BOEMRE Director Delivers Remarks at World National Oil Companies CongressMeets with Officials to Discuss Offshore Safety and Regulatory Issues
LONDON — Bureau of Ocean
Energy Management, Regulation and Enforcement (BOEMRE) Director
Michael R. Bromwich delivered remarks today at the 5th annual World
National Oil Companies Congress in London. The World National Oil
Companies Congress brings together senior executives from national
oil companies and government leaders from around the world to
discuss global energy issues. Director Bromwich is attending this
year's meeting to further the bureau’s efforts to expand bilateral
and multilateral cooperation with regulatory counterparts around the
globe, especially in light of the recommendations of the National
Commission on the Deepwater Horizon Oil Spill and Offshore Drilling
stressing the importance of sharing experiences across different
international systems and establishing global standards and best
practices.
While in the United Kingdom, Director
Bromwich will also address the World Well Integrity Congress and the
International Association of Oil and Gas Producers’ Management
System Workshop. Director Bromwich will also meet with U.K.
officials to discuss their regulatory framework and how certain
aspects of the U.K. regulatory system, such as the safety case
model, are applied in practice.
In today's speech, Director Bromwich
discussed the aggressive and far-reaching steps that BOEMRE is
taking to renew its commitment to the responsible stewardship of the
U.S. Outer Continental Shelf, some important recent international
developments in the realm of offshore drilling, and a comprehensive
set of guiding principles and expectations related to the future of
offshore exploration and development.
Director Bromwich’s remarks, as
prepared for delivery, are below:
Good afternoon. It is great to be
here with you today. I want to start by thanking the conference
organizers for putting together such an impressive event and for
inviting me to speak about the future of offshore oil and gas
regulation in the United States.
It was exactly a year ago yesterday that I became Director of the
BOEMRE, which is the agency responsible for regulating offshore
drilling and production in the United States. We renamed the agency
to better reflect its mission but had a massive task ahead of us:
undertaking a top-to-bottom reorganization of the agency and
implementing major regulatory reforms, while at the same time
responding to the worst offshore oil spill in United States
history.
The tragic loss of life and the
enormous, immediate, and visible damage to the environment from the
Deepwater Horizon tragedy were a wake-up call for industry and
government alike, sending a clear message that we had to take a
good, hard look at existing safety technologies, practices, and
regulations and make immediate, and lasting, improvements.
Over the past year, my staff and I
have been working extremely hard to do just that.
Today, I will share with you the
enormous changes that we are implementing. I will also describe
some important recent international developments that underscore the
value and importance of international cooperation and collaboration
in the realm of offshore drilling. Finally, I will outline a
comprehensive set of guiding principles for the regulation of
offshore drilling and development.
I. The BOEMRE Reorganization
Let me begin by talking about the structural reforms we are putting
in place in the U.S. We are in the final stages of a comprehensive
reorganization of the former Minerals Management Service (MMS). That
agency had three conflicting missions: promoting resource
development, enforcing safety regulations, and maximizing revenues
from offshore operations.
Starting on October 1, these
functions will be carried out by three strong, separate agencies
within the Department of the Interior:
1. The Office of Natural Resources
Revenue, is responsible solely for collecting revenues from offshore
leases, and has been operating separately from the rest of the
agency since last October;
2. The Bureau of Ocean Energy
Management will be responsible for managing development of the
nation’s offshore resources in an environmentally and economically
responsible way; and
3. The Bureau of Safety and
Environmental Enforcement will enforce safety and environmental
regulations offshore.
In making the important structural
and design decisions that are shaping these two new agencies, we
have relied on several guiding principles:
• First, separating resource
management from safety oversight to allow our permitting engineers
and inspectors greater independence, more budgetary autonomy, and
clearer senior leadership focus. For BSEE, the goal is to create an
aggressive, tough-minded, but fair regulator that can effectively
evaluate the risks of offshore drilling, promote the development of
safety cultures in offshore operators, and keep pace with
technological advances.
• Second, ensuring that we create a
strong and effective BSEE so that it can properly carry out the
critical safety and environmental protection functions that are
central to its mission and that were historically under-funded
within MMS.
• Third, providing an organizational
structure that ensures that thorough environmental analyses are
conducted and that the potential environmental effects of proposed
operations are given appropriate weight during decision-making
related to resource management. We are placing our environmental
science and environmental analysis resources in BOEM to ensure that
leasing and plan approval activities are properly balanced and that
environmental considerations are fully taken into account at early
stages of the process, not after important resource decisions have
already been made.
But organizational changes alone are
not enough to address the institutional weaknesses of the past. That
is why we are taking concrete actions, over and above the
reorganization, to strengthen certain key functions. This includes
our environmental enforcement function, our inspections program, the
way we review and approve Applications for Permits to Drill, and the
way the agency deals with conflicts of interest. I want to share
with you some of the key improvements we are making in each of these
areas.
