Strengthening the Safety Culture of the Offshore Oil and Gas Industry (2016)

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64 This chapter provides a brief history of the development of the off-shore oil and gas industry and the safety efforts made since its inception. The discussion draws heavily on Wake-Up Call: Acci- dents and Safety Provision in the Gulf of Mexico Offshore Industry (Priest 2008a). The reader is also referred to the report of the National Com- mission on the BP Deepwater Horizon Oil Spill and Offshore Drilling (2011, Ch. 2) for additional accounts of the history of the offshore oil and gas industry in the United States. 1890s TO 1940s: COASTLINE AND OFFSHORE OIL AND GAS EXPLORATION As the offshore oil and gas industry expanded to the U.S. coastline and Outer Continental Shelf (OCS) in the 1890s, oil wells were drilled in the ocean from wooden piers attached to the shore. As drilling moved farther from the shore, drilling from piers became impossible. Move- able barges were used in the 1930s, and by 1938, the first free-standing structure had been placed in the Gulf of Mexico 1.5 miles offshore for the purpose of drilling for oil (Pratt et al. 1997). As the demand for gas and oil products continued to increase during and after World War II, these free-standing structures were placed in deeper waters. In 1947, the first well to be out of sight of land was built on a platform 12 miles off the coast of Louisiana (Priest 2008b). By 1949, there were 11 oil and gas fields with 44 exploratory wells (NOIA 2015) in the Gulf of Mexico. The early years of offshore drilling were characterized by extremes of both reward and risk in an environment in which very little legislation and regulation existed. During this period, the industry undertook few safety initiatives. While companies were able to find and produce oil and gas profitably, they also faced a number of hazards that resulted from 3 | History of the Offshore Oil and Gas Industry and the Development of Safety Efforts

History of the Offshore Oil and Gas Industry and the Development of Safety Efforts 65 trying to adapt land-drilling methods offshore, fitting complex drilling and production facilities onto small platforms, using untested designs and procedures, and handling dangerous equipment and flammable materials, all in an adverse marine environment that frequently exposed workers and equipment to high winds and waves as well as corrosive salt water. In addition, high operational costs intensified pressure to surmount these challenges within the shortest time possible (Priest 2008a). 1950s TO 1960s: THE DANGERS AND CHALLENGES OF MOVING FARTHER OFFSHORE Offshore oil and gas exploration was halted for a time when Califor- nia, Texas, and Louisiana challenged a 1945 proclamation made by President Truman that granted authority over the subsoil of the U.S. Continental Shelf to the federal government (Penney 2008). The states’ challenge prompted the U.S. Department of Justice to file suits against them. The legal disputes ended when the U.S. Supreme Court ruled against California in 1947 and against Louisiana and Texas in 1950. In May 1953, Congress passed two pieces of compromise legislation that put an end to the debate over federal and state jurisdiction on the Con- tinental Shelf: (a) the Submerged Lands Act (SLA), which validated all state leases that had been awarded prior to the issuance of the Supreme Court’s decision against California, Texas, and Louisiana and reserved to the states all land within 3 nautical miles (nmi) of their shores1, and (b) the Outer Continental Shelf Lands Act (OCSLA), which placed all offshore lands beyond the 3-nmi limit under federal jurisdiction and gave the Department of the Interior the authority to issue leases (National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drill- ing n.d.). Offshore drilling resumed after the legal disputes were settled and the SLA and OCSLA were signed by President Eisenhower. In 1954, the Department of the Interior’s Bureau of Land Manage- ment held the first federal lease sale for offshore drilling in New Orleans, while the U.S. Geological Survey’s (USGS) Conservation Division established a new office to supervise drilling operations and collect rev- enues (Priest 2008c). Oil companies explored and developed their new leased lands by using services from the preexisting onshore Gulf Coast 1 For Texas and the west coast of Florida, 3 marine leagues (approximately 10 nmi).

66 Strengthening the Safety Culture of the Offshore Oil and Gas Industry oil service sector, creating a distinct offshore industry sector that uti- lized services in marine geophysical surveying, offshore engineering and construction, transportation (boats and helicopters), diving, and mobile drilling (Priest 2007). During this period, new discoveries, such as giant salt dome fields off the coast of Louisiana, prompted companies to move their opera- tions farther into the Gulf and support the development of equipment that would facilitate oil exploration in deeper waters. The use of mobile drilling units progressed rapidly. In 1954, a drilling contractor used a submersible drilling barge rig with a hull that could rest submerged on the seafloor in 30 feet of water and be refloated and relocated. Other drilling operators tested jack-up rigs that positioned the rig’s legs on the ocean floor and jacked the drilling equipment up above the water’s surface, making drilling possible in water deeper than 100 feet. By 1957, 23 mobile rigs were operational along the Gulf Coast, and 11 more rigs were under construction (Calvert 1957a). As in preceding decades, every phase of early offshore exploration entailed safety hazards that could lead to accidents resulting in death or injury to people and damage to equipment and the environment. The deployment of land-based technologies, equipment, and practices in the marine environment, as well as the use of new technologies untested for offshore use, persisted and continued to heighten the risk of off- shore drilling operations. Platforms were built without full consider- ation for worker safety, and often had decks crammed with equipment and crew quarters situated near dangerous equipment and compressor buildings.2 Pipe, drilling mud, cement, and chemicals were moved using brute strength instead of automated tools such as large cranes, lift pal- lets, and forklifts (Priest 2008a, 142). In addition, the pressure to drill wells, install platforms, and bring production online as quickly as possible to recoup the huge investment in leases, structures, equipment, and personnel did not abate. In this work environment, some operators and contractors did not make safety a high priority and sometimes cut corners (Priest 2008a, 144). Others may simply not have known how to create a safe working environment. In the exploration phase, marine seismic work proved to be partic- ularly dangerous. The dynamite explosions used to generate the sound 2 K. Arnold, personal communication, interview by Tyler Priest, Houston, Texas, May 10, 2004.

