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January 6, 2011

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Offshore industry isn’t planning for “black swans”, warn MPs

A committee of MPs has upheld the UK’s offshore regulatory standards as robust and fit for purpose but is concerned that the industry is failing to anticipate and plan for high-consequence, low-probability events.

The Energy and Climate Change Committee delivered the verdict in a report on UK deepwater drilling published on 6 January, following last year’s inquiry into the implications of the Gulf of Mexico oil-well explosion last April.

In backing the UK regulatory regime, the MPs also gave an unceremonious thumbs-down to calls for increased regulatory oversight from the European Commission, and declared that there is “insufficient evidence of danger” to support a moratorium on offshore drilling on the UK Continental Shelf.

Nevertheless, it identified a number of concerns regarding disaster planning, safety culture and commercial pressures, and outlined several proposals to prevent an incident similar to Deepwater Horizon occurring in UK waters.

Addressing the committee in September last year, BP’s then group chief executive, Dr Tony Hayward, accepted that “the inability of BP and the industry to intervene because it wasn’t properly prepared was unacceptable”. He went on to observe that “the occurrence of black swans [as high-consequence, low-probability events are known] seems to be more often than not these days”.

In an earlier evidence session, Mark McAllister, chair of the Oil Spill Prevention, Response and Advisory Group (OSPRAG), admitted that “as an industry, if we can do something better, it is to make sure that we do not take maybe such an introverted view of our operations”.

Pointing out that drilling is likely to venture into increasingly extreme environments, the MPs recommended that, as part of the drilling-licence process, the Government should not automatically accept offshore companies’ claims that they have mitigated away the risk of worst-case scenarios.

As reported by SHP in September last year, the committee also heard conflicting evidence concerning bullying and harassment on rigs and the impact that such a culture has on whistleblowing and raising safety concerns. Consequently, the committee also told the Government to discuss with industry and unions what steps are needed to prevent safety representatives from being or feeling intimidated into not reporting a potential or real hazard.

On a similar theme, it urged the Government to seek assurances from industry that those offshore who have the authority to halt drilling operations are not swayed by commercial pressures. Rather, their prime role should be the “safety of personnel and the protection of the environment”.

The publication of the Committee’s report came as a US commission released its own findings into the BP disaster. The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling highlighted a catalogue of root causes of the explosion, laying the blame on industry as well as government.

Of greatest significance, said the Commission, was a failure of industry management. It concluded: “Better management of decision-making processes within BP and other companies, better communication within and between BP and its contractors, and effective training of key engineering and rig personnel would have prevented the Macondo incident.”

The report also castigated both cement contractor Halliburton and BP’s management processes for failing to ensure that cement used to seal the well was adequately tested, and highlighted that individuals were often making “critical decisions without a full appreciation of the context in which they were being made”. BP’s drilling partner in the Gulf, Transocean, also came in for sharp criticism for failing to communicate lessons from an earlier near-miss to its crew.

Government regulators were also accused of relying too much on industry’s assertions of the safety of their operations and failing to apply a programme of regulatory oversight that would have minimised the risks of deepwater drilling.

The Energy and Climate Change Committee’s report is at: www.publications.parliament.uk/pa/cm201011/cmselect/cmenergy/450/45002.htm
The US report is at: www.oilspillcommission.gov/
For BP’s own internal investigation report, which was issued last year, go to: www.bp.com/sectiongenericarticle.do?categoryId=9034902&contentId=7064891

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Bill
Bill
13 years ago

If black swans are low probability they cannot be happening “more often than not” these days. Perhaps a better knowledge of the reality would suggest that there are Black swans and there are Mute swans. These are obviously higher risk than the black version, but get overlooked because they do not make their presence as obvious. You have to look a bit more closely to tell the difference, or employ someone who really knows their swans.

Jhampton
Jhampton
13 years ago

Can’t say I agree with the MPs conclusion. Looks like its going to take another major disaster to get this back on the agenda. But hey its only the environment we are putting at risk.

Stan
Stan
13 years ago

In my opinion the MPs should come off the fence. UK offshore safety is either good enough or it’s not – they can’t have it both ways. Failure to anticipate and plan for the possibility of black swans is clearly not good enough, in which case stronger regulatory action is needed before we too experience another big hazardous event. Appropriate guidance can be provided by the HSE without any EC interference – so let’s get on with it without unhelpful and conflicting statements from politicians.