Interior secretary, industry confused by safety rules

NEW ORLEANS -- After the Deepwater Horizon catastrophe of 2010, the U.S. government began a major shift in how it regulates offshore oil and gas operations.

Central to that shift has been a move from prescriptive rules to a more performance-based audit program called Safety and Environmental Management Systems, or SEMS. The top U.S. regulator, Brian Salerno, calls SEMS "critical" to developing strong safety culture and limiting risk throughout the offshore oil and gas industry.

But while many operators have responded with robust new safety management programs, others appear to be stuck in the old way of thinking, and it seems U.S. Secretary of the Interior Sally Jewell is right there with them.

WWL-TV questioned Jewell about SEMS at a national conference of environmental journalists last week, and she began by asking her staff what SEMS stood for.

"SEMS stands for... what does it stand for, John? Do you remember?" she said.

WWL-TV has been seeking information about SEMS audits ever since they were introduced as a critical new tool for managing risk offshore.

The station found the Interior Department's Bureau of Safety and Environmental Enforcement was not using its new authority to perform its own audits when offshore oil and gas operators struggle with safety failures. Michael Bromwich, the former safety director who set up the new regulatory agency after the BP disaster, said last week that the bureau must be aggressive in monitoring the new SEMS rules.

The bureau provided WWL-TV with copies of completed SEMS audits under the Freedom of Information Act, but used exemptions in the sunshine law to black out all pertinent findings -- to protect proprietary information, the agency said.

WWL-TV asked Jewell how the public was supposed to know if the audits were making offshore drilling and production operations safer and if her regulators were being aggressive enough. That's when she mixed up SEMS audits and the traditional inspections that regulators still perform on every rig and platform to make sure the components work properly, personal safety equipment is being worn and proper tests and drills are being run.

The Bureau of Safety and Environmental Enforcement's "job is safety and environmental enforcement," Jewell said. "They do audits. They do look for a culture of compliance. They do talk to rig workers. They do embed themselves in some of these operations to be able to see that at work and they do write up the audits and the reports."

A spokeswoman for Jewell later clarified that "the audit Jewell was referring to was one in which she accompanied an operator to an offshore inspection -- entirely different process."

Jewell, a former petroleum engineer who was appointed to President Obama's Cabinet last year, spoke at length at the conference on a number of topics, including hydroelectric power dams in the Northwest, Indian lands mineral rights and climate change. Brian Salerno, director of the Bureau of Safety and Environmental Enforcement, defended his boss for flubbing SEMS.

"It had been, quite honestly, well over a year since she had been briefed on the specifics of the SEMS program, but she definitely got it and is very supportive of it," Salerno said.

More troubling to Salerno is that some oil companies are still not fully getting what SEMS is about.

"There's great variation in the degree to which different companies approached SEMS," he said.

Charlie Williams, a former Shell engineer who runs the industry's Center for Offshore Safety in Houston, has reviewed anonymous copies of the audits and agrees that some companies are still confused.

"There were different levels of performance, but there were still people who thought of it as an inspection," he said.

A report released by the agency this summer suggests that many companies are still thinking in the old way about training and safe work practices, and not so much about what's called "management of risk," which deals with how the company handles hazards and changes in their operations. When better management practices are implemented, the report said, they are often done "in isolation," without recognition for how one management decision can add to the risk of other processes.

That's important because investigations found the Deepwater Horizon blowout and explosion was caused, in part, by a failure to recognize how a small amount of risk from making one change in the design of the well or in altering the drilling completion process could multiply the risk of a blowout when considered with all the other risky processes going on at the time.

Salerno said he wants to use the lessons from a first round of SEMS audits last year to focus oversight on struggling companies.

"You know, not every company operates the same way. Some are more committed to safety than others. As a regulator, my goal is to address the greatest risks," he said.

"I'd like to get to a point where we do risk-based inspections. It would account for past performance. It would account for higher risk. (But) we're not there yet."

Salerno sent letters to 12 companies that initially failed to do the audits. Six were from Louisiana and six were based in Texas, ordering them to cease offshore operations. All but three of them later complied.

Williams and Salerno said several of the major oil companies already had SEMS programs and were able to use the audits to tweak and improve those systems. Now, the companies have until June 4, 2015, to have independent, third-party auditors complete a new review. They said it's been a good learning experience for all of the companies, with regulators also looking for new ways to monitor them.

"This is an ongoing dialogue we are having with the industry," Salerno said. "What I'd say to the public is, 'Look, we have not stepped away from our traditional inspection role. We are still out there, we are still visiting every facility and we are holding the industry to very high standards.'"


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