This chapter begins with background on the U.S. offshore oil and gas industry and the mission of the U.S. Department of the Interior’s (USDOI’s) Bureau of Safety and Environmental Enforcement (BSEE) to promote offshore safety and environmental protection. The background is helpful for understanding the scope and purpose of the study, which was commissioned by BSEE to inform the many decisions it faces in trying to evolve its inspection program in line with a changing offshore energy landscape. The nature of these decisions is reflected in the diverse questions asked by BSEE in the study charge. Thus, following the background section, the specific elements of the charge are discussed and then framed according to what the committee perceives as BSEE’s interest in making its inspection program not only more agile and efficient, but also better suited to the agency’s mission centered on promoting safety and environmental protection.
Under the United Nations Convention on the Law of the Sea,1 a coastal nation has legal authority over economic activity, including extraction of resources in the seabed, within its Exclusive Economic Zone (EEZ). The EEZ extends as much as 200 nautical miles (~230 standard miles) from
1 The United States is not a signatory to the International Law of the Sea but observes it as a codification of customary international law.
the coastline.2 In the United States, states have jurisdiction over waters 3 nautical miles (~3.4 standard miles) from their coastline, except on the Gulf of Mexico’s coastline in Florida and Texas, where state jurisdiction extends approximately 9 nautical miles (~10 standard miles) (Vann 2018). The remaining waters, seabed, and subsoil in the U.S. EEZ are under the jurisdiction of the federal government and are referred to as the Outer Continental Shelf (OCS). The OCS’s outer boundaries are depicted in Figure 1-1 for the Alaska, Atlantic, Gulf of Mexico, and Pacific coastlines.
For decades, energy companies have leased 9-square-mile sections, or blocks, of the OCS from the federal government for exploration, development, and production of oil and gas under the authority of the Outer Continental Shelf Lands Act (OCSLA) of 1953 and its amendments.3 Upon acquiring the lease, the lessee can commence a series of energy exploration and production activities that can span a period of a few years to decades. These activities, many of which are performed by specialized contractors, will usually begin with seismic surveying and field evaluation, which may be followed by exploratory and developmental well drilling and completion (e.g., casing, sealing, and temporarily plugging the well). If conditions merit, the lessee or its contractors will design, construct, and install production facilities, including any additional wells, for hydrocarbon extraction and processing, and pipeline infrastructure. When no longer economically viable, the wells will be permanently plugged as part of the facilities’ decommissioning.
To further the public interest in safe and environmentally responsible offshore operations, OCSLA authorizes USDOI to regulate the industry. USDOI established BSEE in 2011 as a successor to other departmental agencies that have exercised this OCSLA regulatory authority since the 1950s. Accordingly, BSEE is responsible for issuing and implementing a long-standing body of offshore safety and environmental regulations that has grown over the years to account for nearly all safety-related aspects of offshore operations, including drilling, well completion and operation, production systems, pipelines, and platform and structure design and construction.
In addition to issuing regulations, BSEE is responsible for verifying and enforcing regulatory compliance. As interpreted by BSEE and its predecessors, OCSLA requires at least one on-site compliance inspection per year of each offshore facility, and the inspections must include (but are not limited to) all required safety equipment and procedures intended to prevent or
2 For additional information on jurisdiction over submerged seabed and subsoil, see https://www.un.org/Depts/los/convention_agreements/convention_overview_convention.htm.
3 Public Law 95-372 as amended on September 18, 1978. See http://www.gpo.gov/fdsys/pkg/STATUTE-92/pdf/STATUTE-92-Pg629.pdf.
ameliorate blowouts, fires, spills, or other major accidents.4 To fulfill these requirements, BSEE inspection personnel usually travel by helicopter to an offshore facility, where they may also verify compliance with the regulatory requirements of certain other federal agencies, including the U.S. Coast Guard (USCG), the U.S. Environmental Protection Agency, and the Pipeline and Hazardous Materials Safety Administration (PHMSA) under established interagency agreements.5 BSEE inspectors will also read oil and gas production meters (which is not a safety-related function) per agreement with its sister agency responsible for assessing and collecting royalties, the Office of Natural Resources Revenue.
