BOEMRE Director Discusses Responsible Stewardship of U.S. Offshore
Energy Development at the National Conference on Science, Policy and the Environment
WASHINGTON
– Today,
Bureau of Ocean Energy Management, Regulation and Enforcement
Director Michael R. Bromwich delivered the concluding keynote
address at the National Council for Science and the Environment 's
National Conference on Science, Policy and the Environment.
Director Bromwich discussed the steps that BOEMRE is taking to renew
its commitment to the responsible stewardship of our nation’s
resources on the Outer Continental Shelf and the re-balancing of
BOEMRE's decision making processes with a renewed emphasis on
acquiring and analyzing scientific information.
Director Bromwich’s
remarks, as prepared for delivery, are below:
Good afternoon. Thank you for inviting me to participate in this very important
conference on Our Changing Oceans. This would be an important
subject at any time, but it is especially important at a time when
we are making critical decisions about the future of offshore energy
development in the United States. I know that you have had a long
and no doubt exciting day, and that earlier this morning you heard
from the co-chairs of the National Commission on the BP Deepwater
Horizon Oil Spill and Offshore Drilling as well as Interior
Secretary Ken Salazar. In my remarks tonight, I will discuss the
steps that my agency is taking to renew its commitment to the
responsible stewardship of our nation’s resources on the Outer
Continental Shelf (OCS) and to re-balance our decision making
processes with a renewed emphasis on acquiring and analyzing
scientific information.
The Deepwater Horizon tragedy has shaken
government, and I hope industry, out of a complacency and
overconfidence that had developed over the past several decades. That complacency and overconfidence created a circumstance in which
the increased dangers of deepwater drilling were not matched by
increased vigilance and concern for the safety of those operations.
We are in the process of making profound changes in
the manner in which oil and gas drilling and development in the
waters off our country’s shores. These changes are long overdue
and, as is so often the case when it comes to serious reform
anywhere, are being spurred by a catastrophe – the unprecedented
deepwater blowout of the Macondo well, the explosion and sinking of
the Deepwater Horizon drilling rig, the tragic deaths of 11
workers, and a spill of nearly 5 million barrels of oil into waters
of the Gulf of Mexico.
This week marks my seventh month as the Director of
the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE). As you know, Secretary Salazar created the agency after the
Deepwater Horizon accident to replace the former Minerals
Management Service (MMS). The mandate I received from President
Obama and Secretary Salazar was as daunting and ambitious as it was
urgent – to reform offshore energy development, starting with the
agency responsible for overseeing it. Since that time, we have been
working aggressively to make the changes necessary to restore the
public’s confidence that offshore oil and gas drilling and
production are being conducted safely and with appropriate
protections for marine and coastal environments.
This topic is nothing if not timely. I know you
heard this morning from the distinguished co-chairs of the
Commission, Bill Reilly and Bob Graham. The Commission’s report is
a thoughtful and comprehensive analysis of not only the spill
itself, but of the history and development of offshore drilling and
of the regulation of offshore drilling. I want to commend the
Commission and its staff for their hard work, their professionalism,
and their willingness to listen to – and take into account our
perspectives – on the issues they were examining. I encourage each
of you to read the report if you have not yet done so. We will
continue to review and analyze the report’s recommendations.
As the Commission describes in its report, regulatory
and industry reform in the wake of a significant offshore disaster
has happened before. The United Kingdom and Norway substantially
changed their oversight of offshore drilling and production
following the Piper Alpha and Alexander Keilland
incidents. Australia is currently facing many of the same issues we
are confronting following the Montara blowout, which occurred only
eight months before Deepwater Horizon.
The specific challenges facing us, however, are
unique in many significant respects. The scale of the offshore oil
and gas operations in U.S. waters, particularly in the Gulf of
Mexico, is vastly greater than those in the North Sea. The
economies of many of the Gulf Coast states, particularly Louisiana,
are closely tied to offshore industry to an extent that is not fully
appreciated around the country. The Gulf accounts for more than 25
percent of domestic oil production and approximately 12 percent of
domestic gas production. One of the key problems that we are
addressing – and that cannot be avoided – is this: how will
government and industry make the fundamental reforms necessary to
improve the safety and environmental protection in this massive
industry, while at the same time allowing operations to continue?
To illustrate the problem, consider this: U.K.
offshore production (which again is at a much smaller scale than
that in the Gulf) dropped off substantially for two years following
the Piper Alpha incident. The major challenge facing us and
the industry is to dramatically improve the safety of drilling in
the Gulf of Mexico, particularly in deepwater, while continuing with
operations, keeping production flowing and keeping people working.