History of the Offshore Oil and Gas Industry and the Development of Safety Efforts 67 necessary to identify geological structures beneath the ocean floor resulted in a number of problems, ranging from headaches due to breathing in the fumes from an explosion (Shell News 1939, 15) to deaths and injuries due to onboard explosions (premature ignition), particularly when crews tried to speed up operations (Priest 2008a, 140). In addition, explosions could create large craters in the mud floor, into which unsuspecting workers carrying heavy loads could fall and have difficulty getting out.3 Between the late 1940s and mid-1950s, transportation for person- nel created another significant hazard, especially during inclement weather. The use of ladders, ropes, cargo baskets, and swing ropes to move personnel from boats to the platform or between different levels of the platform led to falls that produced injuries (Priest 2008a, 141). Helicopters, which were introduced in 1948 but were not widely used until the mid-1950s, provided a more economical and time-efficient means of transferring crews to offshore rigs; however, they were not without risks (Priest 2008a, 141). Helicopter accidents occurred dur- ing bad weather and at night, and when they did, multiple fatalities usually resulted. USGS’s monthly engineering reports from the 1950s to the 1960s listed multiple deadly helicopter crashes. In 1958 alone, 14 reported fatalities resulted from helicopter accidents in the Gulf of Mexico OCS.4 In addition, several mobile drilling vessel disasters occurred in the early days of offshore exploration and drilling. From 1955 to 1957, four drilling vessels overturned, resulting in the loss of 13 lives. In the worst of these accidents, 9 people died when the Golden Meadow Drilling Company’s Mister K capsized off the South Pass of the Mississippi River in April 1957. Two weeks later, the Glasscock Drilling Company’s jack-up Mr. Gus capsized, killing 1 person.5 Many operators blamed human error for these accidents; however, many academic researchers (e.g., Reason 1990; Shappell and Wiegmann 2001; Dekker 2002) believe the attribution of accidents to human error is too simplistic and fails to take into account issues of equipment design, training, and 3 N. Constant, personal communication, interview by Diane Austin, July 23, 2001. 4 USGS, “Monthly Engineering Reports,” Gulf Coast Region, Volumes 109–160,1954–1966, Record Group 57, Records of the U.S. Geological Survey, Conservation Division, Oil and Gas Leasing Branch, National Archives and Records Administration (NARA), College Park, Maryland. 5 Oil Rig Disasters. http://home.versatel.nl/the_sims/rig/index.htm. Accessed August 24, 2015.

68 Strengthening the Safety Culture of the Offshore Oil and Gas Industry supervision. For example, it was evident that these mobile drilling ves- sels, especially the jack-ups, had design flaws that contributed to their instability (Calvert 1957b). Well control incidents can occur in the course of drilling for oil and gas, and they can be especially disastrous for those who work on the platform and for the surrounding environment when blowouts occur. However, most well control incidents do not result in fatalities or inju- ries, and the ability to regain control quickly determines the severity of the accident and the extent of its consequences. Despite offshore operators’ early use of blowout-prevention systems, some blowouts still occurred in the Gulf, resulting in fires, explosions, deaths, property damage, and environmental pollution (Priest 2008a, 141). Diving, which had become an essential part of offshore operations by the late 1950s, was also a dangerous activity. Divers took part in the construction, installation, repair, maintenance (such as removal of marine growth), and salvage of offshore platforms and pipelines, and they were asked to dive to greater depths for longer periods of time with minimal training. Unusual and extreme environmental conditions off- shore posed challenges even to experienced divers, and new recruits whose primary occupation was not diving were often asked to dive after receiving little training (Priest 2008a, 142). Although safe operations were a clear problem with many of the common offshore practices, safety was not always emphasized, partic- ularly when untested equipment was employed or pressure increased to rapidly move operations forward. While offshore workers usu- ally received some training in safe operating practices, they were not necessarily trained to manage safety or to manage change safely (Priest 2008a, 144). In most organizations, safety programs were basic and simple. Each company defined what “safe” meant. The better ones learned from their own and others’ mishaps, blowouts, and accidental deaths and worked to improve technologies for drilling, blowout prevention, and produc- tion (Priest 2008a, 144). During this period, the industry’s minimalist approach to safety remained mostly unchanged, and government regulation and oversight also were minimal. Federal regulations addressing specific equipment and procedures were implemented incrementally. Between 1958 and 1960, the USGS issued OCS Orders 2 through 5, which specified