Because the Gulf of Mexico (GOM) accounts for the vast majority of the country’s oil and gas produced offshore, a large majority of BSEE inspections take place on drilling rigs and production facilities in this OCS region. As discussed more in Chapter 2, the GOM has been the predominant source of domestic oil and gas produced offshore for more than 70 years. Early production in the GOM was limited to relatively shallow waters (less than 500 feet deep), but this is no longer the case as production from
4 43 U.S.C. § 1348(c): Onsite inspection of facilities.
5 USCG is responsible for regulating the safety of vessels, which includes mobile drilling rigs and floating platforms. PHMSA regulates the safety of offshore transportation pipelines. The two agencies have agreements with BSEE on the division and coordination of inspection duties and other matters. These and other interagency agreements are found at https://www.bsee.gov/newsroom/partnerships/interagency.
facilities in water 500 feet or deeper has grown dramatically.6 From 1990 to 2018, production of oil from platforms operating in waters 500 feet or deeper increased from less than 5 percent to more than 90 percent of total GOM production, or from about 12 million barrels per year to almost 642 million barrels per year.7 During this period, production from facilities in shallow waters fell by nearly 40 percent.
Yet, even with the decline in GOM production from shallow waters, the number of facilities in shallow waters continue to outnumber those in deeper waters. As shown in Table 1-1, at the beginning of 2021, 74 production platforms were operating in the OCS in water 500 feet or deeper, all located in the GOM, compared with nearly 1,700 shallow-water platforms. The Pacific and Alaska regions include approximately two dozen additional platforms that are not included in Table 1-1.
TABLE 1-1 Total Number of GOM Production Platforms by Water Depth
|As of January 1 of||Total||Platforms <500 Feet Water Depth||Platforms ≥500 Feet Water Depth|
NOTES: The numbers include platforms that are actively producing and some that are no longer producing but not fully decommissioned. GOM = Gulf of Mexico.
6 Deepwater was historically defined as having a depth greater than 500 feet. However, over the past decade, the definition of deepwater has increased to depths greater than 1,000 feet. The historical definition is used here to maintain consistency with statistical data, as shown in Table 1-1.
As discussed in more detail later in this report, these industry trends have had significant implications for BSEE’s inspection program. While inspectors have observed a steady decline in the number of shallow-water facilities that they must visit annually, the legacy facilities that they do visit are aging and still relatively numerous when compared to facilities in deeper water. At the same time, the growth in facilities operating in deeper water has created its own challenges for BSEE inspectors, both logistically and technically. The deeper water fields can take much longer to reach by helicopter and involve larger, more varied, and more complex facilities in terms of their components, equipment, and operations.
The safety and environmental concerns associated with offshore oil and gas production have also been changing as activity in deeper water has increased relative to shallow-water activity. Both drilling and production operations in the deeper waters of the OCS are more complex and can be more hazardous, as harsh marine and weather conditions can hinder access to and evacuation from locations that are often remote; deepwater reservoirs are more likely than shallow-water reservoirs to have higher pressures and higher temperatures to produce high well flow rates; and the larger and remote deepwater facilities must be designed to accommodate a wide range of hydrocarbon production, processing, storage, and transportation activities while also providing living quarters for dozens of workers. Whereas many shallow-water facilities are close to shore and manned only part of the day, the deepwater facilities are usually manned 24 hours per day due to their large size, complexity, and distance (usually 50 miles or more) from shore. The exposure of operator personnel can therefore be greater in the event of a serious incident involving a deepwater facility.
Compared with shallow-water facilities, the companies that own and operate deepwater production facilities tend to be larger and better resourced, usually multinational energy corporations. However, the complexity of deepwater operations also means that these operators are more likely than operators of shallow-water facilities to depend on myriad contractors to supply the large number of specialized services and technologies needed, with attendant organizational complexities and challenges associated with coordinating decisions, diverse workforces, and communications. While the large energy companies usually retain day-to-day operating control over their deepwater installations, the organizational complexities (including differences in organizational cultures) can nevertheless create safety risks if not properly recognized and managed.