While the Commission has been doing its work, we at
BOEMRE have been working to address many of the issues identified by
the Commission. Let me be specific about what we have already done,
and what we plan to do in the future. Together with Secretary
Salazar, we have undertaken the most aggressive and comprehensive
reform of offshore oil and gas regulation and oversight in U.S.
history. This includes the reorganization of the former MMS to
establish mission clarity and to strengthen oversight; and it also
includes the development and implementation of heightened standards
for drilling practices, safety equipment, and environmental
safeguards.
These new rules set forth prescriptive standards that
industry must meet. But they also establish, for the first time in
the U.S. offshore regulatory system, performance-based standards
focused on the identification and mitigation of specific risks
associated with offshore operations. These changes are substantial,
and more work is being done to ensure that these changes are both
lasting and effective. The ultimate goal is to establish an
industry-wide culture of safety, and to have well-equipped and
professional regulators. Both elements are necessary to keep pace
with the challenges and risks of offshore drilling, particularly as
those operations push into new frontiers and face increased
technical challenges.
I. Reorganization
Earlier today,
Secretary Salazar and I announced the details of our
reorganization. As most of you know, the Secretary outlined the
guiding idea behind the plan in May 2010, which was the creation of
three strong, independent agencies with clearly defined roles and
missions. The reality is, MMS – with its conflicting missions of
promoting resource development, enforcing safety regulations, and
maximizing revenues from offshore operations, and its chronic lack
of resources – led to its inability to effectively meet the
challenges of overseeing companies in the offshore industry
operating in U.S. waters.
The reorganization
of the former MMS is designed to remove those conflicts by
clarifying and separating missions across three agencies and
providing each of the new agencies with clear missions and new
resources necessary to fulfill those missions. We are designing and
implementing these organizational changes while we fully take into
account the crucial need for information-sharing and the other links
between the functions of the former MMS. This is essential to
ensure that the regulatory processes related to offshore leasing,
plan approval, and permitting do not succumb to bureaucratic
paralysis.
On October 1 of
last year, the revenue collection arm of the former MMS became the
Office of Natural Resources Revenue and now is located in a
different part of the Interior Department with reporting structure
and chain of command completely separate from the offshore
regulator. The President’s Commission agrees with this change.
Over the coming
months, the offshore resource management and enforcement programs
will be established as separate, independent organizations. The
next steps in the reorganization are more difficult, but also
extremely important: they involve separating the energy development
functions from the safety and environmental enforcement missions of
the nation’s offshore regulator. The Interior Department, as well
as the President’s Commission, have concluded that the separation of
these missions is essential to reforming the government’s oversight
of energy development in our country’s oceans.
I want to share
some details of what those two new independent agencies, the Bureau
of Ocean Energy Management (BOEM) and the Bureau of Safety and
Environmental Enforcement (BSEE), will look like and what their
distinct missions will be. This re-organization is more than just
moving boxes around on an organization chart – it is about making
fundamental, thoughtful changes in, the way these agencies
operate.
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The
new Bureau of Ocean Energy Management (BOEM) will be responsible for
managing development of the nation’s offshore resources. This
involves ensuring that the environment is protected and that the
nation’s offshore energy resources – including oil, gas, and
renewable resources – are developed wisely, economically and in the
country’s best interests.
We provide a
structure that ensures that sound environmental reviews are
conducted and that the potential environmental effects of
proposed operations are given appropriate weight during
decision-making related to resource management in BOEM. This is
to ensure that leasing and plan approval activities are properly
balanced. These processes must be both rigorous and efficient so
that operations can go forward in a timely way with a complete
understanding of their potential environmental impacts and
confidence that appropriate mitigation against those potential
environmental effects are in place.
We
strengthen the role of environmental review and analysis in both
organizations through various structural and organizational
mechanisms. Those include:
-
The
creation of a first-ever Chief Environmental Officer in BOEM. This
person will be responsible for ensuring that environmental concerns
are appropriately balanced in leasing and planning decisions and for
helping set the scientific agenda relative to our oceans. This is a
new, high-profile and extremely important position, which we hope
and expect will attract top-flight talent;
-
Separating
the environmental review and leasing programs in BOEM’s regional
offices;
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The
creation of new plan approval processes in BOEM;
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The
development, for the first time, of a brand new Environmental
Compliance and enforcement function, which will reside in BSEE; and
-
We
will strengthen and establish as a national-level priority the
review and enforcement of Oil Spill Response Plans, which will be
conducted in BSEE.