History of the Offshore Oil and Gas Industry and the Development of Safety Efforts 69 procedures for drilling, plugging and abandoning wells, determining well production rates, and installing subsurface safety devices or storm chokes (Priest 2008a, 144). In July 1959, USGS released an order for facility inspectors to file a report on each facility they inspected, noting the deficiencies and actions taken. Enforcement by USGS was sporadic, however, and most installations were inspected only annually and in some cases less frequently because the agency lacked funding and staff- ing for this work (Priest 2008a, 144). Because of inconsistencies in the reporting requirements for minor and major accidents, fatalities, and minor injuries, data on fatalities and major accidents were generally more complete than data on minor acci- dents and injuries. Hence it is difficult to determine trends for all types of accidents and injuries offshore during this period. Despite the lack of complete records on injuries, specific catastrophic accidents and numerous injuries likely had many causes, ranging from workers’ carelessness and desire to display their physical capability to ropes and cables breaking and objects being dropped (Priest 2008a, 142). In 1965, a jump in the rate of accidents prompted Lloyd’s of London to increase global insurance rates on most types of drilling vessels. In addition to insurance fees, operators had to bear the costs of uninsured exposures such as downtime and lost production (Priest 2008a, 145). More broadly, between 1950 and 1968 there were approximately 150 working mobile units worldwide, and 30 major rig mishaps and about the same number of minor accidents occurred on these struc- tures (Howe 1968, 51–52). At the same time, there remained no legal requirements anywhere in the world for the overall performance and safety of mobile offshore drilling units (Priest 2008a, 146). 1965 TO 1990: IMPROVING THE SAFETY OF OFFSHORE OPERATIONS During this period, the industry’s ability to solve design and equipment problems at a steady pace allowed it to overcome some of the challenges of working in the marine environment. At the same time, diving con- tractors were compelled by diver safety groups and union organizers to address safety and formed the Association of Diving Contractors. Ulti- mately, union efforts failed to organize the divers in the Gulf of Mexico,

70 Strengthening the Safety Culture of the Offshore Oil and Gas Industry but the union’s organizing actions helped improve safety standards and technologies in the 1970s and provided the impetus for the creation of new USCG regulations. In addition, diving injuries and fatalities forced operators to require proof of insurance from their diving contractors and focused both operators and diving contractors on reducing acci- dents (Priest 2008a, 148). A number of accidents also occurred in the Pacific OCS and the Gulf of Mexico during this time, with serious consequences (see also Chapter 1). In 1969, a blowout in the Santa Barbara Channel, Califor- nia, spilled 80,000 barrels of oil and spurred a national environmental movement that helped effect the passage of the National Environmen- tal Policy Act (Priest 2008a, 146). Two accidents in 1970 rendered it the worst year up to that point in the history of the U.S. OCS regula- tory program. A blowout and fire on a platform in Main Pass block 41, offshore Louisiana, in February spilled an estimated 1,000 barrels of crude oil per day for 3 weeks. Although there were no fatalities, more than 30,000 barrels of oil in total was spilled. Another blowout occurred on a production platform during wireline operations in the South Timbalier block 26-Bay Marchand area, offshore Louisiana, in December. The accident polluted the environment, harmed wildlife, killed 4 men, and injured 37. Major accidents also occurred outside of the United States. The Sea Gem jack-up drilling vessel disaster in the British sector of the North Sea in 1965 killed 13 people.6 In 1979, a blowout occurred on the Ixtoc 1 well in Mexico’s Bay of Campeche, which caused approximately 3.5 million barrels of oil to spill into the water (the largest industry spill prior to the Deepwater Horizon spill in 2010).7 The 1980 capsiz- ing of the Alexander Kielland semisubmersible drilling rig in the North Sea killed 123 people.8 The 1982 sinking of the Ocean Ranger semi- submersible platform off Newfoundland killed 84 people.9 And the 1988 explosion and fire at the Piper Alpha platform in the North Sea resulted in the deaths of 167 workers.10 6 http://home.versatel.nl/the_sims/rig/seagem.htm. Accessed March 22, 2016. 7 http://home.versatel.nl/the_sims/rig/ixtoc1.htm. Accessed March 22, 2016. 8 http://home.versatel.nl/the_sims/rig/alk.htm. Accessed March 22, 2016. 9 http://home.versatel.nl/the_sims/rig/o-ranger.htm. Accessed March 22, 2016. 10 http://home.versatel.nl/the_sims/rig/pipera.htm. Accessed March 22, 2016.

History of the Offshore Oil and Gas Industry and the Development of Safety Efforts 71 While the immediate causes of these accidents were found to be material–design failure (e.g., Sea Gem collapse [Burke 2013] and Alexander Kielland capsizing [Officer of the Watch 2013]), other factors also were implicated in these accidents. These factors included faulty material (e.g., the Santa Barbara accident was caused by insufficient pro- tective casing [Clarke and Hemphill 2002]), process failure (e.g., failure in the circulation of drilling mud caused the Ixtoc 1 accident in Mexico’s Bay of Campeche [Woods Hole Oceanographic Institution 2014]), human factors, and the lack of safety management systems and a work environ- ment that failed to promote safe work practices and behaviors. In some cases, the integrity of the material or equipment had not been properly inspected, and repair or replacement had not been carried out (e.g., Sea Gem, South Timbalier block 26-Bay Marchand [Donovan 2010]). In other cases, personnel failed to monitor operations (e.g., South Timbalier Block 26-Bay Marchand) and follow safe operating practices and proce- dures (e.g., Santa Barbara blowout), or performed work without consider- ing standards for safe operations (e.g., Piper Alpha [NASA 2013]). Thus the lack of safety systems and human error were the causes of many of these accidents. Minimal regulatory oversight also may have contributed to a lack of attention to safety on the part of companies working on the OCS during the late 1960s and early 1970s (Arnold 2015). In addition, the focus in most organizations was on personal safety and safe use of equipment, rather than process safety. Some companies, however, began adopting safety practices in the late 1960s, such as use of high-pressure sensors, shut-in11 valves, and emergency shutdown systems, while some started keeping records of lost-time accidents and recordable incidents. However, the safety devices being employed were not reliable or tested frequently until the OCS orders were issued in the early 1970s (Arnold 2015). During this period, studies of drilling processes emphasized the need to improve safety on offshore rigs. In 1985, a report on a study on Arctic and deepwater drilling, conducted by the Congressional Office of Technology Assessment (OTA 1985), called attention to the safety risks of operating in harsh environments and remote locations. The report underscored the need for new approaches that would prevent work-related injuries and fatalities while adapting to the hazards of the 11 The term “shut-in” is commonly used in the oil and gas industry.