Deepwater drilling requires a high degree of specialization and sophistication, and therefore this service has become dominated by a few companies that compete for business globally and have the resources to own and operate rigs of various technology types and design generations as
required in the field.8 Their services are expensive due to the large capital investment and high daily operating cost of the technically advanced deepwater drilling rigs and the skilled personnel required to operate them and to complete wells. Demand for exploring and developing new wells, and thus the services of these specialized contractors, is highly sensitive to energy prices, as evident by developments during the 2020 pandemic. According to BSEE data,9 about 42 mobile drilling rigs were operating in the GOM during 2018 but the number dropped to fewer than 20 by September 2020 as the price of oil declined sharply.10 Whether the economic repercussions from the pandemic, coupled with high cost of owning and operating the increasingly sophisticated rigs needed for offshore drilling, result in further consolidation toward increasingly larger drilling contractors is an open question, but some industry reports suggest the likelihood of such a development.11 It also is an open question whether the stopping and restarting of these large, complex rigs, including the need to re-staff them and ensure that new personnel have sufficient training and that returning personnel retain competencies, will create special hazards.
By comparison, the owners and operators of shallow-water production facilities are much more likely to be investors and small companies that specialize in lower-capital and lower-yield operations. Indeed, the management of these facilities is often fully contracted out by the investor owners. Although they are not nearly as complex as deepwater facilities, shallow-water facilities can have their own potential safety concerns. These include ensuring that facilities and structures are maintained in safe conditions, potentially in the face of declining production and profitability; making sure end-of-life wells and platforms are safely plugged and decommissioned; and ensuring that contract operations are cohesive and managed well by small companies whose staff may be located far from the facility.
The catastrophic consequences that can result from not controlling the hazards and risks from offshore drilling and production became starkly evident following the April 2010 well blowout and explosion on the Deepwater Horizon drilling rig,12 which caused the deaths of 11 workers and
9 T. Trosclair, BSEE, presentation to the committee, March 2019.
10 See https://rigcount.bakerhughes.com/na-rig-count. The average price of West Texas Intermediate in 2018 was $65 per barrel, compared with $39 in 2020 through mid-December. See https://www.macrotrends.net/2516/wti-crude-oil-prices-10-year-daily-chart.
12 For background on the blowout and explosion, see Chief Counsel 2011, NAE and NRC 2012, and TRB 2016. See also U.S. Chemical Safety Board reports at https://www.csb.gov/macondo-blowout-and-explosion.
the release of an estimated 5 million barrels (more than 200 million gallons) of oil. This disaster, which was unprecedented in U.S. waters, prompted a national debate about how offshore oil and gas operations should be regulated, to what extent traditional regulations can be expected to minimize the likelihood of major incidents, and how the regulations should be enforced by the responsible agency, which at the time was USDOI’s Minerals Management Service (MMS).
MMS’s regulatory approach was criticized as being one-dimensional, focused almost exclusively on verifying that operators were in compliance with the regulations, and thus encouraging a “compliance mindset” among offshore operators intent on meeting the prescriptive list of regulatory requirements.13 USDOI created BSEE14 in October 2011 to replace MMS. BSEE was charged with making changes to its regulatory program to address concerns that the body of offshore regulations had become too focused on controlling individual risk factors—and that inspection approaches had followed suit—while paying insufficient attention to controlling system-level risks that arise from interactions among technology and humans.15 As is evident from the Deepwater Horizon disaster, the complex designs and operations of deepwater facilities were creating many facility- and operations-specific risks that could not be known by the regulator, much less controlled by a collection of narrowly targeted and detailed requirements covering individual components, safety equipment, and processes. Moreover, important factors related to system risk and health, such as leadership, decision making, and managing change and human behavior, cannot be defined in and assessed in a detailed list of regulatory commands. More explicit responsibility for ensuring safety would need to be placed on the operator, whose knowledge of their own facilities, operations, and processes would put them in a better position to identify and control these facility- and context-specific risk factors.