These reforms are
in alignment with the President’s Commission’s recommendations. As
we move forward with implementing these changes, we will continue to
take the Commission’s recommendations into account in designing the
final structure of and interactions between BOEM and BSEE within the
Department of the Interior.
II. Scientific Integrity in Decision-Making
One of the guiding
principles of our reform agenda for offshore energy development is a
fundamental change in the approach to decision-making, which
includes a renewed commitment to develop thorough, credible and
unfiltered scientific data.
Over the past few
decades, oil and gas development moved farther and farther offshore,
as industry sought new productive discoveries, sought to increase
domestic oil and gas supplies and provide the country with greater
energy independence. While important science has always been
conducted and has been involved in these developments, we have
concluded from the reviews of the Presidential Commission, as well
as those we have conducted internally, that our scientific community
has not always had a strong enough voice. We are changing that.
This past
September, Secretary Salazar issued a Secretarial Order establishing
a Scientific Integrity Policy for the Department. My senior science
advisor, Alan Thornhill, played a leading role in drafting that
policy, and we as a bureau are wholeheartedly embracing its
principles.
Scientific and
scholarly information considered in our decision-making must be
sound, of the highest quality, and be the product of rigorous
scientific and scholarly processes. To achieve those goals, we must
cultivate and reinforce a culture of scientific integrity.
This means that our
employees, political and career, must never suppress or alter,
without new scientific or technological evidence, scientific or
technical findings or conclusions – period. Further, employees will
not be coerced to alter or censor scientific findings, and they will
be protected if they uncover and report scientific misconduct. This
is not about finding fault with the past, because the truth is that
the agency’s scientific work has in been many instances been
unfairly maligned, but a strong commitment and prescription for the
future.
This also means we
have to devote greater resources to, and elevate the role of, our
scientists within the offshore regulators. As I mentioned earlier,
we are for the first time establishing the position of a Chief
Environmental Officer for BOEM. This individual will be empowered,
at the national level, to make decisions and final recommendations
when leasing and environmental program directors cannot reach
agreement. The Chief Environmental Officer also will be a major
player in setting the scientific agenda for the nation’s oceans. And by standing up an entirely new environmental compliance function
for BSEE, we are providing for the first time regulatory oversight
focused on the environment.
As many of you
know, we are in the midst of a review of our application of the
National Environmental Policy Act (NEPA), including in particular
the use categorical exclusions. We have obtained public comments on
our NEPA policy and we are in the process of reviewing and analyzing
the comments we received. We are working closely with the Council
on Environmental Quality (CEQ) on this evaluation. In the meantime,
we have announced a policy that will require that site-specific
environmental assessments be conducted, as opposed to the
categorical exclusion reviews performed in the past, for deepwater
drilling operations. Those environmental assessments will be
conducted for all new and revised exploration and development plans
in deepwater.
For those who might
now be thinking that the pendulum is swinging too far to the other
side, we believe this is not the case. We are mindful of the fact
that industry must continue developing the energy resources that
exist offshore. This development is crucial to the economy,
employment, and energy independence. We are striving to ensure
appropriate balance between the imperatives of energy development
and awareness of the potential environmental effects of energy
development – and to ensure that appropriate measures are taken to
protect against those effects. Creating and maintaining a culture
of scientific integrity will enable us to make those decisions with
greater confidence that we will be able to pursue energy development
while having a full, science-based understanding of the risks posed
by that activity and what can and should be done to reduce those
risks.
III. New Safety and Environmental Regulations
I have discussed some of the reforms that we are
pursuing to improve the effectiveness of government oversight of
offshore energy development and drilling. These changes are both
substantial and necessary. However, as the Commission’s report
makes abundantly clear, industry must change as well. My agency has
a clear and important role in helping to spur that change. We are
doing so through the promulgation of new prescriptive regulations to
bolster safety, and to enhance the evaluation and reduction of
environmental risks. We have raised the bar for safety equipment
and environmental safeguards in the drilling and production stages
of offshore operations – and we will continue to do so in open and
transparent ways in the coming months and years. We have also
introduced – for the first time – performance-based standards
similar to those used by regulators in the North Sea. We have done
all of this through the development and implementation of the two
new rules for drilling and workplace safety, announced last fall,
that raise standards for the oil and gas industry’s operations on
the OCS and certain Notices to Lessees that provide additional
guidance to operators on complying with existing regulations.