1. Strengthening Environmental
Enforcement
First, we have taken a number of steps to strengthen the role of
environmental analysis and enforcement in the new regulatory
framework.
• We have created the brand new
position of Chief Environmental Officer in BOEM to provide
institutional assurance that environmental considerations will be
given adequate weight in resource development decisions. This
includes the development of five-year plans, leasing decisions,
exploration and development plan reviews, and other decisions that
bear on resource management.
• We are also creating in BSEE a new
dedicated environmental enforcement and compliance program.
Historically, our overworked personnel have tried from time to time
to determine whether operators have fulfilled their environmental
commitments – in the form of stipulations and mitigations to
minimize the adverse impact of operations to the environment. But
the agency has never had personnel specifically dedicated to that
task. Now we will.
2. Improving Inspections
In addition to strengthening the role of environmental analysis and
enforcement, we have also taken a number of steps to improve our
inspections program.
• Earlier this month, we announced
that we would begin to use multiple-person, multi-disciplinary
inspection teams for offshore oil and gas inspections. The new
process will allow teams to inspect multiple operations
simultaneously and thoroughly and will enhance the quality of
inspections on larger facilities.
• In addition, we are creating for
the first time a National Offshore Training Center led by a training
director whom we are also currently seeking through a nationwide
search. The Director of the National Offshore Training Center will
develop national training strategies, curricula and programs to
maintain and improve the technical capabilities of offshore
inspections and compliance personnel throughout the bureau.
This will be a huge improvement on
what existed previously. In the past, our inspectors have learned
how to do their jobs through a combination of on-the-job training
and industry-sponsored courses aimed at teaching how certain types
of equipment function. The agency has never had a training center
dedicated to training inspectors on how to do their jobs. Now we
will.
3. Improving the Permit Application
and Review Process
We also recently announced improvements to the permit application
and review process. First, we published a permit application
checklist to assist offshore oil and gas operators in submitting
complete applications to drill. We also implemented a requirement
that BOEMRE personnel conduct completeness checks before beginning
an in-depth, substantive review of the application. This will allow
our staff to capture the major gaps in the submission early in the
review process. In addition, we developed clear permit review
priorities that will expedite our review. Finally, in the coming
weeks, we will launch an online tracking system, which will allow
operators to track the status of their applications.
4. Addressing Conflicts of Interest
We are also taking steps to address conflicts of interest within the
agency.
We have issued a tough new recusal
policy that will reduce the potential for real or perceived
conflicts of interest in our enforcement programs. Under the policy,
employees in our district offices, including our permitting
engineers and inspectors, must notify their supervisors about any
potential conflict of interest and request to be recused from
performing any official duty where such a conflict exists.
As a result, our inspectors are
required to recuse themselves from performing inspections of the
facilities of former employers. Also, our inspectors must report any
attempt by industry or by other BOEMRE personnel to inappropriately
influence, pressure or interfere with his or her official duties. A
recent internal review demonstrated approximately 50 instances of
our inspectors recognizing a conflict barred by the policy and
taking appropriate action to recuse themselves.
In the coming weeks, we will be
issuing a broader version of the policy that applies these ethical
standards across the agency.
In addition, we created the
Investigations and Review Unit (IRU), which is composed of
professionals with law enforcement backgrounds or technical
expertise who promptly respond to allegations or evidence of
misconduct and unethical behavior by Bureau employees.
The IRU also pursues allegations of
misconduct against oil and gas companies involved in offshore energy
projects when there is credible evidence that rules and regulations
have been violated. The IRU has already been a major contributor to
two important investigations conducted by the agency.
5. Augmenting the BOEMRE Workforce
We believe that these far-reaching organizational and procedural
changes will significantly enhance the bureau’s role as a steward of
our nation’s resources on the U.S. Outer Continental Shelf (OCS).
But we are not stopping at structural and procedural reform. We are
also infusing the agency with much needed new resources and new
personnel. We have already taken the first steps to accelerate our
hiring of subject matter experts to bolster existing expertise in
certain key areas. Specifically, we are looking for expertise in
well operations, production operations, safety and environmental
management systems, accident investigations, measurement systems and
deepwater drilling.
We are determined not to simply use
these additional resources and personnel to do more of what we have
done before. We need to learn from our shortcomings, address our
weaknesses, and figure out better and more efficient methods for
doing our work – both with respect to resource development as well
as safety oversight and enforcement.
6. Seeking Recommendations from
Internal and External Experts
To achieve this, last fall we created a number of Implementation
Teams, which have been hard at work for many months analyzing
critical aspects of BOEMRE’s structures, functions and processes,
and implementing needed changes. Through their work, these teams are
laying the foundation for lasting change in the way BOEMRE currently
does business and the way its successor agencies – BOEM and BSEE –
will do business in the future.
