Advance chapter release from BP Disaster Commission Report: Failures in Industry and Government

The U.S. National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling has released an advance chapter from its report on the BP Disaster.  Of particular note for Canadians is the report section dealing with regulatory failures by the former Minerals Management Service (MMS), which played a multi-function role similar to that of the National Energy Board (NEB) in Canada.  The NEB, like the National Commission in the U.S., is currently undertaking a review of the possibility of offshore drilling in Canada's North.  It remains to be seen whether anyone in Canada looks into the risk of regulatory failures in the NEB's oversight of environmental protection and safety in Canada's oil and gas industry.  Weak regulations combined with lax oversight leaves open the probability that major disasters will continue to occur.

Here's the section from the National Commission report on the MMS failure:

Regulatory Failures

Government also failed to provide the oversight necessary to prevent these lapses in judgment and management by private industry. As discussed in Chapter 3, MMS regulations were inadequate to address the risks of deepwater drilling. Many critical aspects of drilling operations were left to industry to decide without agency review. For instance, there was no requirement, let alone protocol, for a negative-pressure test, the misreading of which was a major contributor to the Macondo blowout. Nor were there detailed requirements related to the testing of the cement essential for well stability.

Responsibilities for these shortfalls are best not assigned to MMS alone. The root cause can be better found by considering how, as described in Chapter 3, efforts to expand regulatory oversight, tighten safety requirements, and provide funding to equip regulators with the resources, personnel, and training needed to be effective were either overtly resisted or not supported by industry, members of Congress, and several administrations. As a result, neither the regulations nor the regulators were asking the tough questions or requiring the demonstration of preparedness that could have avoided the Macondo disaster.

But even if MMS had the resources and political support needed to promulgate the kinds of regulations necessary to reduce risk, it would still have lacked personnel with the kinds of expertise and training needed to enforce those regulations effectively. The significance of inadequate training is underscored by MMS’s approval of BP’s request to set its temporary abandonment plug 3,300 feet below the mud line. At least in this instance, there was a MMS regulation that potentially applied. MMS regulations state that cement plugs for temporary abandonment should normally be installed “no more than 1,000 feet below the mud line,” but also allow the agency to approve “alternate requirements for subsea wells case-by-case.”173 Crucially, alternate procedures “must provide a level of safety and environmental protection that equals or surpasses current MMS requirements.”

BP asked for permission to set its unusually deep cement plug in an April 16 permit application to MMS.175 BP stated that it needed to set the plug deep in the well to minimize potential damage to the lockdown sleeve, and said it would increase the length of the cement plug to compensate for the added depth. An MMS official approved the request in less than 90 minutes.176 The official did so because, after speaking with BP, he was persuaded that 3,000 feet was needed to accommodate setting the lockdown sleeve, which he thought was important to do. It is not clear what, if any, steps the official took to determine whether BP’s proposed procedure would “provide a level of safety . . . that equal[ed] or surpass[ed]” a procedure in which the plug would have been set much higher up in the well.

MMS’s cursory review of the temporary abandonment procedure mirrors BP’s apparent lack of controls governing certain key engineering decisions. Like BP, MMS focused its engineering review on the initial well design, and paid far less attention to key decisions regarding procedures during the drilling of the well. Also like BP, MMS did not assess the full set of risks presented by the temporary abandonment procedure. The limited scope of the regulations is partly to blame. But MMS did not supplement the regulations with the training or the processes that would have provided its permitting official with the guidance and knowledge to make an adequate determination of the procedure’s safety. 

Read the advance release at: Chapter Four.

ProPublica reports on severe corrosion problems in BP Alaska pipelines

An internal British Petroleum (BP) report shows that, as of October 1, 2010, at least 148 BP oil, gas and waste pipelines in Alaska received an "F-rank" from the company.  ProPublica.org, which obtained a copy of the report, explains the "F-rank":

According to BP oilworkers, that means inspections have determined that more than 80 percent of the pipe wall is corroded and could rupture. Most of those lines carry toxic or flammable substances. Many of the metal walls of the F-ranked pipes are worn to within a few thousandths of an inch of bursting, according to the document, risking an explosion or spills.

