“A Year After the BP Blowout:
What We've Learned. And Haven't.”
by Robert L. Cavnar
by Robert L. Cavnar
“Today marks the first anniversary of the worst environmental catastrophe in the history of the US. Unfortunately, most Americans, including our politicians, are suffering from collective amnesia about that tragic event that cost 11 lives, destroyed thousands of jobs, polluted thousands of square miles of the Gulf of Mexico, and damaged the economies of 5 states. As tragic as all those events were (some are still ongoing), media attention has moved on to the Royal Wedding, the next earthquake, and, of course, breathless coverage of "American Idol." At the same time, our politicians, especially those in Washington, have used the lack of media attention to not only abdicate their responsibilities to make offshore drilling safer and are actively working to make it less safe, shocking as that seems.
Doc Hastings, Republican chairman of the House Natural Resources Committee, has taken a novel approach to improving offshore drilling regulation by actually weakening it. Rather than encouraging the modernization of regulations and increasing the budgets for agencies charged with overseeing offshore operations, Hastings is actively working to rush drilling permit review, further hamstringing an already overloaded federal agency. Last week, Hastings passed out of his committee 3 bills that he claims improve safety while actually doing the opposite; they are the Putting the Gulf Back to Work Act, the Restarting American Offshore Leasing Now Act, and the Reversing President Obama's Offshore Moratorium Act, all intended to do the same things: bash the President, undermine BOEMRE review of drilling permits, and rush into new areas of our US waters before any material lessons learned from BP's Macondo well disaster are even considered.
In his severe criticisms of President Obama, Hastings has conveniently ignored the fact that, just 3 weeks prior to the BP well blowout, the President proposed new drilling areas outside of the Gulf of Mexico. We now know that this courageous step (the first taken by any president since Nixon) was rewarded by the catastrophe that scuttled those plans only a few weeks later.
At the same time House Republicans are seeking to weaken offshore safety, the Congress as a whole is ignoring the problem of the statutory limit on liability for damages caused by offshore operators. It remains at $75 million, the limit set in 1990 when the Oil Pollution Act was passed in response to the Exxon Valdez spill, which protects small companies who operate in the offshore. This is one of the key lessons that we have not taken to heart since the BP blowout. Most people don't realize that there are only 5 or 6 companies out of the dozen or so who operate in deepwater who could have even survived an incident of this magnitude. The cost to BP for cleanup and damages could be over $40 billion by some estimates. This is a staggering number, and multiples of the enterprise values of half those companies who operate there. Had this blowout happened to one of the smaller companies, be assured that all of the cleanup costs and damages would have fallen to you, the taxpayer, after that company filed for bankruptcy. This is one stark reality that many in Washington don't want you to understand, and one that is still not being addressed.
There were several other painful realities that became apparent during the disaster of last summer; first, the industry did not know how to contain a deepwater blowout, second, it used 40 year old oil cleanup technology, and, third, that blowout preventers have a high failure rate. Unfortunately, having witnessed the results of these hard lessons, we still haven't done much to correct those failures. To be sure, there are companies now being formed to do deepwater containment. In typical fashion, though, the effort is diluted, with smaller companies utilizing Helix Energy Services, a private, for-profit operation, and the majors forming a co-op called the Marine Well Containment Company. It's unclear what will happen in the next accident, such as who pays if a small operator goes bankrupt after a large spill, not a trivial matter. Some advances will come eventually in spill clean up, but will be slow unless the government takes a leading role, which, so far it is wont to do.
Which leaves us with the blowout preventer. Everyone in the industry has known for years that blowout preventers have a high failure rate, but never really focused on that failure rate until the BP blowout. The recent forensics report from Det Norske Veritas on the Deepwater Horizon blowout preventer probably raised more questions than it answered, especially after managers for the study admitted to flaws in its own computer models that lead to its conclusions and recommendations. The solution from the industry and the federal government? Let's go back to work with no fundamental changes or redesign, depending completely on the subsea well containment companies when the next failure occurs.
The last year has been an odyssey where the disaster in the Gulf lead many to hope that finally we were going to focus on a comprehensive energy policy, improve safety, and protect the environment. To the disappointment of many, including me, none of these objectives were reached; indeed, they are not even being contemplated as all of our politicians, having just finished a re-election cycle a few months ago, are gearing up for the next one that comes a little over a year from now. We don't want to let trivial things like protecting human life and the environment interfere with game of politics, would we? It seems that, even in the face of catastrophe, we really haven't learned any of the important lessons we desperately need to learn."
Bob Cavnar, a 30-year veteran of the oil and gas industry, is the author of "Disaster on the Horizon: High Stakes, High Risks, and the Story Behind the Deepwater Well Blowout"