Updated BSEE incident data tables. The last data are for 2021. The public should have timely access to information about safety and pollution events on Federal lands and the performance records of companies conducting these operations. During the MMS era, these tables were updated quarterly and the Directors (all administrations) did not tolerate delay.
The final NTSB report on the 12/29/2022 GoM helicopter crashthat killed 4. The preliminary report was timely, but the final report has yet to be published. Is the NTSB considering the muddled regulatory regime for helidecks. (Regulatory fragmentation is a safety risk factor).
Corrected IRF performance data. This is arguably the IRF’s most important work stream and the data should be accurate. Some commentary about safety performance would also be helpful. What do the incident trends tell us? How does safety performance compare internationally?
Data on safety incidents associated with the OCS wind program during the site assessment, construction, and operational phases.
Information on the mysterious sinking of the Aban Pearl semi-submersiblein May 2010. We know an investigation was conducted. 14 years have now elapsed and the report has still not been shared.
Slide 13: “In 2022, the rate of occupational fatalities, reported for activities on facilities where BSEE has primary investigation authority, decreased to being near the historical national average of approximately 0.9 fatalities per 25,000 full time equivalent workers per year. However, considering all offshore risk factors, including helicopter transportation, diving, marine transfer, and COVID-19 exposures, the occupational fatality rate for all OCS activities has remained high since 2019.“
Slide 15: “In 2022, the TRIR for both production and construction operations increased to the highest levels recorded since 2010 and remained high even after discounting the impact of COVID-19 illnesses. The TRIR for drilling and well operations, however, remained near their historical lows.“
Comments:
These charts and tables are helpful for assessing trends.
The data raise concerns that merit further analysis. Absent the specific incident summaries, which have yet to be updated for 2022, it’s difficult to assess the nature and extent of the issues.
The parsing of fatality data according to regulatory jurisdiction adds to previously expressed concerns about regulatory fragmentation and its implications for offshore safety.
The latest International Regulators’ Forum country performance data are for 2020. The absence of regular, timely updates makes international comparisons difficult and limits the value of what is arguably the most important IRF workstream.
The final NTSB report on the 12/29/2022 GoM helicopter crashthat killed 4.To the NTSB’s credit, their preliminary report was timely. Hopefully, the NTSB is considering the muddled regulatory regime for helidecks (regulatory fragmentation).
Report on the Nord Stream sabotage: As the anniversary nears, the prospects for an official report are fading.The absence of a report from Sweden, Denmark, or Germany speaks volumes.
In a draft rule published on June 29, 2023, BOEM proposes to discontinue using a company’s record of compliance in determining the need for supplemental financial assurance for decommissioning. BOEM’s full explanation for this surprising change is pasted at the end of this post.
Opposing view:
BOEM should be more attentive, not less, to safety performance and compliance data. If they were, taxpayers would have been better protected from the risks associated with the lease acquisitions by Fieldwood, Cox, Black Elk, Signal Hill, and others, and their subsequent bankruptcies.
Safe operations, as reflected in compliance and performance data, are critical to a company’s financial success.
BOEM wrongly infers that Incidents of Noncompliance (INCs) are solely dependent on the number and complexity of facilities. Decades of normalized compliance data have told us that there are marked differences among operators in terms of compliance and safety performance. Companies at the bottom of the performance table don’t usually survive.
Accidents are not mere matters of chance; management and culture matter.
Honor Roll companies, large and small, have superior compliance records, and in 2022 these companies had 50-90% fewer INCs/facility-inspection than the Gulf of Mexico average.
Does BOEM expect noncompliance leaders to be concerned about decommissioning obligations? The record shows that they are not.
Cox’s 2023 bankruptcy was predictable given their past safety performance. In 2022, Cox was a violations leader by any measure, and was responsible for 9 of the 30 safety incidents that were significant enough to require investigation by BSEE.
Fieldwood’s terrible 2021 safety performance has been discussed, and there was ample evidence of performance problems prior to their bankruptcy declaration in 2018. In 2016 and 2017 Fieldwood was, by far, the GoM violations leader with 818 INCs, 401 of which required a facility or component shut-in.
Ironically (or maybe not), the only other company that was even in the same noncompliance ballpark as Fieldwood in 2016 and 2017 was future Cox affiliate Energy XXI GOM. Energy XXI earned 465 INCs (240 shut-ins) during that 2 year period. Did BOEM object to or otherwise comment on the 2018 Cox-Energy XXI merger?
Black Elk Energy was new in 2007 and quickly became a violations leader. Between 2010 and 2012, BSEE cited Black Elk 415 times. 218 of these violations were serious enough to require facility or component shut-ins. On November 16, 2012, explosions at Black Elk’s West Delta 32 platform killed 3 workers, and 2 others suffered severe burns. Criminal charges and a complex bankruptcy followed. BSEE records show 1107 INCs during the company’s short history, 464 of which required facility or component shut-ins.
The rapid growth of Fieldwood, Cox, and Black Elk was in part facilitated by lax lease assignment and financial assurance policies. Operating companies should have to demonstrate that they can operate safety and comply with the regulations before they are approved to acquire more properties.
The Signal Hill sagawas documented nearly 2 years ago, and none of the questions raised in that post have been answered. Violations data and inspector feedback predicted the Signal Hill/POOI failure. Nonetheless, and despite the objections of regional staff, Signal Hill was allowed to tap into its decommissioning account to cover operating expenses. Responsibility for decommissioning Platforms Hogan and Houchin is still uncertain.