72 Strengthening the Safety Culture of the Offshore Oil and Gas Industry Arctic and deepwater environments. The report also noted that at the time, there were no regulatory requirements for submitting integrated safety plans addressing technical, managerial, and other aspects of off- shore safety operations and that “insufficient funding by the federal government may result in inadequate rig safety inspections and moni- toring efforts” (OTA 1985, 7). Regulatory agencies such as USGS were underfunded and understaffed. In 1969, for example, the USGS Gulf of Mexico Region had only 12 people overseeing more than 1,500 plat- forms (National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling 2011). The high-profile blowout incidents noted above, a growing number of injury lawsuits, increased media scrutiny, and public demand for worker and environmental safety led to efforts on the part of the industry and the federal government to improve regulations, work practices, technolo- gies, and designs so as to make offshore operations safer. The Depart- ment of the Interior expanded and strengthened its regulatory program by rewriting most OCS orders addressing operations in the early 1970s. The new OCS orders required that additional safety features be installed on platforms and pipelines. Subsurface safety valves, for example, which were introduced in 1954 but were not widely used because of costs and operational problems, were required on all producing wells (OCS Order 5-3) for the first time in 1973. There were also new requirements related to process safety. These included the testing of safety devices prior to and when in use, as well as the use of defined processes for the control of drilling and casing operations, preapproved plans for and details of the equipment used for exploration and development drilling, and revised practices and procedures for platform installation and operation. USGS also hired more inspectors and engineers to enforce the new regulations, instituted a more systematic inspection program, and used government- provided transportation to conduct inspections instead of relying on the operators to take inspectors to rigs (Priest 2008a, 147). In addition, the Department of Justice filed suit against a number of major oil and gas companies that were responsible for accidents or committed safety violations, ultimately obtaining judgments against them (Reifel 1976). In a single case, one operator of record was fined $1 million for its failure to maintain safety devices, including safety chokes (Priest 2008a, 146)—a fine that was considered significant at that time.

History of the Offshore Oil and Gas Industry and the Development of Safety Efforts 73 In the early 1970s, the industry tried using a new approach to improve safety offshore, involving collaboration between the industry and USGS. The Offshore Operators Committee and the American Petro- leum Institute’s (API) Offshore Safety and Anti-Pollution Equipment Committee provided input for the revision of OCS orders and also drafted a new set of API Recommended Practices for selecting, install- ing, and testing various types of safety devices and platform designs (Arnold et al. 1989). Offshore operators, with the help of API, consul- tants, academics, and suppliers, also instituted changes in the required training programs for offshore operator and contractor personnel, which resulted in increased worker retention and morale and con- tributed to the improvement of company and industry safety records (Pace and Turner 1974). The catastrophic accidents that occurred in 1969 and 1970 also spurred a series of major studies by the National Research Council’s Marine Board and USGS, which resulted in more changes to the OCS regulatory program. In addition to the revised OCS orders and improved technologies and platform designs, other activities focused the industry’s attention on safety. The U.S. Coast Guard (USCG) and USGS began enforcing new regulations addressing issues related to occupational safety for per- sonnel. In 1972, Lloyd’s Register of Shipping published its first Rules for the Construction and Classification of Mobile Offshore Units. In 1973, the American Bureau of Shipping (ABS) revised its Rules for Building and Classing Offshore Mobile Drilling Units, based on a wide range of more rigorous tests of mobile drilling designs (Priest 2008a, 148). In the early 1970s, the ABS rules, which had first been published in 1968, were incorporated into USCG’s regulatory requirements for mobile offshore drilling units and OCS Order No. 2, which addresses drill- ing from fixed platforms and mobile drilling units and is enforced by USGS (Lovie 1976). Reporting of minor accidents and minor injuries remained inconsis- tent during this period, but reporting of major accidents was done con- sistently, and as required by the OCSLA, the Department of the Interior and USCG investigated deaths, serious injuries, fires, and oil spills of more than 200 barrels. The likelihood that accidents were under- reported in the 1970s is high, however, in part because of the vagueness of the regulatory requirements for reporting injuries, including ambigu- ity as to what injuries operators and leaseholders should report. Some