Read the rest of the article at: ProPublica.org.

US Environmental Protection Agency dissatisfied with Enbridge clean-up plan

CBC News - World - Enbridge must file river cleanup plan

The US EPA has rejected a long-term clean-up plan filed by Enbridge in the aftermath of its massive oil spill in Michigan because of "deficiencies in content and technical details".  Read the CBC story by clicking on the link above.

I posted earlier this week about plans in Canada by the National Energy Board to provide an approval mechanism for contamination remediation by companies like Enbridge.  It's not hard to see the difference in approach being followed in the United States, at least in the wake of the BP disaster in the Gulf of Mexico.  South of the border, it's not the energy project approval body that will decide when the contamination has been cleaned up appropriately - it's the EPA.  In other words, it's not a body whose primary concern is the ongoing development of the energy sector.  Canada has Environment Canada and the provincial ministries of the environment.  Landowners should be asking why the NEB is choosing to step into this issue at this time.

Canada's National Energy Board creating a "Remediation Process Guide" to sign off on pipeline company contamination

The National Energy Board (NEB) says on its website that it has:

... developed a draft Remediation Process Guide (Guide) for industry to follow to ensure successful remediation of soil and groundwater contamination. The goal of this Guide is to provide a clear process for submitting remediation information. If remediation is determined to be successful then the NEB will provide a letter to that effect. The NEB will be hosting a technical meeting on 14 October 2010 in Calgary at a location to be determined to answer any questions and hear comments that interested parties may have. Parties wishing to provide written comments on the Guide are requested to do so by 1 December 2010. The Board will finalize the Guide shortly thereafter.

In the draft guide, the NEB says it makes every effort to ensure industry follows procedures to minimize releases, leaks and spills, but from time to time "accidents can occur".  In reality, the NEB operates on the basis of "goal-oriented regulation" whereby the Board sets goals and allows companies to decide how they will achieve those goals.  However, as we have seen with the BP disaster and the recent Enbridge spill in Michigan, "goal-oriented regulation" simply doesn't work when it comes to an all or nothing proposition like environmental contamination.  How many spills will it take before the regulator steps in and tells companies what they need to do to protect the environment?

The NEB also says that it is the "lead agency" for all contamination incidents related to its pipelines.  Landowners should be cautious to accept this approach.  NEB requirements regarding contamination (including both new spills and the discovery of historical contamination) may not match protections afforded to landowners under provincial environmental legislation.  Why should landowners have less protection from contamination just because the NEB is involved? 

The aspect of the proposed Remedation Process Guide that should be most concerning to landowners is the proposed "Remediation Closure Letter".  Essentially, the NEB will issue letters to companies who have contaminated the environment stating that remediation is complete and the NEB's file is closed.  The NEB says that its "expectation for reclamation is that the land is restored to a state comparable with the surrounding environment".  That is not necessarily the standard to which landowners are entitled to have their properties remediated under provincial laws and/or the common law.  Landowners should be demanding clean-up to the highest level possible under applicable law.  Also, what is to stop the NEB from issuing such a letter to a company before the company has adequately compensated the landowner for the damage caused?  What would that letter do to a landowner's negotiating position?

The NEB's proposal is troubling in that it perpetuates the problems associated with its policy of "goal-oriented regulation".  Companies are allowed to do what they want to avoid contaminating the environment, but when they do contaminate, they can rest assured that the NEB will sign off on their response.  In other words, the NEB's protection of the environment is limited to stepping in after contamination has occurred in order to validate the steps the company has taken to address the contamination.  There is still nothing in place to ensure that the contamination does not occur in the first place.  Is this an acknowledgement on the part of the NEB that there is nothing that can be done to prevent spills that will inevitably occur as pipeline infrastructure ages and corrodes? 

