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EXE:CUT1VE SUMMARY About half the world's offshore oil and gas platforms are found in U.S. watersabout one-fourth of U.~. gas production and one-eighth of domestic oil production comes from operations on the outer continental shelf (OCS). On the whole-particularly in recent years-there have been few major accidents involving exploration and production operations under the jurisdiction of the Minerals Management Service (MMS) of the Department of the Interior. However, the massive oil spill from the E'ocon Valdez on Alaska's Prince William Sound in March 1989 demonstrated dramatically the serious environmental consequences of a major accident in the oil and gas industry. That spill did not involve offshore oil exploration or production, but media focus on it overshadowed a pipeline explosion under Department of Transportation jurisdiction that had taken place aboard a Gulf of Mexico oil production platform only a few days earlier. That explosion killed 7 workers and injured 10 othersa reminder that vigilance in OCS operations cannot be relaxed. The people of the United States have a right to expect that oil and gas drilling and production operations on the OCS will be conducted with appropriate regard for safety of the public, operating personnel, and the environment. This expectation is explicit and implicit in public legislation and policy governing offshore operations. It is likewise embodied in the leases granted to offshore operators. By law, leases are to be granted only to competent operators who can demonstrate that they have the requisite resources to carry out operations in a safe and environmentally sound manner. The Minerals Management Service (MMS) of the U.S. Department of the Interior is charged with ensuring that only qualified operators are granted leases and that they carry out operations in a safe and environmentally sound manner. By law the primary responsibility for safes is placed on the operator. The MMS is charged with ensuring that the operator carries out this responsibility in a fully satisfactory manner. The scope of MMS's responsibility extends to the comprehensive regulation of fixed platforms and drilling and production operations on both fixed and mobile platforms. To carry out its regulatory responsibility, the MMS has promulgated regulations regarding safe operation, including the installation, maintenance, and periodic testing of various safety devices. The MMS also has an inspection program to verify that operators comply with regulations and operate in a safe and environmentally sound manner. The inspection program is centered around compliance with a listing of "potential incidents of non-compliance," or PINCs. Most PINCs relate to the verification of set-points and functioning of specific safety devices, such as pressure gauges and pressure relief valves. Only a few PINCs address general safety issues: for example, "are operations performed in a safe and workmanlike manner?" and "are necessary precautions taken?" The Outer Continental Shelf Lands Act of 1978 (OCSLA) specifies that all OCS facilities must have at least one scheduled onsite inspection annually. In addition to the scheduled annual inspection for each platform, the MMS is required to conduct periodic unannounced "Spot"

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2 inspections (administratively it has set a target of 50 percent of the drilling rigs and 10 percent of the production platforms each year). During these inspections, the MMS inspector works through the items on the PINC listall items on the list in the case of annual inspections, some items in spot inspectionswitnessing tests of the items as they are performed by the operator's personnel. Any deviation found constitutes a violation, and is termed an "incident of non-compliance" (INC), which the operator must correct, subject to sanctions. The sanctions range from a warning, to a shut-in [stoppage] of specific operations or the entire operation, to civil penalties, to criminal penalties. INCs that require a total shut-in are infrequent, and civil penalties are rarely imposed. Many INCs are corrected immediately, or if they involve a faulty piece of equipment, it is isolated, taken out of service, and repaired without a complete shut-in of the entire faculty. Tests conducted during inspections are identical to the routine and repetitive tests not witnessed by MMS but required periodically as a matter of safe working practice. Actual tests witnessed by MMS inspectors under the OCSLA comprise less than 10 percent of all those MMS requires (Table 2-1~. Despite OCSLA requirements, the MMS currently does not conduct an annual scheduled inspection on all platforms, nor does it conduct as many spot inspections as it would like due to limited inspection resources (dollars and personnel). Also, during the annual inspections not every PINC item is inspected-although it is required by regulation. The growing complexity of production platforms and the greater distances of new facilities from shore in the Gulf of Mexico are making it increasingly difficult for MMS to satisfy this requirement of the law. In addition, government work rules relating to overtime, time spent offshore, length of workday, and other factors, and the necessity for helicopter transportation to platforms (with helicopters and pilots frequently standing by for most of the day while the inspector does his work), have resulted in inspections that are expensive and inefficient. The MMS therefore asked the committee to explore alternative ways of deploying MMS inspection resources to carry out its safety responsibilities. In particular, MMS seeks an alternative to annual inspection of all safety devices on the platforms so that it can focus its resources more intensively on particular OCS facilities and operations that need them. In brief, MMS seeks to gain greater efficiency in the use of inspection resources and a greater assurance that it is carrying out its mission as effectively as possible. The committee reviewed the situation in detail and supports the MMS position that it can be more effective if given the freedom to apply its resources selectively to the areas of greatest need.4 In arriving at this conclusion, the committee evaluated the current inspection program as well as five possible alternative inspection programs: 1. increased inspection onsite by MMS; 2. inspection of a sampling of PINCs during annual inspections, and increased spot inspections; 3. annual inspection of a sampling of facilities, and increased spot inspections; 4. third-party inspection with government audit; and 5. self-inspection. 1An important qualification to this endorsement is that it applies only to production facilities and operations. For drilling facilities and operations, the current program of frequent and comprehensive inspections should continue because of (1) the high frequency of "events" (i.e., accidents) per facility for drilling facilities as compared to production facilities, and (2) the large population of workers on a facility while it is engaged in drilling operations. Additionally, the committee believes that at an early date MMS should introduce the enhanced data collection and safety analysis program discussed in Chapter 7 to the fullest extent possible.

