Speech

"Safe Oil and Gas Production in the Nation’s Oceans - Deconflicting the Missions of Government"

Secretary of the Interior Ken Salazar

01/19/2011

Washington, DC

Remarks for the National Conference on Science, Policy and the Environment

As prepared for delivery

Thank you.  

My vision and hopes for the future as a consequence of the Macondo well tragedy are simple but achievable:

• First, that we as a nation develop the gold standard for safe oil and gas production from our world’s oceans;
• Second, that we as a nation recognize the real need, as well as the limits, for oil and gas production from America’s oceans;
• Third, that we as a nation embrace a broad, comprehensive energy agenda to power our economy that makes sustainable and renewable energy a pressing priority; and
• Fourth, that we as a nation embark on an urgent path to restore the Gulf Coast and its environment, including the Mississippi Delta, which has been so degraded by humankind for more than a century.

Now, I know you will hear much more about these topics over the next several days. These presentations will help us craft and implement our agenda for responsibly and safely developing energy from our oceans. I look forward to the reports from this conference.

I also know you just heard from Bill Reilly and Bob Graham, Chairmen of the President’s National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. 

Together, they answered President Obama’s call to shed light on what factors contributed to the Deepwater Horizon tragedy which took the lives of 11 men and spilled millions of barrels of oil into the Gulf of Mexico.   

Along with their team of scientists, engineers, and academics, Chairmen Reilly and Graham were relentless in their search for answers and solutions to do all that is possible to prevent another disaster like the Deepwater Horizon oil spill.

Last week the Commission released its final report. The report is both thorough and thoughtful. The report concludes that the spill was the result of systemic problems that spanned more than three decades and involved the oil and gas industry as a whole and the federal government. Moreover, the report underscores the need for deep structural and cultural reforms within the industry and to the regulations governing offshore drilling.

The Commission’s recommendations are, in many ways, a strong validation of the reforms that we at the Department of the Interior have been undertaking to promote safety and science in offshore oil and gas operations. Moreover, many of the recommendations are in line with where we intend to go with future reforms.

When President Obama asked me to be Secretary of the Interior, he asked me to help usher in a new energy future for the United States. 

The Department of the Interior is the custodian of America’s natural resources. The Department has stewardship over 20 percent of our nation’s land mass and more than 1.75 billion acres in the Outer Continental Shelf. 

These areas contain enormous conventional and renewable energy potential.  

We have vast solar, wind, and geothermal potential from coast to coast. Those resources – which we can and must harness - are central to our efforts to reduce our nation’s dependence on foreign oil and to power our economy.  

That’s why, in the last year, we approved more than a dozen renewable energy projects across the United States, including nine large-scale solar energy projects, several wind and geothermal energy projects, and transmission lines to carry renewable energy to market. These projects include the first-ever large-scale solar energy projects in the Nevada and California deserts and what will be the largest solar energy project in the world.

We also approved the Cape Wind project – the nation’s first offshore wind farm – and, along with our partners at the Department of Energy, we are building an Atlantic wind energy strategy that will allow us to harness the great renewable energy potential off our coasts.   

But our lands and oceans, as we all know, also contain valuable oil and gas reserves.  

The Gulf of Mexico alone accounts for more than 25 percent of domestic oil production and approximately 12 percent of domestic gas production. The reality is that offshore oil and gas reserves are, and will continue to be, vital elements of our nation’s economy and energy portfolio for many years to come.

Our job at the Department of the Interior is to ensure that energy development on America’s lands and oceans is done in the right way, in the right places, and with the right protections for the environment and worker safety.

It is a task we take seriously.  

That’s why we have launched the most aggressive and comprehensive reforms to offshore oil and gas regulation in U.S. history. 

Like the Commission, we have taken a hard look – top to bottom – at what needs to change to create the gold standard for energy production.

As a result, we are raising the bar for safety, oversight, and environmental protection at every stage of the oil and gas development process.