74 Strengthening the Safety Culture of the Offshore Oil and Gas Industry companies reported only what they legally had to report (i.e., only major incidents). In addition, from 1985 until well into the 1990s, some oil and gas companies did not regard accidents that resulted in lost workdays but not fatalities or major damage to assets as serious incidents that had to be reported to the Minerals Management Service (MMS).12 A volun- tary survey of operators conducted as part of an MMS–USCG industry performance study revealed that of the 507 lost workday cases in 1997 reported in the survey, only 83 (or 16 percent) had been shared with the MMS (Federal Register 2003; Priest 2008a, 149). Through the different trade associations (e.g., the Offshore Opera- tors Committee, API, the International Association of Drilling Con- tractors [IADC]), the offshore industry reviewed the major accidents to determine their nontechnological causes and to identify appropriate preventive measures. By most accounts, most of the major accidents had been caused not by technological problems or failure to comply with industry safety standards but by human error resulting from insufficient training and supervision, rote reliance on regulations, and poor operating practices (Priest 2008a, 150). Industry was in agree- ment that realizing significant improvements in safety would require renewed commitment to better training, more supervision and over- sight at work sites, less reliance on simply complying with regulations to achieve a safe working environment, and greater focus on enhanced operating practices and procedures. Safety awareness was driven by safety technicians who were assigned to the rigs starting in the late 1970s, which helped reduce incidents involving personnel safety, espe- cially those related to slips, trips, falls, and hand injuries. 1990s: PROMOTING OFFSHORE SAFETY AND ENVIRONMENTAL PROTECTION In the 1990s, more geographically promising areas in deep water were discovered with the aid of new technology for acquiring multidirec- tional seismic data and computer processing three-dimensional seismic images. With the discovery of these deepwater fields that could yield vast amounts of oil, the introduction of new-generation drilling ves- sels, and advances in drilling technology, the industry began to explore 12 MMS assumed USGS’s responsibilities for offshore oil and gas regulation in 1982.

History of the Offshore Oil and Gas Industry and the Development of Safety Efforts 75 the deeper waters of the Gulf of Mexico—a venture that paid off when millions of barrels of oil were recovered (National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling 2011). From 1950 to 1990, the offshore industry focused most of its safety improvement efforts on equipment design and operational consider- ations, and the government enacted prescriptive regulations (Velez 1998, 5). During the same period and continuing into the 2000s, most accidents offshore were attributed to human error, a narrow perspec- tive that ignored the role of systems and culture. Most in the indus- try believed that this persistent trend of accidents caused by human error was the result of the difficulty and stressfulness of the work; the environment (e.g., darkness, heat, cold, noise); and long work shifts (e.g., 7 days on, 7 days off work schedules and some up to 28 days on, 14 days off ) that led to worker exhaustion, which can take a toll on human performance and predispose workers to accidents that cause injury. Aside from the problem of underreporting of minor incidents by some companies, the industry’s reliance on lost-time incident rates as an indicator of the level of safety emphasized personal safety indicators, which in turn lacked causal explanations (Wilkinson 2012). Rather, the causes of lapses in personal safety could be attributed to many factors, including the worker’s failure to follow procedures or pressure from the worker’s management to complete a task too quickly. Although many still attributed accidents to human error in the 1990s, the industry and regulators continued to focus on equipment design and safety and on production and drilling practices and procedures. They also began to expand their perspectives on safety to focus on the management systems and process safety of the entire facility. Consideration of process safety goes beyond personal safety and equipment design to analyze the causes of accidents, particularly catastrophes. The focus is on the interre- lationships among the components of entire systems, including workers, supervisors, equipment, training, safety procedures, work rules, and so on, with measures being used to monitor systems, track progress, and provide early warning of potentially dangerous situations. Also characteristic of this period was a decline in the presence of major operators in large areas of the Gulf of Mexico and growth in the number of smaller, independent operators. Many accidents during this period continued to involve entry-level workers, a problem that was probably exacerbated by the “increasing turnover rate in the offshore

76 Strengthening the Safety Culture of the Offshore Oil and Gas Industry labor market, the growing use of contract personnel, and the emergence of smaller, independent operators without the necessary organizational structure for managing safety” (Priest 2008a, 150). The hiring of more contractors and subcontractors by both major and independent operators posed an additional safety concern because it led to the presence of more players in a given location with differing under- standings of the elements of safety culture, including safety procedures, work conditions, and decision-making responsibilities. The growing use of contractors and subcontractors also created uncertainty over who had legal responsibility when work was being performed and raised new ques- tions about how to specify safety responsibilities and liability in contract text. One legal concern was whether contracts should specify in detail how work was to be carried out because a resulting accident could shift liability from the contractor to the operator. A different approach was to specify the safety responsibilities of the parties in contract terms and con- ditions, with the expectation that reducing adverse events would lower liability for all parties. Some operators also began following up to ensure contractor compliance and screening potential contractors according to their past safety performance as a way of selecting those that would be willing and able to work to the operator’s safety standards. Although there was concern about the takeover of mature prop- erties, rigs, and equipment by small independent operators, a study sponsored by MMS suggested that independents, on average, had mar- ginally better safety and environmental records relative to the major operators (Pulsipher et al. 1998). This study, however, did not address questions about underreporting of minor incidents. As one way to address safety offshore, MMS proposed a performance- based safety approach emphasizing corporate and human responsibility. This approach is exemplified by the Safety and Environmental Manage- ment Program (SEMP), introduced in 1991 to shift companies from a compliance mentality to a focus on the association of human error and organizational influences with accidents occurring in the workplace and on the application of continuous improvement principles in offshore safety management (Priest 2008a, 150; Arnold 2015). As in the previous decades, the safety improvements in the offshore industry during this period cannot be fully evaluated because of insuf- ficient data, a problem that had long been known (OTA 1985). Baram (2014) attributes the lack of a comprehensive database that could fill

