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Interior Urged to Shift from Punish-Only Regime in Offshore

The Interior Department's Bureau of Safety and Environmental Enforcement (BSEE) must move from a "pure" compliance-type of regulatory environment to "something that is a more goal-setting regulatory regime" in the Outer Continental Shelf (OCS), said the head of a committee established by the National Research Council (NRC), which issued a study Tuesday on offshore safety.

"We're not telling them [BSEE] to give up on compliance," said Ken Arnold, senior technical advisor for Houston-based WorleyParsons and chairman of the committee, which wrote the study. But the agency can't continue with its punish-only regime to ensure offshore safety.

The 106-page report, which was commissioned by BSEE, calls for BSEE to take a holistic approach to regulating the OCS, including facility inspections, operator audits, bureau audits, key performance indicators and whistleblower programs.

The study's recommendations are consistent with BSEE's proposed changes to its proposed Safety and Environmental Management Systems (SEMS) rule, which is part of a series of safety and environmental reforms that Interior issued following the blowout of the Macondo well in the Gulf of Mexico and the resulting explosion aboard the Deepwater Horizon rig in April 2010 (see Daily GPI, April 22, 2010). A final rule on proposed changes to the SEMS regulation has not been issued yet.

However there was one difference. Unlike BSEE in its proposed changes to the SEMS rule, the NRC study favored audits being conducted by a truly independent internal audit team rather than an external third-party team, saying that the latter contributed to a "compliance mentality and [was] counterproductive to establishing a culture of safety" in the OCS.

"We believe that independent internal auditors are better able...to find where [internal] problems exist than external auditors. But the internal auditors have to be truly independent," Arnold said.

If BSEE has any suspicions about a company's audit, it has the right to conduct its own audit, according to the study. "And if an audit says that nothing can be improved, that should be seen as a red flag. There's always something that can be improved," he noted.

Since the 2010 Macondo well blowout, the federal government as well as the offshore oil and gas industry have been undergoing major changes, including the issuance of regulations requiring operators of offshore facilities to adopt and implement the SEMS programs by Nov. 15, 2011 (see Daily GPI, Sept. 14, 2011). The objective is to shift from an entirely prescriptive approach to a proactive risk-based, goal-oriented regulatory approach to improve safety and reduce the likelihood of Macondo-like events from recurring.

With the exception of Macondo, the industry has done a "good job" over the years of reducing the number of offshore incidents, Arnold said. The focus now is on the "very, very rare, high-consequence events."

The study further proposed that BSEE develop key performance indicators or other indicators that could be useful in providing a measure of the effectiveness of an operator's or offshore installation's SEMS program and culture of safety. Right now the indicators correlate with personal safety -- slips, spills and falls -- but there's nothing to address the risks of future catastrophic events on the level of Macondo, Arnold said.

Moreover, it calls on BSEE to establish a whistleblower program to help monitor the culture of safety that actually exists at each installation to to help uncover any improprieties in its own operations. Workers must have a way to anonymously report not only dangerous deviations in normal, but also unprofessional conduct by its own staff.

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