Congressional lawmakers were far from united in their reaction to the findings and recommendations in the final report of the presidential commission on the BP Deepwater Horizon rig disaster, which was released Tuesday.
Sen. Mary Landrieu (D-LA) found the 320-page report to be largely favorable to the oil and gas industry and Gulf Coast states (see Daily GPI, Jan. 12). “The Commission calls for raising the oil spill liability cap on [offshore producers] above the current level of $75 million. I agree that the cap should be raised and that $75 million is too low.
“But the cap should not be raised to a level that will put small, independent companies out of business. For months I have been working with several of my Senate colleagues to facilitate a mutual insurance system to fairly spread the risk among offshore operators. This type of liability system will preserve the ability of smaller independent operators to develop oil and gas offshore, while ensuring that taxpayers never have to pick up the tab for an oil spill,” she said.
Moreover, Landrieu said she supported the commission’s recommendation for “more money and manpower” to bolster the Bureau of Ocean Energy Management, Regulation and Enforcement’s (BOEM) ability to regulate offshore drilling, particularly in the Gulf of Mexico. The additional funding, it suggested, could come from fees on new or existing leases.
“The agency’s presence in the Gulf must be dramatically increased. Currently the Pacific Region BOEM office employs five inspectors to inspect 23 production facilities, a ratio of one inspector for every five facilities. By contrast, the Gulf of Mexico regional BOEM office employs 55 inspectors to inspect about 3,000 production facilities — a ratio of one inspector for every 54 facilities,” she noted.
Landrieu, however, said she objected to the commission’s recommendation that the BOEM have 90 days, rather than the existing 30 days, to process an application to drill. “We have successfully drilled more than 58,000 wells using a 30-day approval window, and if we strengthen BOEM’s ability to oversee drilling it should not be necessary to add another 60 days to the approval process.”
“Several of the recommendations put forward [by the commission] deserve real consideration and will be more closely examined during our committee hearings,” said Rep. Doc Hastings (R-WA), the new chairman of the House Natural Resources Committee. But, he warned, that “proposals that prolong the de facto moratorium in the Gulf, cost American jobs or delay future energy production will be viewed skeptically in both the House and Senate.”
Likewise Rep. Fred Upton (R-MI), the new chairman of the House Energy and Commerce Committee, criticized the report. “It is disappointing that, even after completing its final report, the commission has left unanswered the fundamental question of what went wrong. Rather than clearly identifying the root cause of this unprecedented disaster, the commission’s report is limited to general assertions about the enforcement agencies and industry as a whole,” he said.
“Neither this nor any investigation should be used as political justification for a pre-determined agenda to limit affordable energy options for America. Without clear and specific evidence of what went wrong with this isolated well, unlike the tens of thousands that have never experienced similar failures, we will not learn the lessons needed to ensure a disaster like this will never happen again.”
The report founds that the “bad decision” and “blunders” made by BP, Halliburton and Transocean, a “culture of complacency that affected [both] government and industry” contributed to the blowout of BP’s Macondo well and the ultimate explosion aboard the Deepwater Horizon rig. Producers took issue with the commission’s finding that the problems that contributed to the fatal rig on April 20 were not isolated, but rather were evident throughout the industry.
BP was majority owner and the Macondo well operator when the blowout happened. Transocean Ltd. owned the Deepwater Horizon rig, which BP leased to drill the well; and Halliburton was the primary service operator. The explosion on April 20 killed 11 people and decimated a large portion of the Gulf Coast region commercially (see Daily GPI, April 23, 2010). Halliburton Tuesday disputed the report’s characterization of February and April foam stability tests related to the cement pump on the Macondo well.
In addition to increased funding for BOEM, the report called for the creation of a safety agency within the Interior Department, which would have enforcement authority to oversee all aspects of offshore drilling safety. The agency would be headed by someone with a background in science and management.
The commission also proposed the establishment of a “safety institute that is entirely controlled and managed by industry, which enforces best practice, which evaluates, which audits and which grades the performance of various companies,” said Commission Co-Chair William Reilly, who headed up the Environmental Protection Agency under the Bush administration. The safety institute would supplement the government’s oversight of industry operations.
There has been resistance from both industry and Congress to the concept of a safety institute, but Reilly said, “we’re going to make a lot of noise” to win support this time around. Both Reilly and Co-Chair Bob Graham, former Florida senator and governor, plan to testify before the Senate Energy and Natural Resources Committee and House Natural Resources Committee later this month.
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