OPED: IN THE WAKE OF BP GULF OIL SPILL

A Review of Safety Management in the Offshore Drilling Industry
by Angelo Pinheiro MS, CSP, CPEA

Angelo Pinheiro holds the Certified Safety Professional (CSP), Canadian Registered Safety Professional (CRSP), and Certified Professional Environmental Auditor (CPEA) designation.

Incident Summary
On the evening of April 20, the Transocean Deepwater Horizon (Figure 1), a semi-submersible mobile offshore drilling unit (MODU) contracted by BP to drill its Mississippi Canyon lease approximately 52 miles off the coast of Louisiana in 4,992 feet of water, experienced a “kick” or ingress of formation fluids into the marine riser. Attempts by the drilling crew to regain control of the well were unsuccessful, and at around 10 pm, the blowout ignited, resulting in a massive explosion and fire. Of the 126 crew members, 115 successfully abandoned the MODU and were subsequently rescued. 11 crew members, comprising of an entire drilling crew, crane operator, and two service company specialists remain missing and are presumed dead. Several standby rescue vessels responded to the fire, discharging powerful fire monitors upon the MODU. However, those efforts were futile as the hydrocarbon inflow fed the flames. A second explosion occurred mid-morning on April 22, following which the MODU sank and settled on the ocean floor. An estimated 5000 bbls/day of oil has flowed into the ocean since the blowout due to the inability to close the blowout preventer (BOP), a series of heavy duty surface-operated valves mounted on the subsea wellhead.

(Pictured: The Deepwater Horizon,before and after the explosion)
Spill response
BP has tried both innovative and traditional interventions in responding to the incident, including the building of a cofferdam (a 125 ton steel-clad concrete box to cover the source of oil) to funnel the oil to a surface storage vessel (Figure 2), a Riser Insertion Tube Tool (Figure 3) that is “stabbed” into the broken end of the marine riser to siphon the oil to a surface drillship, and the drilling of relief wells.

The cofferdam failed to function as intended and was decommissioned shortly after installation. Its failure was attributed to the formation of methane hydrates or ice-like crystals within the structure, which obstructed the flow of crude oil. Hydrates are routinely encountered in deep water drilling operations and they form when natural gas mixes with the cold water at deep depths. The Riser Insertion Tube Tool, however, was partially successful and has capturing approximately 1000 bbls/day of crude oil, according to BP. The relief well, a proven blowout intervention method, is not expected to reach its target intercept at 13,000 feet below ground, until late July or early August. A “top kill” procedure is being contemplated by BP, which will involve plugging the BOP with a “junk shot” comprising of material such as shredded tires, golf balls, and pieces of nylon rope, to choke the flow of hydrocarbons. If this approach is successful, heavy drilling mud, followed by cement will be pumped into the well to stop the flow of hydrocarbons and permanently seal the well.

On the spill mitigation front, over 930 vessels (including skimmers, tugs, barges, and recovery vessels), several aircraft, and thousands of responders have been deployed for spill containment and collection; dispersant spraying; oiled seabird, turtle, and mammal rescue; and shoreline clean up operations. Controlled or in-situ burning, under US Coast Guard supervision, has been undertaken in a number of instances where the oil could be corralled into ignitable pools, thereby reducing the amount floating on surface. Following a visit to the BP Command Center in Houston on May 23, 2010, Department of Interior (DOI) Secretary, Ken Salazar, expressed his apprehension over the effectiveness of the response and hinted that a possible federal takeover of the spill response and recovery efforts may become necessary.

Incident Fallout
The legal liability and financial impact of the Gulf of Mexico oil spill will undoubtedly reach staggering figures once all is said and done. A May 18, 2010 News Release by BP estimated the cost of the response to date at $625 million., which included the costs of boom deployment and containment, drilling relief well, grants to Gulf states, settlement of claims, and federal costs. Lawyers envision this incident has the potential to become the largest class action lawsuit in US history, involving billions of dollars in potential liabilities. This exceeds, by far, the financial responsibility assurance of $150 million by the ‘responsible party’ under the Oil Pollution Act (OPA). §4301(b) of OPA provides authorization for civil penalties at $1,000 per barrel of oil discharged. Furthermore, under CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act), polluters are strictly liable for response costs, removal costs, real and personal property damage, lost profits, and loss of government revenue.

A study of the underwater crude oil plume undertaken by the National Institute for Undersea Science and Technology (NIUST) on behalf of the National Atmospheric and Oceanic Administration (NOAA), the federal agency conducting the Natural Resource Damage Assessment required by Section 1006(e)(1) of OPA, revealed that the plume is 15 to 20 miles long, 5 miles wide, and 300-400 feet deep in certain spots. Experts at NOAA predict this plume may be drawn into the Gulf of Mexico Loop Current and migrate to coastal areas of Florida, the Eastern Seaboard, and possibly Cuba, thus spreading the extent of the damage and consequently, the liability.