Recognizing this need, one of BSEE’s first actions was to add a new element to its regulatory program requiring offshore operators to establish Safety and Environmental Management Systems (SEMS)16 for controlling
14 Initially, oversight authority under OCSLA rested with the U.S. Geological Survey. MMS had authority for offshore oil and gas operations from 1982 to 2010. In June 2010, MMS was renamed the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) as a response to the Deepwater Horizon incident. On October 1, 2010, BOEMRE’s royalty and revenue management functions were transferred to a new bureau, the Office of Natural Resources Revenue. On October 1, 2011, USDOI reorganized the remainder of BOEMRE into two new, independent bureaus—BSEE and the Bureau of Ocean Energy Management.
16 See BOEMRE 2010 and BSEE 2013. SEMS regulations in Subpart S are available at http://cfr.regstoday.com/30cfr250.aspx#30_CFR_250_p_SUBPART_S.
their sources of risk in a comprehensive manner that looks “beyond the prescriptive, compliance-based approach” (BSEE 2017, p. 8). As discussed in Chapter 3, the SEMS rule drew from industry standards and recommended practices for safety management systems and because its purpose was to ensure that offshore operators themselves would become more cognizant of and deliberate in controlling factors that can lead to failures, including those arising from system-level interactions. In so doing, the rule sought to harness the special information advantage that an operator possesses about the details of their operations and facilities. The operator was recognized as being in a better position than the regulator to know what actions should be taken to eliminate and control these context-specific hazard and system risks. For example, the SEMS rule requires that offshore operators identify and assess all possible hazards and take steps to reduce their likelihood and minimize their consequences, such as by installing safety equipment, changing designs, and increasing inspections and testing. Box 1-1 describes terms and concepts associated with hazards and risk analysis. A SEMS program must also contain many other elements in accordance with American Petroleum Institute Recommended Practice 75, including procedures and programs for the investigation of incidents, management of change, workforce safety training and communication, emergency response and control, and documentation and record-keeping.
In requiring operators to develop SEMS programs, BSEE did not withdraw its existing body of prescriptive regulations or discontinue facility inspections. Instead, the requirement for operators to develop and implement a SEMS program was adopted to supplement the regulations. Facility inspections would remain central to verifying compliance with regulations other than the SEMS rule, usually consisting of BSEE inspection personnel flying by helicopter to a platform, observing the general condition of the structure, witnessing safety device testing with the operator, and reviewing paperwork in accordance with a set of guidelines for items to inspect known as the Potential Incident of Noncompliance (PINC) list. As in the past, inspectors were tasked with citing violations of items on the PINC list by issuing either a warning to take corrective action, a corrective action with a specific deadline, or a shut-in notice requiring action before an activity can resume.
However, the addition of SEMS to BSEE’s regulatory program created a new enforcement and compliance assurance challenge that could not be addressed by these PINC-based facility inspections. In requiring the development and implementation of a SEMS program, BSEE made it clear that it was expecting more accountability from operators, both in identifying hazards that need to be controlled and ensuring that all significant risks are appropriately managed. Because standardized facility inspections and PINC list reviews were clearly not suited for ensuring compliance with
each operator’s customized SEMS program, BSEE required operators to have their programs audited by an accredited third party.17 The audits are intended to ensure that all required elements of a SEMS program are satisfied and that operators understand and execute each element. Although Incident of Noncompliance (INC) violations detected through BSEE’s traditional inspection program can provide some insight into whether an
17 Under agreement with BSEE, the American Petroleum Institute’s Center for Offshore Safety is an approved accreditation body responsible for the development of good practice documents for SEMS programs and for accrediting and ensuring that third-party auditors (audit service providers) meet the program’s goals and objectives. See https://www.centerforoffshoresafety.org/Guidelines-and-Reports/SEMS%20Good%20Practices.
operator’s program is effective and being conscientiously followed, they cannot provide a complete picture of how well an operator’s SEMS program is working to eliminate and control risks. This is because inspections only determine if an operator is in compliance with the regulation, and they do not seek to understand how an operator’s safety management system may have allowed or caused an INC.
