Gulf of Mexico and other deep water locations. At a recent SPE Seminar in Houston, chaired and moderated by ERM and attended by oil & gas operators and drilling contractors, HSE professionals were asked to give their views on:

  • a risk-based "goal setting" approach to safety (versus a fully prescriptive approach),
  • the possible introduction of Safety Cases for GoM platforms and
  • about safety culture generally in the region.

A clear majority of the delegates present were in favor of the introduction of a risk-based regime for safety and the introduction of safety cases - similar to the UK approach - for both drilling rigs and offshore production facilities.

The National Commission report states that to assure human safety and environmental protection, regulatory oversight of leasing, energy exploration and production will require industry reforms even beyond those already initiated since the Deepwater Horizon spill. Fundamental reform will be needed in both the regulatory structure for the region and the decision-making processes relating to safety and environmental protection. It goes on to suggest that the new regime must be seen to have political autonomy, appropriate technical expertise and be able to fully appreciate safety and environmental protection concerns. In short, it must provide the industry with consistent and transparent oversight.

However, the Commission report emphasizes that regulatory oversight alone will not be sufficient to ensure adequate safety in GoM operations. The oil and gas industry itself will need to take steps to increase safety dramatically, including self-policing mechanisms that supplement governmental enforcement.

The National Commission report concludes that the technology, laws and regulations and the practices for containing and responding to spills, lag behind the real risks associated with deepwater drilling. If government puts a regime in placed to close the existing gap, industry will support these efforts as part of its continuing license to operate in the region.

There are a number of clear recommendations in the report, but the following are particularly interesting with regard to potential developments of the regulatory regime:

  • Working with the International Regulators' Forum and other organizations, Congress and the Department of the Interior should identify those drilling, production and emergency-response standards that best protect offshore workers and the environment, and initiate new standards and revisions to fill gaps and correct deficiencies. These standards should be applied throughout the Gulf of Mexico, in the Arctic, and globally wherever the international industry operates.
  • The Department of the Interior should develop a proactive, risk-based performance approach specific to individual facilities, operations and environments, similar to the "safety case" approach in the North Sea.
  • The Department of the Interior should provide prescriptive safety and pollution-prevention standards that are developed and selected in consultation with international regulatory peers and that are at least as rigorous as the leasing terms and regulatory requirements in peer oil-producing nations.

ERM is now seeing many oil & gas operators taking the initiative to revamp their Gulf of Mexico programs. These activities range from integrated approaches for safety, environmental, health and security risk assessment through to redevelopment of 'enterprise risk management' systems, review and improvement of HSE Management Systems, increased adoption of Safety Cases and an expansion of Safety Culture assessment and transformation programs.

In the GoM, operators will need to provide all stakeholders including the new enforcement agency - BOEMRE - with a clear demonstration that major accident risks have been identified, assessed, safeguards evaluated and performance standards put in place to ensure levels of safety are maintained. The key to achieving this will be to provide strong leadership, bringing about a shift in culture which will ensure not only that a thorough risk management process is put in place - and documented in the form of a Safety Case - but is also implemented effectively and rigorously.

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