The political fallout has not been limited to BP and its non-governmental stakeholders. Department of Interior Secretary Ken Salazar announced on May 19, 2010: “today I am ordering the division of MMS into three distinct entities, the Bureau of Ocean Energy Management, the Bureau of Safety and Environmental Enforcement and the Office of Natural Resources Revenue”. This effectively will enable a clear division of responsibilities for work authorization, revenue collection, and safety and environmental oversight of offshore E&P activities.

Safety Management in the Offshore Oil and Gas Industry
As news emerges on the devastation caused by the spill, and frustration mounts over the inability to stop the flow of crude into the ocean, the focus of lawmakers, the public, and media has fallen on the industry’s ability to manage its safety and environmental risks. A review of blowouts in the US Gulf of Mexico showed that there were 173 such incidents between 1980 and 2008, according to data published by SINTEF, a leading Norwegian oil and gas research institute. Despite these startling numbers, a review of injury statistics for the US offshore drilling industry shows a significant improvement in safety performance over the past decade. According to data published by the International Association of Drilling Contractors, the OSHA Recordable Incident Rate declined from 4.0 per 200,000 exposure hours in 1998 to 1.25 in 2008 (a “recordable incident” includes injuries beyond first aid treatment). This compares favorably to other high risk industries, such as Construction (4.7); Agriculture; Forestry, Fishing and Hunting (5.3); Manufacturing (5.0); and Mining (3.5), according to the 2008 Workplace Injury and Illness Summary report published by the US Bureau of Labor Statistics. Without lessening the tragic consequences of the BP oil spill, these results reflect the inordinate amounts of time, resources, and effort by offshore operators in their endeavor for incident-free operations.

Oil and gas facilities and operations in the US Gulf of Mexico fall under a myriad of regulations, codes, and standards to ensure that the risks are formally evaluated and addressed. Facilities must comply with the MODU Certifying Authority’s classification rules and regulations of the Minerals Management Service (MMS), US Coast Guard (USCG), Environmental Protection Agency (EPA), and Occupational Health and Safety Administration (OSHA) with respect to the safe design, construction, installation, operation, maintenance, and management of the facility. Operators must submit an Application for Permit to Drill (APD) and obtain approval prior to commencing drilling operations. The APD must be accompanied by an MMS-approved Exploration Plan (EP) which includes information on biological, physical, and socioeconomic criteria; solid and liquid wastes and discharges; air emissions; oil and hazardous substance spills; environmental monitoring; environmental mitigation measures; support vessels, aircraft, and shore-based support facilities; coastal zone management, and an environmental impact analysis statement. Additionally, the lessee or operator must include a Certificate of Inspection issued by the Coast Guard, a Hydrogen Sulfide Contingency Plan (if applicable); evidence that the drilling equipment, BOP systems, diverter systems, and other associated equipment and materials are suitable for operating under the anticipated operating conditions.

Aside from the regulatory and certification requirements for MODUs, operators and installation owners are expected to voluntarily implement a safety and environmental program conforming to the American Petroleum Institute’s Recommended Practice for Development of a Safety and Environmental Management Program (SEMP) for OCS Operations and Facilities (RP75). The SEMP is founded on the principles of: safety and environmental policy development; planning; implementation and operation; verification and corrective action; management review; and continual improvement.

The 12 elements of RP75 include:
• Safety and environmental information
• Hazards analysis
• Management of change
• Operating procedures
• Safe work practices
• Training
• Assurance of quality and mechanical integrity of critical equipment
• Pre-startup review
• Emergency response and control
• Investigation of incidents
• Audit of safety and environmental management program elements, and
• Records and documentation

Based on an analysis of inspection data and a root cause analysis of accidents and incidents on the OCS (Outer Continental Shelf), MMS proposed on June 19, 2009, legislating four SEMP elements, namely, Hazards Analysis, Management of Change, Operating Procedures, and Mechanical Integrity.

Conclusion
The BP Gulf Oil Spill incident has revealed an astounding lack of understanding of deepwater blowouts and spill response. The drilling approvals process and voluntary SEMP implementation are effective only to the extent they are monitored and enforced by corporate management regulatory and agencies respectively. The lessons learned from this tragedy present an unprecedented opportunity to fix the technical and scientific knowledge gaps and to improve the oversight and management of safety and environmental risks.

Angelo Pinheiro is a qualified safety professional with twenty years experience in the upstream oil and gas industry. His oil and gas project experience includes seismic acquisition; shallow and deepwater drilling; Front End Engineering Design (FEED); shipyard construction; oil and gas production; and decommissioning of hydrocarbon assets. He earned his Bachelor of Technology degree from Memorial University, Canada, and MS degree in Technology Management (safety management track) from Texas A & M University-Commerce. Mr. Pinheiro is a member of the Society of Petroleum Engineers, American Society of Safety Engineers, and Project Management Institute.