We will be aided to a great extent by
the recommendations that will flow from the implementation teams I
mentioned earlier. But we will seek guidance from other sources as
well.
One of those sources is the new Ocean
Energy Safety Advisory Committee, chaired by one of our nation’s
leading scientists, Dr. Tom Hunter. This committee includes
representatives of federal agencies, industry, and academia.
The 15-member committee has already
began its work on a variety of issues related to offshore energy
safety, including drilling and workplace safety, well intervention
and containment and oil spill response. This will be a key component
of a long-term strategy to address on an ongoing basis the
technological needs and inherent risks associated with offshore
drilling, and deepwater drilling in particular.
II. Regulatory Developments and the
Current Status of Offshore Drilling
In addition to reforming our organization and procedures, we have
developed and implemented a number of new regulations to improve the
effectiveness of government oversight of offshore energy development
and drilling.
First, the Drilling Safety Rule is an
important new rule prompted by Deepwater Horizon, creating tough new
standards for well design, casing and cementing – and well control
procedures and equipment, including blowout preventers.
For the first time, operators are now
required to obtain independent third-party inspection and
certification of the proposed drilling process. In addition, an
engineer must certify that blowout preventers meet new standards for
testing and maintenance and are capable of severing the drill pipe
under anticipated well pressures.
The second rule we issued is the
Workplace Safety Rule, which requires operators to systematically
identify risks and establish barriers to those risks and thereby
seeks to reduce the human and organizational errors that lie at the
heart of many accidents and oil spills.
This rule introduces for the first
time in the US regulatory regime performance-based standards similar
to those used by regulators in the North Sea. Operators in the U.S.
are now required to develop a comprehensive safety and environmental
management program that identifies the potential hazards and
risk-reduction strategies for all phases of activity, from well
design and construction, to operation and maintenance, and finally
to the decommissioning of platforms.
Finally, we will soon be issuing a
second proposed SEMS-related Rule, which will require third-party
audits of mandatory SEMS programs and will address additional safety
concerns that were not covered by the Workplace Safety Rule.
The proposed rule will enhance safety
for offshore workers and provide greater protection of the marine
environment through additional safety procedures, training programs,
notification obligations and strengthened auditing procedures.
In the very near future, we will be launching another major
rulemaking designed to further enhance offshore drilling safety.
This process will be broad, inclusive and ambitious. Our goal will
be a further set of enhancements that will increase drilling safety
and diminish the risks of a major blowout. It will address
weaknesses and necessary improvements to blowout preventers, as well
as many other issues.
In addition to these important new
rules, we have issued Notices to Lessees (or NTLs) that provide
additional guidance to operators on complying with existing
regulations.
• Last summer, we issued NTL-06,
which requires that operator’s oil spill response plans include a
well-specific blowout and worst-case discharge scenario – and that
operators also provide the assumptions and calculations behind these
scenarios. Our engineers and geologists then independently verify
these worst case discharge calculations to ensure that we have an
accurate picture of the spill potential of each well.
• Following the lifting of the
deepwater drilling moratorium last year, we issued NTL-10, a
document that establishes informational requirements, including a
mandatory corporate statement from the operator that it will conduct
drilling operations in compliance with all applicable agency
regulations, including the new Drilling Safety Rule.
Our regulatory changes over the past
year have been sweeping and swift, especially compared to the
historical pace of change. We worked through the policy and
implementation issues diligently and consulted frequently with
members of industry in both the Gulf of Mexico and in Washington to
provide guidance on complying with the rules through formal Notices
to Lessees, Q&As, and in-person meetings.
III. International Cooperation
A final – and very important – part of our long-term strategy
includes continuing and strengthening our collaboration with our
international counterparts.
Offshore regulators and senior policy
officials have much to gain from collaborating with their
counterparts in other countries to elevate the safety and
environmental soundness of offshore operations around the world. To
this end, in April, the Department of the Interior hosted ministers
and senior energy officials from twelve countries and the European
Union for the Ministerial Forum on Offshore Drilling Containment.
This was a historic meeting for the
Department – and it led to a fruitful dialogue about best practices
and how best to develop cutting edge, effective safety and
containment technologies. The meeting concluded with the unanimous
recognition that this dialogue should continue at the highest levels
of government. In the coming weeks, I will convene a Working Group
to address the best mechanism for continuing this dialogue.
We will also continue to work to
strengthen existing channels for international cooperation and the
sharing of best practices across different regulatory regimes.
For example, BOEMRE will continue its
participation with the International Regulators Forum (IRF), an
organization that BOEMRE helped to found in 1994 to facilitate the
cooperation and sharing of information among the leading offshore
regulators.
