Saturday, January 15, 2011

Analytical Perspectives of Some of the fifteen Recommendations from the Presidential Commission on BP Oil Spill II

D) Create an independent agency charged with ensuring companies share information about best practice in terms of worker safety and environmental controls:

This is probably contestable. We will all agree that adding another layer of bureaucracy would only create an additional burden for budget costs in a contracting economy. The performance of the defunct Mineral Management Services, was so deplorable just before its dissolution, it was arguable an agency that was a revolving door for members in the oil and gas industry, until when there was another available oil and gas executive position in the private sector to fill. The problem became so appalling that the monitoring agency only remained in name, in practice it was a toothless bull-dog. It was not only difficult to monitor violations in oil and gas drilling activities, it became too cumbersome to ensure that each company in the industry was in compliance with related laws. Necessary information from oil and gas companies going into offshore drilling at depth considered too risky were hardly secure and bearing decisions that were meant to ensure that executives at oil and gas companies were in compliance, were either not stringent enough or were ignored with the implicit consent of the regulatory agency. At the height of the British Petroleum Oil spill, the defunct Mineral Management Service was criticized for allowing insiders in the oil and gas industry to play a role in writing safety and environmental rules for offshore drilling. The agency was broken into three and renamed Bureau of Ocean Energy Management Regulation and Enforcement. Adding another independent agency to manage worker safety and environmental control is unnecessary. One of the three agencies already created from the Mineral Management Services can handle the worker safety and environmental control issues.

Further, following the BP oil spill it was difficult to understand who was in charge of managing the mess, because there were too many hands in the pot of soup. Congressional hearing may be organized to fine tune some of the mandates given to the three new regulatory agencies, but not an additional one. The task of strengthening oversight necessarily does not get better with another bureaucracy. What the lawmakers may want to prevent is having the revolving door between the regulatory agencies and the industry echelon. There were criticisms that the old Minerals Management Services had a former director named President of the National Oceans Industries Association. This must be a ‘no-no’ policy written in black and white into the law. We cannot have a former director of a regulatory agency moving into the private sector in the same industry he was expected to have had an oversight, with respect to the regulatory affairs. This type of indifference that permeated the defunct Minerals Management Services made it difficult to ascertain where the problem for the explosion was from and who should have monitored or noticed the problem before it became an issue on April 20, 2010. Imagine, Randall Luthi promising policies favorable to offshore energy industry, immediately after leaving the directorship of Minerals Management Services. This was comparatively an executive officer in the public sector moving into the private sector and promising heaven and earth to the industry he was supposed to have regulatory oversight jurisdiction.

E) Give Regulatory Agency up to 60 days before issuing out approval for oil drilling licenses:

For the purpose of accountability, it will be meaningful if the bid process for leases and intent to enter contract with multiple site project managers are scrutinized with an eagle eye by the regulatory agency staff. To do a good job of this, Regulatory agencies must be given enough time. I will recommend ninety days in place of 60-day recommendation from the commission. If building contractors in my city have to wait for 180 days sometimes to get approval for a building permit and before the City issues an approval, I do not see what is out of place in recommending a 90-day window of assessment for qualification for an oil and gas drilling licenses. The Regulatory agency must be in possession of all documents regarding companies that are going to sub-lease contracts on off-shore drilling platforms, including ensuring that each is properly licensed to carry out the impending operation on oil rigs and or platforms. The application for license must also provide all the names of the major officers that will be engaged on the project; and, if one quits, oil and gas companies must be directed to report replacement and changes within five-working days. There must just be a new way to regulate and govern process completions in off-shore oil drilling.

Everyone and contractor that will be impacted by regulatory agencies’ provisions must be listed; including guidelines of service on the off-shore drilling contracts, purchase, supplies and maintenance of equipment on the rigs, well specified. While we knew who was managing the BP oil rig, the issue of who was responsible to turn off- the blow-out preventer became an issue during the Macondo well disaster. We cannot afford to have that anymore. There must be a publication of notice of functions and duties of each contractor on a project and these publications distributed or placed in a conspicuous board, where everyone working or accessing the rig can easily see it. An electronic circulation of this information must be added to all emails moving between project supervisors and across companies' departments participating in the extraction of oil and gas on a rig. There must also be a periodic alert sent out every 72 hours, informing everyone about the status of the progress on a rig and the impending process to be completed. The dearth of information regarding the activities on the Macondo well was blamed for the failure of the blow-out preventer to shut down in an emergency because there were some delayed response in the heat of the explosion.

Decisions with respect to issuing out approval for oil drilling licenses are recommended to be made in 90 day, not 60 days as recommended. The lapse time between opening of a bid and issuing oil drilling licenses, must be such that regulators have enough time to turn every stone and claims in a bid. Now, there are industry insiders who would cry foul, asking that continuance must not be made for more than 30 days, except with consent of the oil companies; however, this is the same issue we just went through that landed us in a mess with British Petroleum. Any applicant for an oil and gas drilling licenses must appreciate that it is not only ability to perform or size of the oil and gas company that matter; rather prior compliance with regulatory agencies guidelines on safety and industry standards are just ass essential to the new process of issuing lease licenses. Regulatory agencies must have the capacity and ability of a company to manage a platform or rig under difficult conditions or terrain, the performance of subcontractors of similar size and magnitude of work, previous project work and complexity with respect to workplace safety, ability to perform specific project phases in accordance with engineering specifications and provisions of the regulatory agencies, must now become part of the license issuing process.

F) Establish better communication among federal agencies, including the National Oceanic and Atmospheric Administration and the United States Coast Guard to help improve exploration leases awards to any oil company:

This recommendation cannot be over-emphasized. How much communication, inter and intra, agencies and contractors, are so important that we can all agree that the absence of this type of fluid communication has either delayed inspections on project sites for regulatory compliance with workplace safety and other additional issues. From the time of receipt of an application for license to the end, selected firms performance on prior drilling projects must be shared freely and urgently among the regulatory agencies. Evaluation of a statement of qualification and performance data on file or submitted regarding a proposed drilling project must be readily available to any member of the three regulatory agencies, as well as the Environmental Protection Agency and the Office of Safety and Health Administration. Discussions with representative of submitting oil and Gas Company for licenses must be based on approved and established criteria and should be specified in the guidelines for submitting applications for drilling licenses. Applicants must be made responsible to account for any deviations and necessary precautions in case of failures to share important information with multiple regulatory agencies.

The essence of fluid communications among regulatory agencies are better appreciated, when you consider that the approval for a license might undergo so many steps and stages of evaluations and the stages of each evaluation process embodies useful information that may allow other federal agency to determine complete compliance with the mandate provisions which they are responsible for. Preservation of site and workers during accidental explosions may not seem to be important to the oil and gas company seeking drilling licenses, but it is probably important to the Office of Safety and Health Administration.

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