by Elizabeth Grossman
The 398-page National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling final Report to the President on the Deepwater Horizon: The Gulf Oil Disaster and the Future of Offshore Drilling, released January 11, offers a scathing critique of the offshore oil-drilling industry's approach to safety and of the U.S. government's systemic failure to ensure that safety. It also includes a valuable history of the industry that helps explain - but does not excuse - the structural complexities and shortcomings of the response to the disaster, deficiencies that led to questions about working conditions, worker hiring and training, and health and safety concerns.
In its introduction to the report, the Commission writes:
Investments in safety, containment, and response equipment and practices failed to keep pace with the rapid move into deepwater drilling. Absent major crises, and given the remarkable financial returns available from deepwater reserves, the business culture succumbed to a false sense of security. The Deepwater Horizon disaster exhibits the costs of a culture of complacency.
But the industry history recounted here suggests that even more than "a false sense of security" or "complacency," the entire structure of the business - and the government's role in its development - laid the groundwork for both the disaster and for the complex and often confusing structure of the response.
Deep waters and complex structures
Although offshore drilling had been going on for decades, the 1970s drive to develop domestic energy supplies accelerated pursuit of oil under U.S. coastal waters. In 1982, Reagan administration Secretary of the Interior James Watt created the Minerals Management Service (MMS) to promote offshore drilling by dramatically expanding drilling on the outer continental shelf. From the outset, MMS was also responsible for collecting money from leases and drilling royalties, so had an incentive to maximize revenue, creating an inherent conflict with its regulatory role.
As companies became increasingly ambitious in their exploration, they moved into deeper water and more complex subsurface geology using more complicated drilling methods. "Those increased risks," writes the Commission, "were not matched by greater, more sophisticated oversight." The industry failed to "match its massive investments in oil and gas development and production with comparable investments in drilling safety and oil-spill containment technology and contingency response planning." Government attempts to increase oversight, says the Commission, were "regularly and intensely resisted."
At the same time, the report explains, the deepwater offshore drilling industry began to rely more heavily on a network of partner companies, contractors, and subcontractors for each individual well - a trend that continues to this day. This use of partnerships and subcontracts was intended to make use of multiple companies' capabilities and expertise. (The report doesn't discuss whether or not the desire to share liability may have influenced this practice, but it seems a question worth asking.) But this structure, now an inherent feature of deepwater drilling, is also vulnerable to gaps in communication - gaps that plagued the Deepwater Horizon response.
Like the industry's complex, multi-partner arrangements for well-drilling, the government's plan for addressing oil spills distributes responsibilities between multiple actors. The report notes:
Although the National Contingency Plan requires the Coast Guard to supervise an oil-spill response in coastal waters, it does not envision that the Coast Guard will provide all, or even most, of the response equipment. That role is filled by private oil-spill removal organizations, which contract with the oil companies that are required to demonstrate response capacity.
Exactly how many companies ultimately were involved in the Deepwater Horizon response and to whom they were responsible has not been catalogued.
Who's prepared to take the lead?
Given the magnitude of the event and the great extent of the area affected, the BP/Deepwater Horizon blowout exposed and exacerbated this system's flaws. Confusion about which entity - BP or the federal government - was in charge of a particular activity persisted throughout the response, from the immediate aftermath of the blow-out and fire, to the months-long process of capping the well, to containing and cleaning up the most evident oil. As recounted by the Commission report, these flaws were evident from the very beginning of the response. Describing what happened in the long hours after the platform explosion, the report authors write:
As Coast Guard vessels continued the search and rescue operation, private offshore supply vessels sprayed water on the fire. Transocean hired Smit Salvage Americas, a salvage company, to try to save the rig. There was confusion about whether Transocean, the Coast Guard, the salvage company, or anyone at all was directing the firefighting operations. Captain James Hanzalik, Chief of Incident Response in District 8, would later say that the Coast Guard, which was focused on the search and rescue and then on the spreading oil, "monitored what was going on, but [was] not directing any firefighting resources."
The tension between local and federal officials that boiled over during the height of the Deepwater Horizon response also has roots in the history of Gulf offshore drilling. State and federal officials squared off when President Truman wanted to set aside potential federal offshore drilling areas as a Naval Petroleum Reserve. In 1945, Truman proclaimed federal authority over the subsoil of the U.S. continental shelf but California, Texas and Louisiana continued to lease offshore land for oil-extraction, prompting lawsuits by the U.S. Department of Justice. This dispute went all the way to the Supreme Court, which ruled against California in 1947 and against Louisiana and Texas in 1950.
Also embedded in this history are the special exemptions to certain environmental reviews required under the National Environmental Policy Act (NEPA) made for Gulf of Mexico oil drilling plans. These exemptions allowed rapid expansion of drilling in the Gulf, but, writes the Commission, "took no account of the Gulf's remarkable fisheries, or the economic importance of the region's beaches to the tourism industry."
