The More Things Change At MMS . . . .

The federal Minerals Management Service (MMS), which is supposed to supervise oil companies’ drilling on the Outer Continental Shelf (OCS), has come into a lot of criticism for the laxness of its own safety inspections and for its practices of allowing self-certification by oil companies that they are complying with the law.  There has also been a shoddy history of reliance on allegedly independent third-party reporting on some OCS drilling activities; I say “allegedly” because many of these companies have no other clients than the oil companies on whose equipment and practices they report. 

After the BP Deepwater Horizon blowout, the Department of the Interior (DOI) suspended all new OCS drilling, both in shallow water (500 feet or less) and deep.  DOI also produced a 30-day report on safety improvements for OCS drilling.

Last week, the DOI lifted the moratorium on shallow-water OCS drilling on condition that a number of conditions, outlined in the DOI 30-day report, are complied with.  You can find the new rules here as a “Notice to Lessees.”

As my colleague Larry Levine pointed out, these new rules, while well-intentioned, repeat MMS’ practice of allowing self-certification of compliance by oil companies and review by third parties of dubious independence. 

For example, oil companies must certify that they are “knowledgeable of all operating regulations at 30 CFR 250 – Oil and Gas and Sulphur Operations in the OCS – and that they are conducting their operations in compliance with those regulations.”  They must also submit to MMS “BOP [blowout preventer] and well control system configuration information” without any independent verification that the information submitted is correct.  

Here is an example from the new rules of a requirement for third-party certification:  “Before beginning new floating drilling or resuming floating drilling operations that were suspended under NTL No. 2010-N04, you must have an independent third party conduct a detailed physical inspection and design review of the BOP.”  That looks good on paper, but without assurances that the “independent” third party is immune from economic retaliation by oil company clients, this requirement is of little value.

I’d like to close with a note about whether shallow-water drilling is safer than deep-water.  It isn’t, as my colleague Regan Nelson pointed out here

The Union Oil blowout in Santa Barbara in 1969, the Pemex Ixtoc I blowout in the Gulf of Mexico in 1979, and the Montara Platform blowout off the coast of Australia in 2009 all occurred in shallow water.  Each of these was very difficult to cap; the Ixtoc I well gushed oil for nine months. 

In an article written by MMS employees, published in 2007 in Drilling Contractor, the authors found that most blowouts between 1992 and 2006 had occurred during the drilling of shallow-water wells.  The authors found one blowout per 362 wells drilled in shallow water and one blowout per 523 wells drilled in deeper waters. 

This information calls into question whether it makes any sense to treat shallow-water wells differently from deep-water wells for purposes of safety and environmental review.  It seems to me that it doesn’t. 

But even if we do decide to allow shallow-water drilling to resume, we need to be careful not to repeat MMS’ past mistakes.  I would scrap self-certification for a number of years and would require all “independent” third-party analysts to be certified by the federal government -- excluding MMS.  By doing this, there is at least a chance that the third-parties verifying safety compliance on OCS wells will be more than sock puppets for industry.