WSJ Offshore Oil Inspections Piece Misses The Mark On Drilling Regulation

Editor’s Note: Our buddy Steve Maley told us he got his heartrate up a little upon reading a piece in the Wall Street Journal last week on the challenges facing the federal government’s efforts to regulate offshore oil drilling in the wake of the Deepwater Horizon spill. He asked us to publish his open letter to the authors of that piece – and of course we’re happy to do so.

Ms. Eaton, Mr. Power and Mr. Gold:

I read the captioned article with great interest, and with no small amount of consternation. The article is well-written and researched, but lacking the perspective of the small operator. I’m writing this letter to offer that perspective.

By way of introduction, I am the Operations Manager for Badger Oil Corporation, a small, privately-held explorer and producer in the Gulf of Mexico and in South Louisiana. Badger has 25 employees and is located in Lafayette, LA. I’ve been working in and around the Gulf of Mexico for my entire working career of 32 years (and counting). 

All of Badger’s GOM wells are in the shallow waters of the “Shelf”. We regard Shelf operations as distinctly different from the deepwater, for a variety of reasons. The Deepwater Horizon blowout was a regrettable tragedy. But bear in mind that 40,000+ wells have been drilled in the GOM over the last 40 years (most of those Shelf wells), with a total volume of oil spilled due to blowouts of about 1,800 barrels; the Deepwater Horizon incident is a horrific anomaly, one bearing virtually no resemblance to the type of operations my company pursues.

Your article suggests that you are familiar with the safety performance record available at BOEMRE’s website: see http://www.boemre.gov/perfmeas/PDFs/PM_Charts_09.pdf and http://www.boemre.gov/perfmeas/PDFs/PM_Summary_Table_09.pdf

As you can see, the offshore industry has an exemplary safety record, a record which has improved significantly over the last 15 years. Is it a perfect record? No. Could it be better? Certainly. Is the BOEMRE the vehicle that’s going to make it get better? I have my doubts.

That improvement has happened because industry knows that a commitment to safety and the environment is the proper way to do business. We have yet to figure out how to make money by spilling oil or endangering workers.

BOEMRE’s inspection program is a necessary part of the picture, but it can never be the whole answer. The focus of the inspections has been, as you point out, mostly on equipment (safety controls, cranes, fire extinguishers, etc.), housekeeping, and corrosion. Much of their time is spent inspecting the operator’s paperwork, which consists of documentation of testing intervals and so on.

You point out that the inspectors are frequently overruled by their district management on INCs. Of course they are, and they should be. That doesn’t mean the district management is in cahoots with the oil companies. The inspectors do not possess perfect knowledge of the voluminous and complex regulations and standards that dictate design and operating practices. The district managers are all engineers who have more breadth and depth of knowledge in the matters surrounding oil and gas facility operations.

I would agree that inspectors need to specialize on either drilling or production operations. The two activities have very little in common. As you correctly point out, “Inspectors come into the job with little or no hands-on experience in deep-water drilling…” But bear in mind that the inspectors are not at the wellsite to direct the activity, and they are not in any position to pass judgment on well construction, operations or the operator’s management philosophy vis-à-vis safety practices. Each operator is accountable to the BOEMRE for his overall performance, and that’s as it should be.

Inspectors are like traffic cops. They write the “tickets” for operating infractions. We don’t ask our cops to set the speed limits, design the roads, design cars or manage the car companies. They have no expertise in any of these things.

A healthier environment would exist if we could recognize the fact that most operators are trying very hard to do the right thing. A “boot on the throat” mentality is not conducive to an environment where every single person takes accountability and an ownership stake in the outcome. A raft of new paperwork and reporting requirements, I fear, will distract operators from the goal of creating better safety management practices and cultures within their organizations.

Another important realization is that industry has a history and a culture of learning from its failures. The tragic Bay Marchand blowout and fire in 1970 predated the creation of the MMS. That incident demonstrated to all the need of reliable downhole emergency shutdown valves in the event of catastrophic failure. Fast forward to the hurricanes of 2005 and 2008: hundreds of platforms were toppled with many hundreds of wells down. The amount of oil spilled, while not exactly zero, was close enough to be of negligible consequence. The success of these Subsurface Safety Valves is a direct result of industry and regulator cooperation and commitment.

Industry can and will improve. My hope is that government regulators will figure out a way to be facilitators and change agents in that process instead of adversaries.

Yours very truly,

Steve Maley
Badger Oil Corporation

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