And somehow, as the industry progressed and drilling went farther offshore into deeper water and more fragile subsurface formations, state and local governments were effectively left out of the oil spill response planning required by the National Oil Spill Pollution Act. This happened despite the fact that the National Contingency Plan specifies the establishment of Regional and Area Contingency Plans that are to be carried out in coordination with designated state and local representatives.
"Before the Deepwater Horizon spill, state and local elected officials were not regular participants in Area Committee meetings or familiar with local Area Contingency Plans," says the report. "The Coast Guard and Area Committee member agencies had done little to reach out to state and local elected officials." The results were painfully evident at many levels throughout the response.
The report's historical analysis of the off-shore drilling industry also brings to light the fact that a lack of legal or policy attention to the human-health effects of an oil spill helped set the stage for another major deficiency in the response - what the Commission describes as the failure by both industry and government to "adequately anticipate or address the magnitude of potential health impacts."
The Commission report includes a substantive critique of how concerns about health impacts and safety were handled (including specifically by BP, Halliburton and Transocean). I'll address those - along with the report's recommendations - in a later post. What is clear from the history set forth in the report is how the industry's working structure and what the Commission identifies as its chronic inadequate attention to safety, combined with insufficient government oversight, left the many actors involved inadequately prepared to address environmental and occupational health concerns for both responders and affected Gulf Coast communities.
Elizabeth Grossman is the author of Chasing Molecules: Poisonous Products, Human Health, and the Promise of Green Chemistry, High Tech Trash: Digital Devices, Hidden Toxics, and Human Health, and other books. Her work has appeared in a variety of publications including Scientific American, Salon, The Washington Post, The Nation, Mother Jones, Grist, and the Huffington Post. Chasing Molecules was chosen by Booklist as one of the Top 10 Science & Technology Books of 2009 and won a 2010 Gold Nautilus Award for investigative journalism.
From the outset, MMS was also responsible for collecting money from leases and drilling royalties, so had an incentive to maximize revenue, creating an inherent conflict with its regulatory role.
This approach to regulatory oversight is so widespread, and the problems with it so obvious, that I'm finding it increasingly difficult to ascribe to incompetence rather than malice. It's exactly what you'd do if you were explicitly designing the system to maximise regulatory capture and minimise effectiveness.
I've read that drilling has been pushed far offshore, even though deepwater drilling is so difficult and unsafe, because there's so much resistance to drilling on land. Is that the basic reality, that people's wish to use lots of energy and not be exposed to the environmental consequences, is the root cause of disasters like this?
You have read incorrect information. It is true that many locations on land are restricted, especially some government lands (and I am not talking about ANWR.) However, it is not even an industry lie, just a lie (told by the Sarah Palins of our nation,) that the reason we are drilling deep water wells is because we are not allowed access to resources on land.
USA oil production peaked in 1970 (as predicted.) It has been declining ever since (as predicted,) despite numerous subsidies and for the last decade plus, high prices that should spur investment in exploration. This near-monotonous decline is geologically controlled. There are many prospects on land that would generate a great deal of revenue for oil companies, landowners, and the government. There remain important domestic supplies on land. But most large fields on land have been developed. The remaining large fields -- and the integrated, international oil companies need large fields because their vertical structure makes them mind boggling capital intensive (it takes $10-20 BILLION to produce a drop of oil or gas on their projects) and they have to recover that capital and then some to invest towards future capital intensive projects) -- are located offshore.
Large oil companies pursue ALL attractive assets. If an attractive lease were available on land, they would pursue it, but they would also pursue whatever leases offshore. It's not an either or issue; they'd choose BOTH. There is lots of oil left on land, but not enough to offset the annual declines in existing fields. We drill offshore because that is where most of the remaining attractive prospects are concentrated. That is where the bounty is.
Also, many people within and outside the industry would claim that the technology is safe. The BP-Amoco America (the "real" name of the company responsible) horizon disaster, like the Exxon Valdez, was the failure of their management system. Whether the government can work with industry to create management systems that prevent these incidents is an open question. The tens of thousands of wells that have been drilled without incident indicate that the technology is safe. What is different, in this and almost all incidents, is implementation of the management system (which should include thorough prevention and mitigation measures.)
Thanks for this great post. I have used it as a basis for contacting the President and my representatives about continuing the deepwater drilling moratorium in the Gulf.
Until profits are subservient to health concerns and environmental impact, more disasters like this are inevitable.
However, corporate charters legally mandate that the bottom line must be pursued by management regardless of consequences.
For hope of possible remedy, i refer you to the idea of the "B" Corporation. This is a legal structure for corporations that mandates policies which serve the public good while also being economically viable:
Peace, Dan Hittner