BOEMRE will also continue to
participate in a number of government-to-government initiatives to
share best practices and build regulatory capacity. BOEMRE experts
have participated in needs assessments and have conducted workshops
in Suriname, Uganda, Papua New Guinea and Liberia. BOEMRE also
continues its long-term technical assistance with the governments of
Iraq and India. Later this month, BOEMRE will host a delegation from
Mexico for the first of a series of information exchange workshops
to fulfill the Secretary’s mandate for developing the highest
standards for operating in the Gulf of Mexico.
Going forward, it is my hope that we
will continue to collaborate with our foreign counterparts, both
through bilateral government-to-government assistance programs and
through appropriate multilateral channels in developing safer, more
environmentally responsible drilling in the world’s oceans.
IV. The Future of Offshore Drilling
Offshore drilling in the U.S. OCS, and indeed around the world, will
never be the same as it was a year ago. That much is clear. The
changes that we have put in place will endure because they were
urgent, necessary and appropriate. And more change will surely come,
although not at the frantic pace of the past year.
While a lot has changed over the past
year, and we are continuing to upgrade drilling standards and
workplace safety, I want to be absolutely clear about something –
the process of making offshore energy development both safe and
sufficient to help meet the nation’s and world’s energy demands will
never be complete. It is a continuing, ongoing, dynamic enterprise.
Therefore, those who ask whether the
regulatory system is “fixed” yet, or whether the agency is “fixed”
yet, are asking the wrong question.
In fact, the central challenge that
Deepwater Horizon exposed and highlighted is the need to establish
the institutions and systems – and the processes of cultural change
and improvement– necessary to ensure that neither government nor
industry ever again becomes self satisfied to the point that they
think no further change is necessary. It’s exactly that sort of
complacency and over-confidence that set the stage for Deepwater
Horizon.
Let me describe for you some of the
key elements that my vision of the future of offshore energy
oversight and development includes, most of which flow directly from
the issues I have just discussed.
• First, a well-funded and resourced
offshore safety regulator that evaluates the relevant risks
associated with offshore drilling and other energy development
activities in designing its regulations, its compliance program, and
its enforcement programs. This includes the development of more
sophisticated methods for measuring risk, designing programs for
evaluating those risks and assessing whether industry is managing
those risks appropriately.
• Second, a regulatory agency that
has the tools and the resources – both technological and human – to
hold all players involved in drilling and production activity in the
nation’s oceans to high standards and, if there are safety or
environmental violations, or an accident, holds all responsible
parties accountable. This includes not only those companies that
operate leases, the traditional subjects of agency regulation and
enforcement, but their contractors and service providers such as the
owners of drilling rigs as well.
•Third, a system in which all
available scientific information and analysis is factored in to a
process to ensure balanced decision making with respect to the
environmental risks and economic benefits of offshore resource
development.
• Fourth, a regulatory system that
strikes appropriate balances and ensures that energy development is
conducted safely and in an environmentally responsible manner, while
also being more efficient, transparent and responsive.
• Fifth, a leasing and revenue
generation system that encourages the active development of the
nation’s natural resources made available to industry to provide for
the country’s energy needs.
• Sixth, institutions that spur
continued government and industry focus on and innovation in the
areas of risk assessment, technological advances in safety
equipment, emergency response equipment, and further improvements in
the effectiveness and availability of subsea containment resources,
and oil spill response systems and coordination.
• Seventh, a set of industry
performance standards that requires operators to engage in rigorous
and deeply self-critical evaluation of the hazards posed by their
operations and the measures implemented to address those hazards.
• Eighth, a set of common principles
and standards by which companies drilling and producing in the
oceans govern their conduct, regardless of where in the world they
are operating.
• And finally, an ocean energy
program that includes not only the development of oil and gas
resources, but also the aggressive and responsible development of
renewable energy sources. The long-term solution to meeting the
nation’s and the world’s energy needs must include power derived
from clean and renewable sources such as offshore wind.
V. Conclusions
Following Deepwater Horizon, a broad consensus quickly emerged – in
government and industry – that there was an urgent need for
upgrading the safety rules and practices within the oil and gas
industry.
Going forward, we need to do
everything possible to keep the complacency from creeping back –
into my agency and into industry. Industry and government regulators
alike must continue to resist the fierce pressures to return to
business as it used to be conducted. Down that path lies another
Deepwater Horizon.
It has been a long year, and I have
no expectation that it will get easier any time soon. But I believe
in the tangible results I have seen, and I have seen the intense
interest in what we are doing in industry, in the environmental
community, and among the public at large. People are watching our
work around the world, are interested and invested in it, and know
the stakes involved in whether we succeed.
We are determined to succeed in
creating a system that allows continued offshore development while
ensuring safety and environmental protection. That’s the goal we
will continue to pursue with single-minded determination.
I thank you for your time and
attention and am happy to take some questions.
Contact: BOEMRE
Public Affairs