Although the SEMS rule was promulgated by BSEE in the aftermath of the Deepwater Horizon disaster, the idea that operators should be required to create and apply such safety management plans was not new. Indeed, as early as 1993, MMS had considered requiring all operators to establish a SEMS-like program, and as noted above, the offshore industry had established guidelines for safety management systems.18 Moreover, a heavy reliance on safety management systems is the hallmark of offshore regulatory regimes in some other parts of the world. Canada, Norway, and the United Kingdom require the operator, referred to as the “duty holder,” to undertake rigorous hazard and risk analyses and management planning, and to act in accordance with the plans. For example, in the United Kingdom,19 operators are required to define their plans in a document called a “safety case,” operators in Canada20 are required to identify and control hazards and risks following a management program, and operators in Norway21 are required to do the same in a document referred to as “an acknowledgment of compliance (AOC)” certificate. Other North Sea countries, including Denmark and the Netherlands, have introduced similar requirements for safety management plans and programs (TRB 2018).
In having responsibility for enforcing its long-standing body of regulations through facility inspections while also ensuring that high-quality SEMS programs are in place, BSEE faces a number of practical challenges. The sheer number of facility visits required can be a formidable challenge. BSEE is required by statutory interpretation to inspect each offshore facility at least once per year. Because of the large number of facilities in the GOM alone, BSEE’s inspection force can be stretched thin and inspection time may be limited to a few hours. The vagaries of weather, combined with the travel distances, can create significant logistics and scheduling complications. Faced with these challenges, BSEE has been modifying and augmenting its programs in various ways. For instance, it has sought to supplement its inspection program with a more risk-based approach for identifying facilities’ components and activities that warrant closer scrutiny.
In 2012, BSEE commissioned the Argonne National Laboratory to develop a model to quantify the potential risks associated with individual facilities. The aim of the risk-based program, which has undergone pilot testing and a series of modest revisions over several years, is to make more effective and efficient use of the agency’s enforcement capabilities by identifying higher-risk facilities, activities (e.g., lifting), and components (e.g., gas detection systems) to focus supplemental inspections (BSEE 2019, p. 3). In addition, BSEE has been considering how it can employ new technologies for more effective and efficient monitoring and verification of regulatory compliance. For example, advances in the remote monitoring of blowout prevention systems and other safety-critical equipment could reduce the need for BSEE inspectors to visit facilities when systems are being tested. Additionally, BSEE has placed greater emphasis on the collection and analysis of data from incident reports and the inspection of operator records while offshore to allow more time to inspect equipment when visiting a facility. In 2015, the agency enlisted the U.S. Department of Transportation’s Bureau of Transportation Statistics to develop and manage a voluntary and confidential “near-miss” incident reporting system, called SafeOCS.22 The idea is that the anonymized information from SafeOCS can be shared with BSEE, industry, and the public to help identify safety and environmental problems in their incipiency.
In a related initiative, BSEE has been emphasizing the importance of making safety assurance a core organizational value of operators and their contractors, as expressed in the agency’s safety culture policy statement.23 The increasing complexity of offshore operations and the large number of specialized service contractors are viewed as complicating factors in ensuring consistent safe behavior on a facility. In this regard, a well-designed and well-executed SEMS program is seen as essential but likely to be more effective when implemented within the broader context of an operations-wide commitment to safety that involves operators and their contractors.
Nearly 10 years after BSEE was created following the Deepwater Horizon disaster, many questions remain about how its inspection program should function and adapt to a continually changing offshore energy landscape. Even as it seeks to improve the effectiveness and efficiency of its inspection program, BSEE wants to make it better suited and more complementary to its efforts to both prompt and support offshore operators in developing effective safety management systems rooted in strong safety cultures. It is because of this interest that BSEE reached out to the National Academies for this study of its inspection program and for advice on how
the program could be improved by taking into account its current methods and accomplishments, new initiatives such as risk-based inspections, and approaches employed by regulators from other countries and other high-hazard industries. The study charge and its varied themes and questions are discussed next, followed by an explanation of how and why the study committee chose to frame and address them in a manner that allows for a more cohesive report aimed at providing strategic advice.
Seeking an independent review of its inspection program, BSEE asked the National Academies to convene an expert committee to consider several topics, or themes, of interest, which the agency elaborated on with the questions shown in Box 1-2.
