Gulf Disaster: Comparing Regulatory Climate

Wednesday, January 12, 2011 @ 04:01 PM gHale

The Deepwater Horizon disaster in the Gulf of Mexico occurred off the coast of the United States, but a similar incident could happen anywhere there is offshore drilling.

When you hear former BP Chief Executive Tony Hayward say in a BBC interview his company’s response to the Deepwater Horizon rig accident in the Gulf of Mexico was insufficient, the next thought may be where was the regulatory oversight?

“We were making it up day to day,” Hayward said of BP’s rescue plan. The result of the accident, and that mindset, led to five million barrels of oil leaking into the ocean outside the coast of Louisiana between April and August 2010, according to news reports.

A lack of safety procedures was a determining factor behind the disaster, according to the oil spill investigation commission. The three companies involved in the accident — BP, Transocean and Halliburton — all cut corners in order to complete the well, the commission said.

At the time of the blow-out, the well was five weeks behind schedule. To point toward the lack of safety initiatives, five survivors talked to CNN about a corporate culture in where workers routinely ignored safety warnings.

That is why “major accidents such as the Deepwater Horizon disaster in the Gulf of Mexico could also happen in the North Sea,” said Preben Lindøe, professor of societal safety and security at the University of Stavanger, Norway.

Together with his colleague, associate professor Ole Andreas Engen, Lindøe is part of the Robust Regulation in the Petroleum Sector team. The four-year research project, funded by the Norwegian Research Council, also involves the independent research group Sintef and the University of Oslo, in addition to legal expertise affiliated with Boston University.

The researchers compare oil industry regulation in the USA, Great Britain and Norway.

“There are hardly any unions in the Gulf of Mexico. Tripartite collaboration, as it is practiced on the Norwegian continental shelf, is therefore impossible,” said Lindøe.

The U.S. regulator, Minerals Management Service, carries out inspections based on a fairly meticulous body of rules. Inspectors go to offshore installations, equipped with long and detailed check lists.

By comparison, Norwegian regulation relies on internal control. The authorities thereby rely on the companies administering their safety work themselves. While the basis of the Norwegian model focuses on trust — built up over time — and the sharing of experience and information, the situation in the U.S. is almost the opposite, Lindøe said.

“The reason this model has succeeded in Norway, is because the parties have been able to fill the concept of internal control with substance. Both employers and unions are involved in developing industrial standards and good practice which can be adhered to,” he said.

Near-accidents in Norway may potentially have become disasters. In May 2010, Norwegian oil major Statoil had problems during drilling operations at its Gullfaks field in the North Sea. While drilling a well from the Gullfaks C installation, gas entered the well and reached the platform deck. According to the company’s investigation report, only luck prevented the incident from becoming a much more complicated subsea blowout.

The Petroleum Safety Authority shared this conclusion, and pointed out the incident could have easily been a disaster. It issued four enforcement notices to Statoil, and the environmental group Bellona reported Statoil to the police. International media compared the Gullfaks incident to the Deepwater Horizon accident.

“The public’s attention is triggered by such incidents, and we are made aware of society’s unpredictability. When perceived threats are referred to by the media, societal safety is pushed up on the agenda. The attention paid to this subject varies, which lies in its nature. When safety work succeeds, its success is proved by the non-occurrence of serious incidents. When nothing happens, we may become less attentive and sloppier in adhering to routines and procedures,” said Ole Andreas Engen.

“When attention fades, accidents happen more easily, and are followed by increased awareness. It is a big challenge for all organizations to maintain a high level of safety awareness over time,” he said.

In another case, researchers point to a gas leak at the North Sea field Snorre in 2004, when an accident equivalent to Deepwater Horizon was only a spark away.

The petroleum industry in Norway has gone through several critical phases in its history. Gradually, the parties involved have learned to trust each other. A system like this is able to withstand a blow. This is not the case in the U.S., where the authorities have a much more difficult task in monitoring regulations. There are strict requirements for new regulations to undergo cost-benefit analyses, the researchers said.

Moreover, the regulation of safety and the work environment is between two governmental agencies, Lindøe said.

Lindøe and Engen said it is common practice in the U.S. to look for scapegoats, and pin the blame for accidents on them, instead of changing the systems. In Norway, the parties are more likely to come together to find out how systems and routines may have contributed to an employee making a mistake.

The researchers sum up the lessons learned after the Gulf of Mexico disaster: “The Deepwater Horizon accident has uncovered some evident weaknesses within U.S. safety regulation. The Government being restrained from intervening directly with the industry is one of them. To the Norwegian industry, this accident and the near-accident on Gullfaks C, should serve as reminders of the importance of maintaining the foundation pillars of the Norwegian safety management system: Effective and well qualified authorities, and clear guidelines for cooperation and trust between the parties,” Lindøe said.