Let me briefly describe just a few of the major changes we have implemented in recent months.

First, we have issued strong new safety rules that operators must now meet before they drill. The rules set higher standards for everything from equipment and well-design to casing and cementing. As part of this effort, we now require blowout preventers to be certified and recertified, inspected by third-parties, and to meet strict, new testing requirements.

Second, we have issued a new rule that requires companies to establish comprehensive risk management programs for their operations. This performance-based approach will improve workplace safety and, we believe, reduce the risk of accidents.  

Third, operators need to demonstrate they are prepared to deal with catastrophic blowouts. A loophole that the previous administration established in 2003 exempted certain operators from providing a worst-case discharge scenario in their exploration plans. That loophole is now closed.

Fourth, we are limiting the use of categorical exclusions so that proposed lease sales and drilling projects must undergo thorough environmental reviews in accordance with the National Environmental Policy Act (NEPA). 

And fifth: for the first time, energy companies must put their signature on the line to state that their rigs comply with our safety and environmental laws and regulations.

Taken together, these new regulations and standards are laying the foundation for an offshore oil and gas program that is producing and profitable and where safety permeates every decision.

We also know that it’s not just industry that needs to change.

That’s why - after a hard look at our own operations within the Department of the Interior – we have undertaken a massive overhaul of the regulatory agency responsible for overseeing offshore oil and gas operations. 

To help with the many organizational, cultural, and structural reforms that were needed, I asked Michael Bromwich, a former Inspector General at the Department of Justice, to serve as Director of the newly-established Bureau of Ocean Energy Management, Regulation and Enforcement.

Director Bromwich has worked quickly and effectively to change the way we do business. You will be hearing more on this directly from him later today.

Within days of starting his new job, Director Bromwich stood up an internal investigations and review unit designed to root out problems within the agency and in industry and help expedite the oversight, enforcement and re-organization mandates.  

Director Bromwich has also established a strict recusal policy that establishes proper distance between inspectors and the offshore platforms and rigs they police.  

And Director Bromwich is working to significantly expand the agency’s team of inspectors and making sure they have the training and the resources to do their job.   

Perhaps most significantly, Director Bromwich is applying his expertise and background to leading the fundamental restructuring of what was once the Minerals Management Service, or MMS. 

When I became Secretary of the Interior, MMS was a troubled agency defined by three missions since its establishment in 1981. Those missions were:

• One: promoting resource development;
• Two: enforcing safety regulations; and
• Three, maximizing revenues from offshore operations.

In practice, these missions were often contradictory and in direct conflict with each other. Yet they were left intact under multiple administrations, both Republican and Democrat.

We are determined to deconflict these missions. In May of last year, I announced we would launch a complete restructuring of MMS which would divide the agency into three separate and effective entities with independent missions.

In October of last year, we split off the first of the three missions by creating the Office of Natural Resources Revenue within the Office of the Assistant Secretary for Policy, Management and Budget. This step effectively walled off the revenue collection arm of the former MMS and ensured that revenue generation could never trump safety or environmental considerations during the permitting and drilling processes.

Today I am pleased to announce the next major step in our reorganization. 

This year, we will separate out the two remaining missions that were within MMS. The agency’s resource management functions will be distinct and independent from the safety and environmental enforcement functions.   

The first new agency we are creating, the Bureau of Ocean Energy Management (BOEM), will be responsible for managing development of the nation’s offshore resources in an environmentally and economically responsible way. BOEM’s responsibilities will include oversight of the leasing process, plan administration, and resource evaluation.

The second new agency, the Bureau of Safety and Environmental Enforcement (BSEE), will be charged with enforcing safety and environmental regulations. BSEE’s responsibilities will include platform inspections and ensuring that rigs are in compliance with safety and environmental regulations.   

The creation of the three independent agencies – ONRR, BSEE, and BOEM - was guided by the natural distinctions among the three missions and ensures that robust environmental analyses and safety considerations are given appropriate weight throughout the permitting and development process.