The first two themes (Themes 1 and 2) concern BSEE’s ongoing performance and initiatives, asking for a review of whether the inspection program is accomplishing its mission and for an evaluation of the agency’s approach to risk-based inspections. The accompanying questions ask for advice on improving inspection performance through means such as clarifying the role of the regulator with reference to the regulated entity (e.g.,
operators, contractors), validating that operators are following their SEMS programs (including questions about the role of inspections for this purpose), and making more effective use of information (including process- or system-level risks) for guiding inspection methods and activity.
In Theme 3, BSEE asks if there are insights that can be gleaned from the practices of offshore safety regulators in other countries, including the North Sea countries of the United Kingdom and Norway. As discussed above, these countries have long relied on regulatory approaches that require operators to identify and manage their risks in ways that allow for more flexibility in the means for doing so but also that demand operator accountability. In requiring operators to develop, implement, and execute SEMS programs, BSEE has adopted aspects of this North Sea regulatory approach. BSEE also wants to know how regulators who use this approach monitor and establish compliance, as well as how they motivate continuous learning and improvement by the regulated firms.
Theme 4 asks for a review of the role of third parties in supporting inspection and verification functions, particularly with regard to SEMS programs. One reason why BSEE required SEMS is that the offshore industry is increasingly characterized by a high level of heterogeneity in facilities and in industry practices, especially as deepwater facilities and operations have become larger and more complex. In such circumstances, the regulator can have difficulty identifying generally applicable requirements for all potential hazards and sources of risk and must therefore depend on the facility- and operation-specific knowledge of the regulated entity for ascertaining and controlling their hazards and risks. Regulators can struggle, however, in establishing their own roles in verifying that the regulated entity is following its customized safety plans, particularly in determining if and how inspections should be used for such purposes. Acknowledging its own struggles in this regard, BSEE seeks the committee’s views on the role of agency inspectors vis-à-vis third-party auditors for assessing and ensuring SEMS compliance.
Theme 5 considers the role that technologies can play in BSEE’s inspection program, including the possible role of remote real-time facility and operations monitoring systems. The agency asks whether there are certain functions that are best suited for BSEE to engage in remote monitoring that will promote safety and environmental protection and whether there are other technologies that could be used by the agency for this purpose. Of interest is how BSEE can better utilize real-time monitoring and other technologies to improve its role as a regulator while also enabling the operator to retain sufficient operational control.
Finally, Theme 6 is explicit in asking for advice to help BSEE evolve its inspection program in the near to longer term. As discussed above, BSEE
and the regulatory agencies that preceded it have long faced the challenge of designing appropriate regulations and structuring methods of ensuring compliance through inspections while encouraging, supporting, and promoting improved safety more generally. The safety regulations and means of ensuring compliance with them are often scrutinized after a major incident, but regulatory and enforcement effectiveness can be inherently difficult to assess when their purpose is to reduce catastrophic failures that are rare (TRB 2018, p. 1). The Deepwater Horizon tragedy triggered the latest changes to the body of offshore safety regulations (most notably the requirement for SEMS) that BSEE administers and the methods used for both guiding (e.g., risk-informed targeting of inspections) and conducting compliance verification (e.g., third-party audits of SEMS programs and their execution). These changes have been superimposed on a regulatory regime and accompanying inspection program that evolved over decades and that cannot be easily changed. The questions asked in this final theme recognize the magnitude of the challenge that BSEE faces in having to make changes to policies, practices, personnel used to do the inspections, and in using technologies to align its regulatory and inspection program missions.
The more than 20 questions asked by BSEE are interrelated, both within and across themes. For instance, the subject matters of Themes 1, 3, and 4 involve questions about the use of management-based regulations (e.g., SEMS), including how to design them, validate compliance, and evaluate effectiveness informed by the practices of other regulatory agencies in the United States and abroad. Questions about using risk-based means to inform the deployment of inspections and other enforcement capabilities are contained in Themes 1 and 2, while Themes 5 and 6 ask for advice on how BSEE should use technologies to improve and evolve its inspection program. In considering these many specific but often interrelated themes and questions, the study committee came to realize that a study that addresses each theme and question individually would result in a less cohesive report that is short on strategic-level advice.
