Posts Tagged ‘safety’

Linking an interesting academic paper on regulatory fragmentation:

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.

Regulatory Fragmentation

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.

Decades later, DOT and DOI pipeline regulations and oversight practices are still inconsistent. Note the confusion regarding the applicable regulations following the Huntington Beach pipeline spill in 2021. As posted following that spill:

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 factorjurisdiction
flow not automatically diverted overboardDOI/USCG (also concerns about EPA discharge violations)
some gas detectors were inoperableDOI/USCG
generators did not automatically shutdown when gas was detectedUSCG/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 functionUSCG/DOI
hazardous area classification shortcomingsUSCG/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.

The contributing factors listed in the Macondo table are not clearly or effectively addressed in the current MOAs for MODUs and floating production facilities.

Helicopter safety is another example of MOA inadequacy. Three offshore workers and a pilot died in December when a helicopter crashed onto the helideck of a GoM platform during takeoff. The most recent Coast Guard – BSEE MOA for fixed platforms added to helideck regulatory uncertainty by assigning decks and fuel handling to BSEE and railings and perimeter netting to the Coast Guard. This is the antithesis of holistic, systems-based regulation.



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Oil and Energy Minister Terje Aasland takes over the constitutional responsibility for the Petroleum Safety Authority with effect from 11 May 2023. Labor and Inclusion Minister Marte Mjøs Persen previously held responsibility. With this, the government wishes to strengthen comprehensive and good management of HSE, safety and preparedness on the Norwegian continental shelf.

The transfer of responsibility to the Ministry of Oil and Energy (OED) is in line with the main principle in Norwegian administration that one ministry and one cabinet minister have the constitutional responsibility for the sector as a whole.

press release

The Petroleum Safety Authority and the Norwegian Petroleum Directorate, the resource management agency, now report to the same ministry. Prior to a December 2003 decree that established the PSA, both the safety and resource functions were administered by the NPD.

Could this be the start of a trend toward better coordination of regulatory and resource management functions? If so, that would be a positive development. Fragmented oversight is neither in the best interest of safety nor resource management. (More on this in an upcoming post.)

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This comment from Save LBI (Long Beach Island, NJ) on BOEM’s Renewable Energy Modernization Rule (proposed) highlights an important regulatory policy consideration:

Promoting the offshore wind program is a very high BOEM priority. The bureau is charged with deploying 30 gigawatts of offshore wind energy capacity by 2030, which requires extensive advocacy. However, BOEM is also a core regulator for offshore wind projects, and the concern is that their regulatory role could be compromised by their advocacy priorities.

Per Notice to Lessees 2023 N-01, which arguably should have been published for public comment given its regulatory significance, BOEM has retained important responsibilities for wind project development and operations. These include review and approval of construction and operations plans, site assessment plans, and general activities plans. BOEM may also exercise enforcement authority through the issuance of violation notices and the assessment of civil penalties.

BOEM exists because in 2010 the Administration wanted to separate the OCS program’s leasing (sales/advocacy) and safety (regulatory/enforcement) functions. The intent was to avoid conflicting missions (or the appearance thereof) in the post-Macondo era. (More on this in an upcoming post.)

Ironically, the Save LBI comment describes BSEE as “a distinct unit within BOEM.” That may seem to be the case, but BSEE is actually a separate bureau in the Department of the Interior.

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Operating companies (listed alphabetically): Arena, Anadarko (Oxy), BHP, bp, Cantium, Chevron, Hess, Murphy, Shell, and Walter


  • Must average <0.3 incidents of compliance (INCs) per inspection. (This is less than half the GoM 2022 YTD average of 0.64 INCs/inspection.)
  • Must operate at least 3 production platforms.
  • Must have drilled at least one well.
  • Pacific and Alaska operations will be considered in a separate post.


  • Impressive performance by Hess: 21 inspections and no INCs
  • Cantium and Walter averaged less than 0.1 INCs/inspection. The INC rates for Anadarko (Oxy), BHP, and BP were only slightly higher.
  • Among the Honor Roll companies, Shell (highest production, 9 deepwater platforms, and 13 well starts) and Arena (115 shelf platforms and 12 well starts) were the deepwater and shelf activity leaders.They thus had the highest INC exposure.
  • Although CSI and FSI INCs are typically more significant than W INCs, that is not always the case, so the INCs have not been weighted by type.
  • As has been previously noted, more inspection data should be readily available online. At a minimum, the specific INC (type) numbers (e.g. P-103, G-110, etc) should be posted so the public can better assess performance. Absent this information, interested parties are left to speculate about the significance of the violations.
  • Incident data should also be considered in performance assessments. Unfortunately, the inexplicable lag in the posting of BSEE incident tables, precludes the use of these data in our analysis.