History of the Offshore Oil and Gas Industry and the Development of Safety Efforts 77 this gap to the decades-long inability of the primary offshore regulators (MMS and USCG) to collect data systematically from all parties involved offshore—operators, independents, contractors, and subcontractors— which limited the ability to analyze trends and help the industry make continuous and timely improvements in offshore safety. A follow-up to the SEMP designed to address these data inade- quacies is the OCS Performance Measures Program, created by rep- resentatives of the regulators (MMS and USCG) and the oil and gas industry to help operators and contractors determine how the SEMP affects their operational safety and environmental performance. In addition to assessing the effects of the SEMP within a company, the performance measures are used to monitor the industry’s OCS-wide operating performance by aggregating the performance data reported by all operating companies to generate an annual safety and environ- mental performance profile. This profile allows an operating company to weigh its individual performance against industry-wide performance (Beittel and Atkins 2000), and also enables regulators, industry, and the public to assess offshore performance trends. See Chapter 4 for addi- tional information about the SEMP, API Recommended Practice 75, and the OCS Performance Measures Program. 2000s TO THE PRESENT: DEEPWATER DISCOVERIES AND EXPLORATIONS AND THE AFTERMATH OF A CATASTROPHIC BLOWOUT In the early 2000s, operators found 11 major oil fields located in 7,000 feet of water or deeper. Offshore oil exploration shifted to the deeper and older strata, called the “Lower Tertiary,” that some believe could yield 3 billion to 15 billion barrels of hydrocarbons. Exploration, however, did not proceed without complications. A major challenge for all such proj- ects included the need for more advanced equipment that would make it possible to see at depths of up to 10,000 feet well enough to operate and manipulate equipment remotely on the seafloor, as well as for blowout preventers made of higher-strength materials and capable of operating at deeper water depths, where reservoir conditions are more intense (National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling 2011). As the industry advanced into the deep waters

78 Strengthening the Safety Culture of the Offshore Oil and Gas Industry of the Gulf, accidents continued to occur. Overall, however, there was a downward trend in rates of recordable and lost workday incidents across all segments of the offshore industry (production, construction, drilling, etc.). From 2000 to 2009, according to Bureau of Safety and Environmental Enforcement (BSEE n.d.-a) data, recordable incident rates fell from 1.97 to 0.46, and lost workday incident rates fell from 0.75 to 0.25 (per 200,000 man hours or 100 person years; see Figure 3-1). In addition, a series of hurricanes battered the Gulf Coast in 2002, 2004, and 2005. Many underwater pipelines, vessels, and platforms were either badly damaged or completely destroyed. However, it did not take long for the industry to recover from the hurricane damage and resume drilling in deeper waters and producing oil and gas. By 2010, 19 reservoirs had been discovered in the “Lower Tertiary,” 14 of which contained at least 100 million barrels of oil equivalent (National Com- mission on the BP Deepwater Horizon Oil Spill and Offshore Drilling 2011, 51). Prior to 2010, the offshore oil and gas industry had not experi- enced a catastrophic accident in many years. That trend ended on April 20, 2010, when a blowout occurred that led to an explosion and fire on the Transocean Deepwater Horizon drilling rig. The blowout was caused by the loss of well control while BP, the operator, was Pa r ci pa nt In ci de nt R at e (in ci de nt s p er 2 00 ,0 00 p er so n- ho ur s w or ke d) FIGURE 3-1 Recordable and days away, restricted, and transfer (DART) case incident rates for combined operations, 1997 to 2013. Source: Adapted from BSEE (n.d.-a).

History of the Offshore Oil and Gas Industry and the Development of Safety Efforts 79 in the process of temporarily abandoning a well it was working in approximately 5,100 feet of water. Eleven of the 126 crewmembers died in the incident, many others were injured, and all personnel had to evacuate the rig. The rig sank in about 48 hours, and oil from the well continued to flow for weeks unimpeded by the blowout preventer. This incident resulted in an estimated 3.19 million barrels13 spilled, the largest ever oil spill in U.S. waters, and activation of the largest ever oil spill response operation. Many attempts were made using different tactics before the well flow was stopped on July 15, 2010, using a capping stack. Prior to this event, it was difficult for many in the industry to imagine an accident that would result in a major spill, loss of lives, injuries, and the sinking of the rig. The likelihood of such an event was very low, but it had major consequences. Need for a Strong Safety Culture The government’s response to the Deepwater Horizon incident was swift. Immediately after the incident, President Obama charged the secretary of the Department of the Interior to deliver a report on the accident, with recommendations for improving safety, within 30 days. The sec- retary asked IADC and API to convene a task force to make those rec- ommendations and also asked the National Academy of Engineering to assemble experts to peer review the secretary’s report. On May 22, 2010, President Obama announced the creation of an independent, nonpartisan group—the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling—to conduct a thorough and impartial analysis of the causes of the oil spill within 6 months and provide recommendations for improving the nation’s ability to respond to spills and making offshore energy production safer. The National Commission’s objective was to provide the President, policy makers, industry, and the American people with a clear, acces- sible, accurate, and fair account of the largest oil spill in U.S. history, including what the context for the well itself was, how the explosion and oil spill happened, and how industry and government responded to an unprecedented emergency. At the end of its investigation, the National Commission (2011) concluded that safety culture was one 13 Volume determined by the court.

