Environmental Safety for Offshore Oil Reform Bill -1

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The US Government has reacted to the BP oil spill with remarkable alacrity and within 3 months brought to the Congress the Offshore Oil Reform Bill incorporating several pathbreaking features that will help in reducing future accidents. The commendable measures are :


1) Lifting the current liability cap of 75 million that will be a natural deterrent to companies from taking liberty with safety provisions.

2)Independent certifications of equipment and tougher measures to ensure that oil well blowout preventers operate. Though officials suspect that a failure by BP's Deepwater Horizon blowout preventer contributed to the Gulf disaster, what they possibly missed out was that the root cause was the misalignment of the drill pipe due to inadequate centring and the stresses in the out of centre pipeline that caused leakage.

3) New worker safety provisions for offshore drilling projects in light of the deaths caused during the explosion. It is doubtful that any would have survived the magnitude of explosion that occured at the platform, whatever be the safety provisions.

4) Granting subpoena power to the independent commission now investigating the Oil spill.This has nothing to do with future accidents

5) Instituting reforms already taken by the Obama administration to break up the Interior Department's Minerals Management Service with the goal of removing conflicts of interest that plagued the old agency. Given the money oil companies are prepared to pay to corrupt the system it is unlikely that any such seperation will be effective.

6) Sharing royalty with states and closing royalty loopholes the industry has enjoyed in federally-controlled drilling areas.

7) Incorporating new and stringent procedures for using chemical dispersants to break up spilled oil.

8)Banning companies with consistently poor safety records, like BP, from participinew leases to drill offshore for up to seven years.

However many crucial issues have been left out including those that can prevent the reasons that specifically created the mishap, making the Bill a generalists delight despite several stringent provisions. The problem with the Bill is that it is not based on a analytics of the past failures and has no diagonistic remedy to the oil spills from the platforms. True it has tightened up various admninstrative and regulatory measures but has ignored the opportunity to manage risk.

The fundamentals of risk management lies in analysing previous failures and taking steps to mitigate the risk. The BP Oil spill though the largest in history was not the first of its type. A similar oil spill of lesser magnitude happened in 1969 at Santa Barbara California at the offshore drilling platform of United Oil. Not only were the reasons of failure similar but so were the response of two oil companies, the Republican Government of President Nixon and Democratic one under President Obama and also the affected public. The effects on the environment was also equally disastrous. Still the legislations that came soon after the episodes needed a lot more to be done.

This is because the legislations that followed did not address the key issues of the two spills. In part I of this analytics now available at Technorati, we have addressed the issue of risk in speeding up operations. Oil exploration is tricky business and you cannot just speed up operations without enhancing risks dramatically, something that the Obama Government is attempting to do. Rather you must lay down checkpoints on the operational route map of each site and devise a mechanism to ensure that shortcuts are not taken due to haste of the operator or because they want to cut costs. This is can be achieved by mandatory reporting of milestones to the regulatory agencies and random audit checks by third party inspection agencies like Lloyds Register, DNV or Bureau Veritas on the rig operators.

For more Details Read my article at Technorati.com by clicking on the headline animator at the top of this page.