Intent on advising BSEE in a manner that informs the strategic direction of its inspection program, the study committee considered the topics of the six themes and accompanying questions in their entirety, and in a manner that better reveals the many challenges that the agency faces as it tries to align its policies, procedures, and programs to achieve its mission as the offshore oil and gas industry keeps evolving and adding new technological capabilities and as the safety and environmental risks of offshore activity receive increased public scrutiny. In considering the study charge and
contemplating BSEE’s mission-related goals expressed in its own strategic plan,24 the committee perceived BSEE’s aspirations as being in line with the following five goals:
- To be more outcome-oriented by focusing more directly and proactively on approaches for reducing the occurrence and severity of offshore incidents and recognizing that measures of total inspections and compliance with individual regulations may not be indicative of mission progress. This goal is evident, for instance, in questions posed in the study charge asking how BSEE can improve its current Risk-Based Inspection program and its measurements of risk reduction and safety enhancement.
- To be more data-informed by marshaling and leveraging information obtained from SEMS audits, incident and near-miss reports, remote monitoring data, equipment failure reports, inspection results, and other data sources to guide outcome-oriented inspection policies, programs, and procedures and measure their effectiveness in reducing incidents and their severity. This goal is imbued in many of the questions in the study charge asking about transparent, data-driven decision making.
- To be more holistic in the treatment of risk by considering the varied causes and contributors to incidents and the varied means that can be employed for reducing them, including the consideration of environmental, technology, organizational, process, and human behavior–related risk factors. Here again, this goal is evident in a number of the questions asked in the study charge, including those asking whether the inspection program places sufficient emphasis on process safety, barrier integrity, risk management, and effective safety management systems (e.g., SEMS).
- To be more discerning of the opportunities and challenges associated with new technologies, such as by being attuned to the promise of new technological capabilities for improved decision support and inspection functions, but clear-eyed about their potential limitations. Questions in the study charge about how the agency can make more effective use of real-time monitoring systems suggest that BSEE anticipates a future inspection program that makes judicious use of such technologies and the enhanced capabilities they can offer.
- To be more adaptable to a changing offshore landscape by recognizing that the nature of risks and means for reducing risks are changing as the offshore industry changes, requiring an inspection
- program that has increased agility and more varied capabilities. This goal is signified by the topics of many of the themes and questions in the study charge, including BSEE’s interest in the possible role of third parties and technologies for inspection functions and the approaches and practices used by regulators in other countries and sectors.
The committee believes that these five aspirational goals are not only evident in the study charge but also in a number of BSEE initiatives mentioned above and in other initiatives and strategic documents that will be discussed in this report. It merits pointing out that BSEE’s budget request for fiscal year (FY) 2021 explains the agency’s intention to align its policies, programs, and procedures in accordance with the changes in the risk profile of the offshore industry, particularly changes arising from increasing activity in deeper water, where facilities are not only larger and more complex but produce large volumes from high-temperature and high-pressure reservoirs and have many more workers on site, all of which demand vigilance to prevent catastrophic events.25 Similar intentions have been expressed in BSEE’s past budget requests, strategic plans, and annual reports, all emphasizing the agency’s responsibility to not only administer and enforce safety and environmental regulations, but also to conduct assessments of new technologies and collaborate with industry in making improvements to the offshore safety culture (BSEE 2020).26
The committee chose to frame the study charge in terms of these five aspirational goals as a means of providing BSEE’s leadership with more cogent and strategic advice. Thus, each of the study’s findings and recommendations is connected to a goal, while recognizing that the goals themselves are complementary and interrelated, all aimed at making the inspection program a more multidimensional and effective contributor to BSEE’s safety and environmental stewardship mission.
The remainder of the report is organized into four chapters. Chapter 2 provides background on key features of the offshore operational environment, as necessary for understanding the associated safety and environmental challenges relevant to BSEE’s inspection program. As part of this discussion, consideration is given to industry developments since the Deepwater
25 BSEE FY2021 Budget Request, pp. 7–8. See https://www.doi.gov/sites/doi.gov/files/uploads/fy2021-budget-justification-bsee.pdf.