Click on this link to read the proposed guide: NEB Draft Contamination Remediation Guide.

Sierra Club asks NEB for intervenor funding to participate in offshore drilling consultation process

The National Energy Board has recently publicized its move toward introducing a funding process for intervenors in its public hearings.  The Sierra Club has written this week to request funding to participate in a consultation process concerning offshore oil drilling in Canada.  Will funding be made available? 

National Energy Board Chair says Canadian regulations adequate - is he right?

The National Energy Board (NEB) has released the opening statement by Gaeton Caron, Chair of the NEB, to the Parliamentary Standing Committee on Natural Resources on the issue of the emergency response to offshore oil and gas drilling.  While Caron deals mainly with the risk of a repeat of the BP disaster in Canada, he makes several broad statements about the effectiveness of NEB regulations in protecting the environment and lands.  He talks about the "stringent" environmental assessments of projects undertaken by the NEB.  He also says that, "NEB-regulated companies are fully responsible for anticipating, preventing, mitigating and managing incidents and oil spills of any size or duration."  Is this the experience of NEB-regulated landowners in Canada?  Is "goal-oriented regulation" working for Canadian landowners?

Read Caron's opening statement at: National Energy Board Opening Statement.

BP has fought safety measures for deepwater oil rigs since Clinton days

WASHINGTON - BP, the company that chartered the Deepwater Horizon oil rig that caught fire and sank in the Gulf of Mexico in April, spent years battling federal regulators ...

Read Noel Griese's full article at: Energy Pipeline News.

National Energy Board cancels Same Season Relief Well hearing

The National Energy Board (NEB) has now cancelled outright the hearing process announced in February to review the need for relief wells associated with offshore oil drilling.  In an earlier post I commented on the effect the BP disaster in the Gulf of Mexico has had on that hearing process and on the NEB's policy of "goal-oriented regulation".

Now, rather than addressing the particular question of relief wells (work on a relief well in the Gulf of Mexico is currently under way, but won't be ready for months), the NEB plans a general review of Arctic safety and environmental offshore drilling requirements.  The NEB says, "Full details of the review will be announced in the near future, when the focus in the Gulf of Mexico shifts from stopping the leak and protecting the environment to understanding what happened. The process will be public and consultative. The NEB will welcome the participation of other regulators in this process."

Click on this link to view the NEB's Press Release.

Same Season Relief Well issue before the NEB - What will be done in Canada to avoid a repeat of the BP disaster here?

Somewhat ironically, the National Energy Board had started a hearing process in February, 2010 to review its Same Season Relief Well (SSRW) policy, just weeks before the BP drilling rig explosion and oil spill in the Gulf of Mexico (relevant documents can be viewed at: MH-1-2010.  BP has been criticized for not having relief wells in place to reduce the pressure in its damaged well that is now spewing oil onto the Gulf coast. 

Here's what BP said in its submission to the NEB in March:

As will be discussed in greater detail below, for both technological and operational reasons, continuance of the SSRW capability is not required and is problematical for BP and other operators, and may well impede further exploration in the Beaufort Sea.

BP is advocating that the policy be changed by eliminating the requirement for same season relief well capability, and any time-of-year drilling restrictions associated with that policy. In BP's view, consistent with the on-going development of goal-oriented regulation, the Board should utilize a series of goals and objectives to enhance safety and protection of the environment.

That was in March.  Of course, in April, BP's operations in the Gulf of Mexico have initiated the worst environmental disaster in the United States since the Exxon Valdez.  Is "goal-oriented regulation", which is the NEB's policy in dealing with safety and the environment, right for Canada?  Where the goal is to avoid environmental disasters, does "goal-oriented" regulation (i.e. set the goal and let industry decide what needs to be done to achieve the goal) do any good?

For its part, Conoco Phillips wrote to the NEB on Monday to suggest that the hearing process be put on hold pending the investigation of the BP disaster: Conoco Phillips to NEB.