IV. Future Reforms
As you can see, we have already put in place
significant pieces of our comprehensive reform agenda. But our work
is far from complete. The technology associated with offshore
drilling will continue to evolve, as will the complexities and risks
of those operations, particularly in frontier environments, such as
ultra deepwater and the Arctic. We will proceed through the normal
notice and comment rulemaking process to implement further safety
measures, including features of the next generation of subsea
containment equipment such as blowout preventers and remotely
operated vehicles (ROVs). As we have already stated, the Bureau
will also promulgate additional workplace safety reforms through the
rulemaking process, including requirements for independent
third-party verification of operators’ SEMS programs. We also will
continue to evaluate the regulatory standards used by other
countries to ensure that the standards applied in U.S. waters, as
well as the agency that enforces those standards are world-class. These are among the issues discussed in the Commission’s report, and
the Commission provides useful insights about these issues.
We can no longer accept the view that the appropriate
response to a rapidly evolving, developing and changing industry,
which employs increasingly sophisticated technologies, is for the
regulatory framework and the applicable rules to remain frozen for
extended periods of time. Over time, the regulatory framework and
the specific requirements must keep pace with advances in the
industry – and industry ambitions to drill in deeper water in
geological formations that have greater pressures. We will continue
to analyze information that becomes available, and we will implement
reforms necessary to make offshore oil and gas production safer,
smarter and with stronger protections for workers and the
environment. In developing these reforms, we will balance the need
for regulatory certainty – the importance of which we well recognize
– against the need to act on new insights and adapt to changing
technology. And importantly, the processing of drilling permit
applications and proposed drilling plans will not be delayed while
these additional reforms are developed.
As you know, we can always do better -- and that we
must always remain open to improvements in our regulations to
develop the necessary culture of safety. In the past, industry has
in many instances reflexively opposed new regulations. That is no
more responsible than regulating for the sake of regulating. We
must strike a new balance that fully involves industry in the
regulatory process, but that recognizes the need for us to exercise
independent judgment.
Our challenge in the months and years ahead is to
ensure that the we do not once again become complacent, but rather
that we continue to make progress in developing state-of-the-art
safety, containment and response capabilities. Government, industry
and the best minds in our universities must collaborate on ongoing
research and development to create cutting-edge technologies in
areas such as well condition sensor capabilities and remote BOP
activation, among others. Government and industry must also work
together to establish the necessary procedures and structures to
address containment in the case of a blowout. It is critical to
ensure that, in the event of a loss of well control, containment
resources are immediately available, regardless of the owner or
operator involved. These are goals that we must pursue
aggressively.
As an important step in this effort, the Department
of the Interior is establishing the Offshore Energy Safety Advisory
Committee, as you heard from the Secretary this morning, which is
the first step in creating the Ocean Energy Institute. This
Advisory Committee and the Institute will serve as a center of
excellence for offshore energy safety and facilitate collaboration
among the nation’s brightest minds from industry, academia, federal
agencies and non-governmental organizations. The Institute will
foster collaboration among all key stakeholders to increase offshore
energy safety. The Institute will also provide recommendations on
matters and actions relating to offshore energy safety, including
drilling and workplace safety, well intervention and containment,
and oil spill response, as well as collaborative research and
development, training and execution in these and other areas
relating to offshore energy safety.
VI. Partnerships with the Science Community
As we seek
partnerships with the communities that have legitimate interests in
oil and gas development, we must also continue our important work in
funding and conducting strong and sound scientific research. We
must work with experts and researchers across many disciplines to
ensure we have the best scientific information available regarding
the potential effects of offshore energy development on the marine
and coastal environment.
Each year, BOEMRE
funds nearly 30 million dollars in environmental research for the
Atlantic, Gulf of Mexico, Pacific, and Arctic regions. We have
well-established partnerships with several universities and with
other federal agencies – many of which are represented in the
audience today – such as the National Oceanic and Atmospheric
Administration, the U.S. Geological Survey, the Environmental
Protection Agency, the U.S. Fish and Wildlife Service, and many
others. We are working very hard to strengthen those partnerships
and provide for greater consultation regarding the complex issues
facing us.
If I have learned
nothing else in seven months, I have learned that passions run deep
with respect to offshore energy exploration. I am committed to
continuing conversations – and hard work -- with industry,
environmental organizations, our federal partners and other
stakeholders, which are all intended to improve the safety of
offshore energy operations, and to help strike the appropriate
balance among the many legitimate concerns and interests that lie at
the heart of offshore energy development. And I am committed to
firmly establishing a culture in this agency and the two bureaus
that follow, in which decisions are based upon scientific
information of the highest quality and untainted by political
influence.
I thank you for your time and
attention. And now, I am happy to take questions with the time we
have remaining.