80 Strengthening the Safety Culture of the Offshore Oil and Gas Industry area in which significant change was needed. (See Box 3-1 for a list of the National Commission’s findings related to safety culture.) The National Commission reached several important conclusions regarding safety. Among those conclusions were the following. First, a sound and cohesive safety culture throughout the industry is neces- sary to further reduce the likelihood of very low-frequency incidents that have very high consequences. Safety management system frame- works, such as those described in API Recommended Practice 75 and the Safety and Environmental Management Systems (SEMS) stan- dard, prescribe some of the processes necessary to strengthen a safety BOX 3-1 Findings of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling • The explosive loss of the Macondo well could have been prevented. • The immediate causes of the Macondo well blowout can be traced to a series of identifiable mistakes made by BP, Halliburton, and Transocean that reveal such systematic failures in risk management that they place in doubt the safety culture of the entire industry. • Deepwater energy exploration and production, particularly at the frontiers of experience, involve risks for which neither industry nor government has been adequately prepared, but for which they can and must be prepared in the future. • To assure human safety and environmental protection, regulatory over- sight of leasing, energy exploration, and production requires reforms even beyond those significant reforms already initiated since the Macondo disaster. Fundamental reform will be needed in both the structure of those in charge of regulatory oversight and their internal decision making process to ensure their political autonomy, technical expertise, and full consideration of environmental protection concerns. • Because regulatory oversight alone will not be sufficient to ensure adequate safety, the oil and gas industry will need to take its own, unilateral steps to increase dramatically safety throughout the industry, including self-policing mechanisms that supplement governmental enforcement. Source: Excerpted from the report of the National Commission on the BP Deepwater Horizon Spill and Offshore Drilling (2011).

History of the Offshore Oil and Gas Industry and the Development of Safety Efforts 81 culture, but leadership at all levels of the organization, from chief executive officer (CEO), to first-level field supervisor, to entry-level employee or contractor, is essential for their successful implementa- tion. Second, the oil and gas industry needs to change its focus from regulatory compliance to implementation of a comprehensive safety system if it is to maintain personnel safety, process safety, and safety leadership at all levels of an organization. The National Commission’s report also points out that the regulatory agencies need to provide support for efforts to meet this objective. The systems approach reflected in the National Commission’s con- clusions requires actions that ensure a balanced, well-implemented safety culture with appropriate safety policies, procedures, work plans, and behaviors. To this end, BSEE has determined that OCS operators must use SEMS as the foundation for their safety management systems (see Chapter 4 for more detail on SEMS). In 2010, the Chemical Safety Board also began its investigation of the Deepwater Horizon accident. In its report, it attributes the accident to “a complex combination of deficiencies: process safety safeguards and inadequate management systems and processes meant to ensure safeguard effectiveness, human and organizational factors that created an environment ripe for error, organizational culture focused more on personal safety and behavioral observations than on major accident prevention, and a regulatory regime unable to deliver the necessary oversight for the high-risk activities involved in deepwater exploration, drilling, and production” (CSB 2015). The investigations into the Deepwater Horizon accident all reached the conclusion that a lack of process safety and deficient safety culture were primary causes of the accident. That conclusion signaled a signifi- cant change in the attribution of the causes of such catastrophic accidents. Instead of focusing on individual behavior, these reports emphasize the importance of looking more broadly at the systems designed to promote safety and the culture that supports safe working behaviors. BSEE Initiatives after the Deepwater Horizon Blowout and Spill SEMS Rule and SEMS II BSEE issued the original Workplace Safety Rule (also known as the SEMS rule) in October 2010 as a way to improve the safety of offshore operations. BSEE subsequently revised the SEMS rule, and a new rule,

82 Strengthening the Safety Culture of the Offshore Oil and Gas Industry called SEMS II, became effective on June 4, 2013 (BSEE n.d.-c). (See Chapter 4 for a more detailed discussion of SEMS and SEMS II.) BSEE Safety Culture Policy On May 9, 2013, BSEE released its final Safety Culture Policy State- ment as part of its commitment to promoting offshore safety. The pol- icy statement includes BSEE’s definition of safety culture as “the core values and behaviors of all members of an organization that reflect a commitment to conduct business in a manner that protects people and the environment,” as well as the nine elements of a strong safety culture discussed in Chapter 2. The policy statement also describes BSEE’s regulatory approach to leading the offshore oil and gas industry beyond checklist inspection toward a systemic, comprehensive program for achieving compliance. During the release of the policy statement, then BSEE Director James Watson emphasized the following: The human factor is the critical element in offshore safety. Prescriptive regulations can reduce risks to worker safety and the environment, but they alone are not enough. Everyone working in the offshore industry must adhere to a set of core values that places safety above all else.14 Industry Safety Initiative: Creation of the Center for Offshore Safety Industry’s response to the Deepwater Horizon accident also was swift. In 2011, the Center for Offshore Safety (COS), an industry-sponsored organization, was created through API to focus exclusively on offshore safety on the U.S. OCS. The objective of COS is “to serve the U.S. offshore oil and gas industry with the purpose of adopting standards of excellence to ensure continuous improvement in safety and offshore operational integrity.”15 Initially, only deepwater operators were mem- bers, with contractors and other service providers (such as consultants and engineering firms) being associate members. In early 2015, COS opened membership to all companies operating on the U.S. OCS. As of November 2015, COS members included 14 operators, 6 drilling contractors, and 10 service/equipment providers.16 (See Chapter 4 for 14 http://www.bsee.gov/BSEE-Newsroom/Press-Releases/2013/BSEE-Announces-Final-Safety-Culture- Policy-Statement/. Accessed April 26, 2016. 15 http://www.centerforoffshoresafety.org/main.html. Accessed March 22, 2016. 16 http://www.centerforoffshoresafety.org/membership.html. Accessed November 20, 2015.

