By David S. Hilzenrath, Project on Government Oversight
By at least one measure, the Trump Administration’s recently finalized rollback of offshore drilling safety standards went much further than planned.
The Administration’s rewrite of safety requirements will save oil and gas companies 63 percent more money than a draft of the rollback published last year would have, mainly by requiring less frequent testing of safety equipment, according to Interior Department estimates.
All estimated savings pale beside the potential financial cost of offshore drilling disasters like Deepwater Horizon, which in addition to killing 11 people, polluted the Gulf of Mexico, and damaged coastal economies.
But even as the Interior Department in some ways went further than planned in loosening safety standards, it ultimately modified or refrained from adopting several of the elements of its original proposal that a Project On Government Oversight investigation last year spotlighted as dangerous.
On May 2, the Trump Administration completed part of its deregulatory agenda: rewriting the Blowout Preventer Systems and Well Control Rule that the Obama Administration spent years developing in response to the Deepwater Horizon disaster. Through an April 2017 executive order, President Trump had directed Interior to review the rule.
The final version of the regulatory overhaul—which the Administration described as a “deregulatory action”—will save industry more than $1.5 billion over 10 years, Interior estimated. The proposal the Trump Administration published last year would have saved industry $946 million over 10 years, Interior estimated at the time.
Most of the savings from the final rule—$919 million of it—is attributed to requiring less frequent testing of safety systems known as blowout preventers, which are the last line of defense against runaway wells.
All of those estimated savings pale beside the potential financial cost of an offshore drilling disaster like Deepwater Horizon, which in addition to killing 11 people disrupted the energy industry, polluted the Gulf of Mexico, and damaged coastal economies. Energy giant BP, one of the central players in the 2010 blowout and oil spill, reported that its losses from the disaster reached $67 billion as of December 2018.
Apparently, that sum didn’t factor into any cost-benefit analysis the Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE, pronounced “Bessie”), the agency responsible for the rulemaking, conducted as part of the deregulatory process.
“BSEE determined that the selected revisions are likely to maintain the same worker safety and environmental protection as the 2016 final rule, therefore BSEE did not evaluate the costs related to a potential increase in spills or safety issues,” the agency said in an explanation of its May 2 rulemaking.
“While BSEE did not develop a specific risk analysis for this rulemaking, BSEE considered potential risks as part of the process of developing this rule,” the agency added.
The final rule provides a pathway for drilling companies to reduce the frequency of certain blowout preventer tests by 50 percent, from every 14 days to every 21 days. BSEE says that would reduce wear and tear on the equipment.
The final rule also eliminates a 2016 requirement, which had not yet been implemented, that energy companies enlist private inspectors approved by the regulator to check on various safety systems. The private inspectors, akin to outside auditors, were known as BSEE-approved verification organizations.
In place of regulator-approved verification organizations, energy companies will be required to enlist so-called “independent third parties” to conduct various safety and compliance checks. But “independent” is a misnomer, because these inspectors will be hired by the companies whose operations they are inspecting.
As part of the rollback, the Administration is removing a requirement that the private verification organizations be present when equipment is inspected. In place of that requirement, BSEE is requiring that the private inspectors review documentation of inspections after those inspections are performed. The change would ease logistical and economic burdens, BSEE has said.
In a news release, the Interior Department said the final revised rule “leaves 274 out of 342 original Well Control Rule provisions—approximately 80 percent—unchanged.” Interior’s count tells the public nothing about the substance or significance of the changes that were made.
In addition to reducing the frequency of tests, the final rule reduces other requirements for the testing of blowout preventers, which are apparatuses meant to choke a well in an emergency and prevent an uncontrolled spill. The final rule reduces the amount of pressure that the devices would have to withstand and the amount of time for which they would have to withstand the test pressure in certain tests.
Another key feature of the final rule is that it would allow drillers to continue drilling in certain situations when, for safety reasons, they otherwise would be required to stop drilling. That change involves situations where energy companies can’t keep the pressure in a well within a prescribed “safe drilling margin.”
Pressure imbalances can lead to blowouts. In the final rule, BSEE adopted a guide written and copyrighted by the American Petroleum Institute, a lobby for the oil and gas industry, for drillers to use “when deciding how best to safely drill ahead,” the agency wrote.
However, in the end, the Administration softened some proposed changes that POGO and others warned would put offshore workers, coastal economies, and the environment at increased risk.
In the notice it published last year, the Trump Administration proposed what would have amounted to gutting requirements that oil and gas companies track drilling operations from shore through “real-time monitoring.” Those requirements were meant to backstop rig crews. In the Deepwater Horizon episode, people on the rig didn’t recognize that a disaster was brewing until it was too late. The Trump Administration’s final rule preserves more of the Obama Administration requirements.
In the notice it published last year, the Trump Administration proposed eliminating a layer of redundancy involving blowout preventer components known as shear rams, which are meant to cut through well pipes in an emergency. Where the Obama Administration rule required each of two shear rams to be able to do the job in case one of them failed, the Trump Administration proposed requiring only that two in combination be able to achieve the desired result. In the end, the Trump Administration preserved the existing requirement.
Redundancy might seem, well, redundant, but in the Deepwater Horizon episode, several supposedly redundant safety systems failed with catastrophic results.
In the notice it published last year, the Trump Administration proposed eliminating several requirements meant to ensure that a blowout preventer’s shear rams could cut through well pipe that had bent, buckled, or been knocked out of the center of the well. One provision said underwater blowout preventers had to be able to position an off-kilter pipe where the blowout preventer’s blades could shear it. Another provision required verification that the outermost edges of the shearing blades could cut the pipe—not just that the blades could cut a pipe if it was positioned in their sweet spot. A third provision said underwater blowout preventers had to be able to cope with a phenomenon described as compression of the pipe. In the end, the Trump Administration preserved those requirements—almost. The Administration deleted wording requiring that certain equipment “ensure shearing will occur any time the shear rams are activated.”
In the notice it published last year, the Trump Administration proposed eliminating a requirement that, if the blind shear rams on a rig were unable to cut through wire, drillers must have “an alternative cutting device” capable of doing so. In the end, the Trump Administration preserved that requirement temporarily, until the shear rams themselves are capable of cutting wire.
Blowout preventers, which often sit on the ocean floor, are powered by pressurized hydraulic fluid. The Obama Administration rule required drillers to store a supply of the fluid in underwater containers “to provide fast closure of the [blowout preventer] components and to operate all critical functions in case of a loss of the power fluid connection” to the rig.
In the notice it published last year, the Trump Administration proposed eliminating that requirement. In the end, the Administration preserved the requirement for the autoshear and deadman systems, which are meant to automatically close the well in certain scenarios.
However, in a departure from the Obama Administration rule, it allows those systems to share a supply of hydraulic fluid with other systems.