BP Didn't Provide Failsafe Requirements

KENNER, La. – BP PLC, the oil giant that leased the rig that sank into the Gulf of Mexico after a disastrous fire last month, did not provide required proof to regulators that its blowout preventer would be able to shut down a well in an emergency.

In the second day of testimony held jointly by the U.S. Coast Guard and the U.S. Minerals Management Service, which together regulate offshore drilling, Michael Saucier, MMS's regional supervisor for field operations in the Gulf of Mexico, testified that while the agency requires operators to submit proof that they have functioning shear rams – which sever and seal pipes in the event of an emergency – BP PLC did not submit that proof with its permit for the Deepwater Horizon, the rig that sank.

"To my understanding - they didn't for this well. This still doesn't remove the requirement that they should have," Mr. Saucier said.

Despite, in essence, holding hearings to investigate themselves, the agencies elicited testimony Wednesday that questioned whether the government is doing an adequate job in oversight of critical safety equipment used on offshore drilling rigs.

Mr. Saucier also testified that his agency leaves it to the drilling industry to certify that their own blowout preventers and other crucial safety devices are working before installation. And once installed, MMS investigators rely on tests performed by rig operators to show the equipment is functioning properly.

Mr. Saucier added that said that since an "accidental disconnect" on an offshore rig in 2000, MMS has been working on regulations requiring secondary back-up systems. Ten years later, the regulations are still in draft form, he said. The delay in passing these regulations was previously reported by The Wall Street Journal.

"Unfortunately, the process of getting new regulations incorporated takes a lot of time," Mr. Saucier said. "As far as I know they are still in headquarters."

He said, instead, the MMS, has periodically sent rig operators "safety notices" that "highly encourage" them to have back-up safety systems.

"Highly encourage? How does that translate to enforcement?" asked Coast Guard Capt. Hung Nguyen, co-chair of the panel.

"There is no enforcement," Mr. Saucier replied.

"So we have self certification of safety equipment and safety notices that are not enforceable," Mr. Nguyen said.

Ned Kohnkey, a representative at the hearings for Transocean Ltd., the owner and operator of the rig, told the panel he rejected any implication that the "self certification of equipment that takes place is lacking and that perhaps those that are doing it are not doing their jobs."

Mr. Kohnkey said the testing of equipment on rigs is done by workers who themselves would be hurt by any "cutting of corners."

Mr. Nguyen replied that he was only trying to determine "how adequate the role of government is" and whether there is a sufficient "safety net" in offshore drilling.

The American Petroleum Institute sets standards for blowout preventers, but Mr. Saucier, the MMS official testified that he's not aware that anyone checks to see if those standards are met.

After the blowout preventer is installed, the MMS ensures that rig tests show the device is working.

"By the time it's on the ocean floor and installed, isn't that a little bit late?" Mr. Nguyen asked. "It wouldn't be better to have (the inspection) done on land?"

Mr. Saucier replied that "it probably would be advantageous to have that."

Summing up Mr. Saucier's testimony, a seemingly incredulous Mr. Nguyen said, "designed to industry standard, manufactured by the industry, and installed by the industry with no government witnessing or oversight of construction or installation, is that correct?"

"That would be correct," Mr. Saucier said.

According to the Coast Guard, there are 16 rigs in the gulf drilling below 5,000 feet.

Coast Guard Lt. Cmdr. Michael Odom, who oversees Coast Guard inspections – the Coast Guard inspects oil company vessels above the water, while the MMS regulates drilling – testified that current regulations for offshore drilling may be out-of-date.

He said many of the regulations were written years ago, and focused on near-shore drilling operations. "As we move farther into deep water and ultra-deepwater," the regulations need to be "more specific."

Now, the regulations are being "outrun" by new technology, he said.

"You have kind of a one shoe fits all approach that in some cases doesn't work well," he said.

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