Horizon disaster. Chapter 3 reviews OCSLA, and how its goals and requirements have come to shape the BSEE inspection program. The chapter describes BSEE’s organization generally and specifically with regard to the inspection program, including relevant regulations, policies, procedures, and initiatives. Consideration is given in this chapter to relevant regulatory and inspection approaches employed by regulators of the offshore industry in other countries and of other high-hazard industries in the United States.
Chapter 4 considers the goals of a safety and environmental regulatory agency at the most fundamental level, and to the kinds of challenges that the agency can face in pursuing them through the use of inspections and other means. Several of BSEE’s current programs and initiatives that align with five aspirational goals are discussed, indicative of BSEE’s interest in evolving and innovating its inspection program. Chapter 5 identifies additional opportunities for BSEE to make progress toward these goals and recommends emphasis areas. The chapter also relates these findings and recommendations to the specific themes in the study charge.
ABS (American Bureau of Shipping). 2020. Guidance Notes on Risk Assessment Applications for the Marine and Offshore Industries, May. https://ww2.eagle.org/content/dam/eagle/rules-and-guides/current/other/97_riskassessapplmarineandoffshoreoandg/risk-assessment-gn-may20.pdf.
BOEMRE (Bureau of Ocean Energy Management, Regulation, and Enforcement). 2010. Oil and Gas and Sulphur Operations in the Outer Continental Shelf—Safety and Environmental Management Systems; Final Rule. Federal Register, Vol. 75, No. 199, October 15, pp. 63610–63654. https://www.federalregister.gov/d/2010-25665.
BSEE (Bureau of Safety and Environmental Enforcement). 2013a. Final Safety Culture Policy Statement; Notice. Federal Register, Vol. 78, No. 91, May 10, pp. 27419–27421. https://federalregister.gov/a/2013-11117.
BSEE. 2013b. Oil and Gas and Sulphur Operations in the Outer Continental Shelf—Revisions to Safety and Environmental Management Systems; Final Rule. Federal Register, Vol. 78, No. 66, April 5, pp. 20423–20443. https://www.federalregister.gov/d/2013-07738.
BSEE. 2017. Annual Report 2016. U.S. Department of the Interior, Washington, D.C. https://www.bsee.gov/sites/bsee.gov/files/bsee_2016_annual_report_v5_final_january2017.pdf.
BSEE. 2019. A New Era of Management: Driving Safety Performance and Environmental Stewardship Improvements Beyond Regulation Through Innovation and Collaboration. Risk-Based Inspections Assessment Report, May. https://www.bsee.gov/sites/bsee.gov/files/reports/bsee-rbi-2019.pdf.
BSEE. 2020. Budget Justifications and Performance Indications: Fiscal Year 2021. U.S. Department of the Interior, Washington, D.C. https://www.doi.gov/sites/doi.gov/files/uploads/fy2021-bsee-budget-justification.pdf.
Chief Counsel. 2011. Macondo: The Gulf Oil Disaster. Chief Counsel’s Report, National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling.
Deepwater Horizon Study Group. 2011. Final Report on the Investigation of the Macondo Well Blowout. Center for Catastrophic Risk Management, University of California, Berkeley.
NAE and NRC (National Academy of Engineering and National Research Council). 2012. Macondo Well Deepwater Horizon Blowout: Lessons for Improving Offshore Drilling Safety. The National Academies Press, Washington, D.C.
TRB (Transportation Research Board). 2012. Special Report 309: Evaluating the Effectiveness of Offshore Safety and Environmental Management Systems. Transportation Research Board, Washington, D.C.
TRB. 2016. Special Report 321: Strengthening the Safety Culture of the Offshore Oil and Gas Industry. Transportation Research Board, Washington, D.C.
TRB. 2018. Special Report 324: Designing Safety Regulations for High-Hazard Industries. Transportation Research Board, Washington, D.C.
Vann, A. 2018. Offshore Oil and Gas Development: Legal Framework. Congressional Research Service 7-5700. RL33404. https://fas.org/sgp/crs/misc/RL33404.pdf.
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