History of the Offshore Oil and Gas Industry and the Development of Safety Efforts 83 additional discussion of COS, its accomplishments to date regarding safety culture, and recommended changes for the future.) SUMMARY Offshore operations, equipment, and workplaces, as well as the work- force and the relationships among operators, contractors, and sub- contractors, are complex. There can be no simple description of the “workplace” offshore. Rather, workplaces offshore vary according to many factors, some of which raise significant safety challenges. For example, the workplace may be defined by the type of mobile offshore drilling unit and the types of equipment on board, as well as by the amounts and types of technology employed, with substantial differ- ences between the more hazardous drilling operations and the more or less steady-state production operations. In addition, offshore work- places vary significantly in their workforces, with workers differing in knowledge, skills, and abilities, as well as primary language and culture. The growth of small independents in the Gulf of Mexico over the last two decades, moreover, has led to increased reliance on contractors and subcontractors with specialized skills, adding to the diversity of the work- force. For drilling operations on deepwater mobile offshore drilling units in particular, the numbers and types of contractors and subcontractors on the same unit, the financial resources of each, and their goals related to profitability play critical roles in defining the safety culture of an opera- tor, which in turn affects the workplace culture. These diverse workforces certainly complicate an operator’s ability to instill a consistent safety cul- ture in the workplace. According to Priest (2008a, 151), “The greater use of contracting by majors but especially independents has created uncer- tainty over the location of legitimate authority and decision-making, and bred ignorance about work conditions and the responsibilities of person- nel and confusion over safety procedures.” Elements of Priest’s assess- ment from 2008 can be seen in the string of mistakes and errors made on the Deepwater Horizon that led to the 2010 blowout and explosion, as well as in the chaos and confusion that occurred in the aftermath as managers argued about safety procedures and authority to engage the blowout preventer and disconnect from the riser. In the span of almost 80 years, from the time when the first free- standing structure was installed in the Gulf of Mexico in 1937, the

84 Strengthening the Safety Culture of the Offshore Oil and Gas Industry U.S. offshore oil and gas industry has gone from extracting oil and gas from the seabed a mile and a half offshore in 14 feet of water to extracting out to 200 miles offshore in 10,000 feet of water. In the Gulf of Mexico as of November 2015, 33 mobile offshore drill- ing units were operating in water at depths of up to 10,000 feet, and more than 2,500 platforms were operating in shallow water (Baker Hughes n.d.; BSEE n.d.-b). According to a February 2016 report of the Energy Information Administration (EIA),17 oil production in the Gulf of Mexico is expected to account for 18 percent and 21 per- cent of the total forecast U.S. crude oil production in 2016 and 2017, respectively, even as oil prices remain low. EIA projects that the Gulf of Mexico will produce an average of 1.63 million barrels per day in 2016 and 1.79 million barrels per day in 2017. The history of accidents and spills in the Gulf of Mexico and else- where in the world highlights the need for every company doing busi- ness offshore to implement a safety system and adopt a strong safety culture as a corporate value. This need is further highlighted by the introduction of new technologies offshore, which bring their own sets of challenges, require specific training and expertise, and often require greater collaboration among all workers in the same facility or vessel. To protect workers, the public, equipment, and the environment, the indus- try and regulators need to work together to define minimum standards for compliance and to facilitate the exchange of information necessary to maintaining a strong safety culture. FINDINGS AND CONCLUSIONS • The number and severity of accidents that have occurred on the OCS indicate that the offshore oil and gas industry can be a dangerous busi- ness. While significant improvements in safety performance have been achieved over the past 40 years, unique logistical, oceanographic, oper- ational, and economic challenges complicate deepwater exploration and development. These challenges require that continuous improve- ment in the management of process and personal safety be a priority among operators and contractors. The number and variety of contrac- 17 https://www.eia.gov/todayinenergy/detail.cfm?id=25012. Accessed February 26, 2016.

History of the Offshore Oil and Gas Industry and the Development of Safety Efforts 85 tors operating on a single facility can further increase the challenges associated with maintaining a common safety culture, effectively man- aging personnel, and executing the responsibility of maintaining safe working conditions. • High-impact accidents have very low probability. Although accidents, such as the Deepwater Horizon blowout, with extensive repercussions are unlikely, they can have severe consequences for individuals, the peo- ple in the communities that support the oil and gas industry, the assets of the operator and its contractors, the environment, and the industry as a whole when they do occur. • Regulatory actions such as SEMS, SEMS II, and BSEE’s Safety Cul- ture Policy Statement reflect regulators’ awareness of the importance of safety management and safety culture in preventing catastrophic accidents. However, having safety management systems is necessary, but not sufficient, for having a robust safety culture. • The establishment of COS by industry leaders and the increased number of new and updated standards and recommended practices indicate these leaders’ concern about the safety culture of the organi- zations that work offshore and their desire to provide tools that can assist in implementing safety systems and processes. Yet while leaders in the offshore oil and gas industry have begun addressing safety culture, not all industry participants have done so. Necessary next steps are participation in COS by all offshore companies and a wider and deeper commitment to improving safety culture throughout the industry. REFERENCES Abbreviations BSEE Bureau of Safety and Environmental Enforcement CSB U.S. Chemical Safety Board NASA National Aeronautics and Space Administration NOIA National Ocean Industries Association OTA Office of Technology Assessment Arnold, K. E. 2015. First-Hand: History of Operational Safety Awareness in the US Gulf of Mexico 1964 to 2014: A Personal Recollection by Kenneth (Ken) Arnold. http://ethw.org/First-Hand:History_of_Operational_Safety_Awareness_

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