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3 The first three alternatives are modified versions of the present MMS inspection system. The other two involve a fundamental departure from current practice. The committee evaluated the present program and the five alternatives in view of considerations deemed important from the standpoint of effectiveness and acceptability of any OCS inspection program. They included the following: Does the alternative being considered promote safety awareness? Does it help to maintain public confidence in the safety of OCS operations? Does it use inspection resources efficiently? What is the impact on the qualifications and training of the inspector force? Does the program provide for identification of safety trends and warnings? Does it promote safety performance accountability? Is it adaptable to changing circumstances? Are there valid precedents? Based on its assessment of present and alternative inspection programs, the committee concluded that the present program is conducted conscientiously and supports the need to ensure compliance with inspection requirements as stated in the OCSLA. However, the program does not incorporate the necessary data and information collection and analytical activity for systematically upgrading safety performance requirements for OCS operations. The committee recommended that the current inspection program be modified to enhance its effectiveness at present levels of personnel and funding through implementation of alternative 2 (inspection of a sampling of PINCs-rather than all the PINCs~uring the annual inspection, together with increased spot inspections). Such a program would be more efficient and as effective as the present program in ensuring compliance with the PINC list. Importantly, it also would free resources for complementary activities that would significantly improve the present program. The inspector resources made available by having to witness fewer tests should be redirected toward . increased spot inspections, instituted systematically on the basis of inspection results, operator safety histories, and interviews with the operator personnel; and ~ . ~ . . . analysis ot data to Gentry emerging safety problems and general safety trends. The alternative program would continue to require each operator to perform and record in a prescribed format all the scheduled inspections/tests (both those specified by MMS and those in the operator's own facility inspection program) with only selective inspections/testsderived from a sampling plan-being witnessed by MMS to verify the operator's performance of the inspections/tests. Ultimately, as experience and confidence in the effectiveness of the sampling plans is developed, the inspection program might be modified further into alternative 3, sampling of facilities for annual inspection (with increased spot inspections), in which only a limited number of facilities would be subjected to an intensive annual inspection and one spot inspection per year (as a minimum) would be conducted at the others. Beyond its principal recommendation, the committee also made a number of observations and recommendations to MMS regarding ways to improve its oversight of safety performance on the OCS. Among these are the following: The committee recommends that MMS improve its collection, analysis, and use of safety-related data regarding offshore operations. This recommendation is based on the fact that improvements in safety performance derive in large part from past lessons. To learn from past experience demands a clear perception of what that experience has been. This means that the data base on OCS operations must be made more comprehensive and accessible. It must include more information, which must be organized and processed so that proper inferences can be made, conclusions clearly drawn, and lessons readily learned.

