With the final report of the National Commission on the BP Oil Spill and Offshore Drilling due in just a few weeks, co-chair William K. Reilly is advising oil and gas industry CEOs to create an autonomous, industry-managed safety institute, as the nuclear power industry did with the Institute of Nuclear Power Operations (INPO) following the Three Mile Island accident in 1979.

“The oil and gas industry should follow in their path, not to clone an organization like INPO, but to create an organization that accomplishes what INPO has done in its sector. This is particularly crucial if the government is going to successfully evolve away from a highly prescriptive regulatory system to a safety case model,” Reilly said at an Institute for Energy Law conference in New Orleans. “The safety institute could facilitate a smooth transition to a regulatory regime that requires systems safety engineering [and] improved coordination between operators and contractors, and that shifts overall responsibility to the operator to demonstrate it can maintain safe operations at all times.”

The safety institute should mandate adoption of revised safety standards by its members and require them to make following the safety rules a prerequisite for their contractors and other service providers, he said.

Reilly, a former administrator of the Environmental Protection Agency, was critical of the actions of BP plc, Halliburton and Transocean in the wake of the blowout of BP’s Macondo well in the Gulf of Mexico and the sinking of the Deepwater Horizon drilling rig.

“There is virtual consensus among all the sophisticated observers of this debacle that three of the leading players in the industry made a series of missteps, miscalculations and miscommunications that were breathtakingly inept and largely preventable.

“What shocked me the most was the understanding that, while the industry has progressed to a remarkable level of sophistication when it comes to exploration — the deepwater rigs are to be celebrated for their incredible innovation and are a testament to the technological capabilities of the oil and gas industry — yet the very same players have been remarkably passive in terms of developing a response capability equal to the task and seemingly indifferent about developing an industrywide safety culture needed to prevent such fiascoes,” Reilly said.

But government regulators haven’t maintained adequate oversight of the industry and share the blame for Macondo and any similar accidents in the future, Reilly said.

“The embarrassing reality is that the understanding and expertise of government regulators has lagged far behind the technological advances that have made deepwater drilling possible and it will take time for them to catch up, even assuming Congress appropriates the required funds for training, new hires and better compensation.”

Interior Secretary Ken Salazar recently proposed establishing an “Ocean Energy Safety Institute” to promote research and development and training in offshore drilling safety, blowout containment and spill response (see Daily GPI, Nov. 3). Salazar proposed making the institute a collaborative initiative involving the federal government.

The National Commission on the BP Oil Spill and Offshore Drilling, which is co-chaired by Reilly and former Florida Gov. and one-time Democratic Sen. Bob Graham, is scheduled to deliver its final public report to President Obama next month.

A report issued in September by the Interior Department’s Outer Continental Shelf Safety Oversight Board, which Salazar established immediately following the April 20 explosion and sinking of the Deepwater Horizon rig off the coast of Louisiana, made 59 recommendations on improving offshore safety, including strengthening the permitting process, inspections, enforcement and environmental stewardship (see NGI, Sept. 13).

A report issued Tuesday by the Department of Interior’s Inspector General (IG) affirmed the direction of Interior’s offshore energy oversight reform agenda, expounding on issues identified in the earlier Safety Oversight Board report. The IG report contains nine new recommendations, eliminates four of the recommendations included in the previous report, and includes the results of surveys of Bureau of Ocean Energy, Management, Regulation and Enforcement employees, according to Acting Inspector General Mary Kendall. Recommendations include more surprise rig inspections and hiring more employees to address a backlog of permit applications.

“This report does not raise new issues; rather, it expounds upon those issues identified in summary fashion in the Safety Oversight Board report,” Kendall said.

Preliminary findings by a committee of the National Academy of Engineering and National Research Council investigating the cause of the blowout of BP plc’s Macondo well indicated a “lack of a suitable approach for managing the inherent risks, uncertainties and dangers associated with deepwater drilling operations and a failure to learn from previous ‘near misses'” (see NGI, Nov. 22).

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