Compliance vs. Safety

While compliance is not synonymous with safety, most experienced observers believe there is a strong correlation. In the 1990’s, John Shultz, a PhD candidate at Carnegie Mellon Univ., studied US offshore facilities and safety data and developed expert and regression models to predict the likelihood of accidents and spills. That was a data rich era in that there were ~4000 US offshore platforms (more than twice the current number) and ~100 well starts/month (>10 times the current rate). In John’s thesis, he found that INCs are a very good predictor of accidents and spills. The offshore world has changed and further study of the correlation between compliance and safety performance is highly recommended.

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Chevron may be the only GoM operator to own its helicopter fleet. Data on their safety performance relative to GoM helicopter contractors do not appear to be available online.

Their news release focuses on hurricane preparedness and the benefits of owning their fleet. I’m not sure how significant these advantages are given that other companies can ensure similar availability through their contracts. A comparative analysis would be of interest.

“Other companies that depend on contracted helicopters to evacuate can’t create their own schedule and might have to start departing the platform days in advance,” said Jose Jaramillo, manager of Chevron’s aircraft operations in the Gulf of Mexico. “With our own helicopters on standby, we have more flexibility in determining when to safely shut down the platform, and after the storm passes, we can quickly remobilize, assess our facilities and bring production back online days faster.”


The Helicopter Safety Advisory Conference (HSAC) does a very good job of identifying and addressing Gulf of Mexico helicopter safety issues. Per HSAC (report attached):

The leading causes, not all inclusive, of the accidents since 1999 are listed below, and secondary causes of these events include 13 related to helideck size or design related issues.
• 21 engine related,
• 25 loss of control or improper procedures,
• 18 helideck obstacle strikes,
• 13 controlled flight into terrain, and
• 12 other technical failures

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Paul, his father Hank, and the rest of the Danos team have always had a strong commitment to safety achievement. In recognition of their outstanding safety, pollution prevention, and compliance record, Danos won multiple National and District MMS SAFE Awards in the Production Contractor category. Danos is also a 2-time recipient of NOIA’s Safety in Seas Award. Paul will no doubt be an outstanding NOIA leader.

NOIA press release

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Yesterday, BSEE issued investigation reports for 2 of the fatal 2020 incidents. Both of these incidents involved falls, a chronic and preventable cause of offshore worker casualties. Not enough industry and trade association attention is given to such incidents, which have been trivialized in the past by categorizing them as “slips, trips, and falls.” The reports are linked below:

The reports describe how the incidents occurred and what we can do better to prevent similar events in the future. Despite the advance in safety management programs over the past 30 years, there has been no discernible improvement in preventing these incidents. We need to rethink training programs, planning, and methods. Deadly falls are not inevitable.

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For illustration only - One of Shell's platforms in the U.S. Gulf of Mexico / Image by Stuart Conway - Photographic Services, Shell International Limited.

Attached is an outstanding presentation by Jason Mathews that reviews the latest Gulf of Mexico incident data and trends. The collection and analysis of incident data are critical to safety achievement and continuous improvement, and are among an offshore energy regulator’s most important functions. Kudos to BSEE’s Gulf of Mexico Region for their timely and comprehensive reviews and alerts.

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In sports, the experts are soon exposed. In regulations and standards, consensus misjudgments are less obvious and may take years to be demonstrated. Also, regulations and standards are often outdated and may not reflect best practices. That is why compliance with regulations and adherence to industry standards is not sufficient. We need to continuously assess risks, observe, listen, review data, and actively manage our operations to achieve safety and environmental objectives.

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the Mexican government’s recent decision to anoint Pemex operator of the billion barrel Zama field would seem to merit further scrutiny. Houston-based Talos Energy discovered the Zama field in 2017. The field underlies both Pemex and Zama acreage, and there are common reservoirs. Per Bloomberg:

Mexico’s energy ministry has designated Petroleos Mexicanos as the operator of the country’s largest oil discovery by private companies, in the latest sign of the government’s nationalist approach to the energy industry.

Talos said it was “very disappointed” with the decision and will explore “legal and strategic options” regarding Zama. The company added that the energy ministry had informed Talos of its “sudden” decision only three days after the driller received a letter directly from Pemex arguing for operatorship.

Bloomberg, 7/5/2021

The Mexican government’s decision is indicative of the Lopez Obrador administration’s commitment to rolling back the reforms that had encouraged private sector participation in Mexican offshore exploration and development.

Questions had already been raised about Pemex’s ability to fund Zama development and operate the field safely. This week’s deadly incident and a July pipeline fire add to those concerns. In light of the background political and financial issues, will it be possible to for Pemex and the Mexican regulators to conduct a fully independent investigation of the tragic fire that just occurred?

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