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4 The main near-term use of an expanded and enhanced data base would be the development of a sampling plan for selecting PINCs to be inspected. To that end, it would be crucial to have available data on past INCstheir numbers, types, and frequency of occurrence on different kinds of facilities and on specific facilities. Access to INC-to-PINC ratios for each PINC over time would provide a valuable index for determining which PINCs should be sampled, how often, and on which facilities. The safety analysis program should include monitoring and review of operator records ashore and analysis of data and subjective observations to reveal safety trends. By comparing accident events data (1982 was selected as a recent sample year) with the PINC list, the committee was persuaded that most of the items on the list are reliable safety devices and their failure is not relevant to the kinds of accidents that actually occur. For that reason, the committee believes that items on the PINC list should be continually reviewed, expanded, pruned, or otherwise revised so that the PINC list focuses on the causes of accidents that actually are experienced and their early warning signals. Analysis based on an improved data base would permit this to be done with confidence. The potential implementation of the selected-facilities inspection alternative (alternative 3) at a later date would require even more extensive data, much of it facility specific. Putting this alternative in place probably would require quantitative indices that characterize and measure the safety of individual offshore operations. Among the factors that should be taken into account in developing sampling indices would be the following: the occurrence of safety-related "events" aboard the facility; the occurrence of "near misses (i.e., operational disruptions that did not result in a reportable accident); recordkeeping), . the record of tests and inspections, in terms of safety equipment not working; evidence of slipshod operation (e.g., poor maintenance, poor housekeeping, poor the facility design, including features such as location and age; evidence of lax safety attitudes of managers, supervisors, or operating personnel; the overall safety record of the operator as to all his facilities; and the overall safety of all operators in the region or district. From such quantitative, facility-specific information, a safety rating could be developed for each platform, which would be updated continually with new data. The data base would be kept up to date by requiring that all ~event" reports and specified operator's inspection and test results be sent to MMS. Onshore review of records could then comprise a substantial part of the inspection. Actual onsite inspections would be made more efficient by prior analysis of the information in the data base. Inspection and test results submitted by the operator could be checked for consistency with actual field inspection results. The committee also recommended that MMS encourage its inspectors to look for emerging and changing safety risks on OCS facilities. The position description, job assignments, and reward structure for MMS inspectors should be amended to reflect the importance of risk identification and reporting. Information on mishaps should be disseminated in a manner similar to safety alerts, and should result in appropriate changes in permit requirements, training, and regulations. The safety of a platform, or any other facility, is not determined just by the quality of its operating manuals and the reliability of its equipment. Major factors are management's safety policy, and the training and attitudes of personnel who manage and operate the facility. MMS should make explicit in its safety management and inspection philosophy that monitoring of safety attitudes of the operators and resulting necessary corrective action are essential. Subjective judgments will be involved, but this fact should not be a deterrent. In fact, MMS inspectors and supervisors should be trained in the techniques for and the importance of monitoring safety attitudes. Moreover MMS should develop programs to provide motivation for operators to Think

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s safety" that are broader and more publicized than the Safety Award for Excellence recognition program currently in place. The record of safety on the OCS has been good. In terms of injuries and fatalities, OCS drilling and production operations are comparable to other hazardous activities onshore, such as mining and construction. In terms of environmental impact, oil pollution from offshore operations contributes less than any other significant source to the release of hydrocarbons into the marine environment. U.S. offshore industry spillage contributes less than 5 percent of world spillage, and over the past several years the average spill volumes and the amount spilled compared to total production has been reduced. Thus, MMS and the offshore industry are not faced with the problem of correcting a manifestly poor safety record. The United States Ms succeeded under its present inspection program in averting the kinds of catastrophic disasters that have befallen the offshore operations of many other nations. Although the evidence of a direct connection is lacking, certainly the activities and vigilance of the federal government have been a factor. However, an increase in the margin of safety on the OCS can be achieved by improving the link between the MMS inspection program and safety performance of the industry. The committee's recommendations are intended to accomplish that end. A final point made by the committeeand it is a crucial one-relates to attitudes. In enterprises that~are subject to inspection by government or other authorities, the operators of the enterprise often gradually drift to the point of view that the responsibility for safety lies with the government and its inspectors. An attitude develops that the operator's responsibility and objective is simply to pass the-inspection, an attitude the committee refers to as a "compliance mentality." It is especially likely to develop when inspections are based on a routine checklist approach. The committee emphasizes its belief that compliance does not equal safety. Thus, although it is certainly desirable to have checklists to guide the inspectors, it is important for MMS to ensure that operators do not sink into a compliance mentality. To reiterate: in practice and by law, the operators bear the primary responsibility for safety. The MMS, for its part, is responsible for using the best and most effective means it can devise to motivate operators to meet that responsibility.