The new framework offers a rational and common-sense structure. By separating the conflicting missions, the new agencies will have clarity in purpose - and will be stronger for it. At the same time, it provides the right checks and balances as we evaluate proposed oil and gas projects. 

This fundamental transformation is in line with the Commission’s recommendation to foster greater independence within the oversight agency.

The second announcement I want to share with you is an initiative that will help us achieve the gold standard for offshore energy safety. As I discussed in November, the Department of the Interior has been working to establish a framework for collaboration among industry, government and academia on issues related to offshore energy safety. I believed then – and believe now – that we need to institutionalize the expertise and experience needed to safely develop oil and gas in our nation’s oceans.

To achieve this goal, in the coming weeks, we will stand up an advisory committee that will serve as a center of excellence for offshore energy safety. The committee will facilitate collaboration among the nation’s best and brightest minds from industry, academia, federal agencies and non-governmental organizations.  

The Offshore Energy Safety Advisory Committee will advise the Department on a variety of issues related to offshore energy safety, including drilling and workplace safety, well intervention and containment, and oil spill response.  

The Safety Committee will identify and prioritize research and development projects in areas related to offshore energy safety. They will review and recommend best practices. And they will help bridge the information gap that too often exists between government, industry and academia.

I have asked Dr. Tom Hunter to serve as the Safety Committee’s Chairman. Dr. Hunter is the former Director of the renowned Sandia National Laboratory and was a critical leader on the federal scientific team that ultimately helped bring about the containment and capping of the Macondo well. Under his leadership, we will assemble a team of experts from federal agencies, industry, academia, national labs, and various research organizations.

They will help us create an enduring and readily-available expertise base that will assist in preventing and responding to accidents in the waters off our shores.

There is no doubt that we have made significant progress, and we are on the right track toward safer, more environmentally responsible oil and gas production on the Outer Continental Shelf.

But the Department of the Interior can’t do it alone.  

Industry, for its part, must recognize that investments in safety will pay dividends over the long-term. Reducing the risk of spills and accidents is both the right thing to do and is good business. Technical advancements in drilling, blowout containment, and spill response techniques can help, but the culture within the industry also needs to change so that safety and risk management permeates every decision on every rig and platform, every day.

We also need Congress to support the implementation of these essential reforms.  

When Chairman Graham released a copy of the report last week, he said: “I believe that this issue and the searing impact that the Deepwater Horizon has had on the conscience of Americans is such that it will override an ideological preference for less government. What makes that level of optimism credible is that members of Congress understand that this isn't just a typical example of a private enterprise that the government is regulating. This is land that the government and the people of the United States own."

I hope that Chairman Graham is right and that Congress carries the reform agenda across party lines and across red and blue and purple states. 

Because the stakes are bigger than any real or perceived ideological divides. We need strong reforms and adequate resources so that we can fulfill our stewardship responsibilities to our land, water, fish and wildlife…. So that we can pass on healthy oceans and pristine shorelines to the next generation…. And so that our grandchildren know that we did the right thing to respond to the challenges of our time.

As the oil spill fades from the headlines and our collective memory, pressure is growing in some corners to roll back the safety and environmental protection standards we have put in place since April 2010. 

But to ignore the lessons of the Deepwater Horizon oil spill would be a grave mistake.
Now is not the time to retreat from our efforts. Now is not the time to let the Commission’s report simply gather dust on a shelf.  

Instead, as Chairman Reilly puts it, now is the time to “make a lot of noise.”

Rest assured that at the Department of the Interior, we will not forget the lessons learned from the Deepwater Horizon oil spill. We will not succumb to pressure to roll back the clock on our reforms. And we will continue to drive responsible production of our domestic oil and gas resources.

Our mission is as urgent and necessary as ever as we work to make the United States the gold standard for oil and gas reforms and work to ensure that we never again experience another Deepwater Horizon.

We will not accept anything less.  

Thank you.