Given that BSEE, not BOEM, is responsible for safety and compliance, I sincerely hope that regulatory fragmentationwas not a factor contributing to BOEM’s decision to discontinue the use of compliance data in determining financial assurance needs.
BOEM’s explanation for the proposal to eliminate the record of compliance criterion:
BOEM also proposes to eliminate the existing “record of compliance” criterion found in the current version of § 556.901(d)(1)(v). BOEM has determined that the number of INCs a company receives correlates with the number of OCS properties it owns, not its financial stability, and therefore, BOEM has concluded that it is not an accurate predictor of its financial health. BOEM reviewed BSEE’s Incidents of Non-Compliance (INCs) records and its Increased Oversight List, which represent BSEE’s cumulative records of violations of performance standards on the part of OCS operators and lessees and determined that the number of incidents of non-compliance typically increases with the size and complexity of the operator’s or lessee’s operations, including the ratio of incidents to number of components. Because larger companies (regardless of credit score) tend to have more properties and components and therefore more INCs, BOEM determined that record of compliance criterion does not accurately predict financial default. BOEM’s review of this information confirmed the feedback BOEM received in response to the 2016 NTL, namely that companies with a large number of properties and facilities tended to receive a large number of INCs and had more individual properties on the Increased Oversight List. BOEM specifically requests comments regarding the use of fines and violations as a criterion in the determination of a company’s ability to fulfill decommissioning obligations, and any data or analysis addressing any correlation between the number of violations and the risk of financial default. BOEM also requests comments on whether the elimination of the INC’s criteria would create a disincentive to comply with regulations. BOEM also requests comment on whether or not the cost of decommissioning is likely to increase based on the type, quantity, and magnitude of previous violations.
On a related note, BOEM/BSEE should consider a followup to the John Shultz thesis which found that INCs are a very good predictor of accidents and spills.
IRF conferences present an excellent opportunity for dialogue among regulators, operators, trade organizations, contractors, academics, and other interested parties.
Some suggested agenda topics for the Perth conference:
Further categorizing incidents by the type of facility (e.g. MODU, fixed platform, floating platform, subsea production system, pipeline, etc.), and activity (e.g. well operations, production, diving, helicopter transit, etc.)
Regulatory fragmentation occurs when multiple federal agencies oversee a single issue. Using the full text of the Federal Register, the government’s official daily publication, we provide the first systematic evidence on the extent and costs of regulatory fragmentation. We find that fragmentation increases the firm’s costs while lowering its productivity, profitability, and growth. Moreover, it deters entry into an industry. These effects arise from regulatory redundancy and, more prominently, regulatory inconsistency between agencies. Our results uncover a new source of regulatory burden: companies pay a substantial economic price when regulatory oversight is fragmented across multiple government agencies.
The US has a highly fragmented offshore regulatory regime that has become even more fragmented with the complex division of responsibilities between BOEM and BSEE. The slide below is from a presentation on this topic.
While the linked paper focuses on costs and productivity, fragmentation may also be a significant safety risk factor. A UK colleague once asseted that “overlap is underlap,” and I believe there is something to that. If multiple agencies have jurisdiction over a facility, system, or procedure, the resulting redundancy, inconsistency, and ambiguity may create significant gaps in industry and governmental oversight.
For example, regulatory fragmentation was arguably a significant factor in the most fatal US offshore fire/explosion incidents in the past 35 years – the South Pass B fire in 1989 and the Macondo blowout in 2010. More specifically:
South Pass 60 B: The investigation of the 1989 South Pass 60 B platform explosion that killed 7 workers noted the inconsistency in regulatory practices for the platform, regulated by DOI, and the pipeline regulated by DOT. Cutting into the 18-inch pipeline riser did not require an approved procedure, and the risks associated with hydrocarbon pockets in the undulating pipeline were not carefully assessed. Oversight by the pipeline operator was minimal, and the contractor began cutting into the riser without first determining its contents. A massive explosion occurred and 7 lives were lost.
One would hope that this major spill will lead to an independent review of the regulatory regime for offshore pipelines. Consideration should be given to designating a single regulator that is responsible and accountable for offshore pipeline safety (a joint authority approach might also merit consideration) and developing a single set of clear and consistent regulations.
Macondo: While the root causes of the Macondo blowout involved well planning and construction decisions regarding the casing point, cementing of the production casing, and well suspension procedure, the blowout would likely have been at least partially mitigated (and lives saved) if the gas detection system was fully operable, the emergency disconnect sequence was activated in a timely manner, flow was automatically diverted overboard, or engine overspeed devices functioned properly. Indeed, regulatory overlap led to underlap as summarized below:
Macondo contributing factor
jurisdiction
flow not automatically diverted overboard
DOI/USCG (also concerns about EPA discharge violations)
some gas detectors were inoperable
DOI/USCG
generators did not automatically shutdown when gas was detected
USCG/DOI
failure to activate emergency disconnect sequence in a timely manner (training deficiencies and chain-of-command complications)
USCG/DOI
engine overspeed devices did not function
USCG/DOI
hazardous area classification shortcomings
USCG/DOI
MOUs and MOAs are seldom effective regulatory solutions as they are often unclear or inconclusive, and tend to be more about the interests of the regulator and protecting turf. They also do nothing to ensure a consistent commitment among the regulators. In the case of the US OCS program, BOEM-BSEE have a greater stake in the safety and environmental outcomes given that offshore energy is the reason for their existence. That is not the case for any of the other regulators identified in the graphic above.
Bud's Offshore Energy (BOE) 