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Living With Oil Rig Workers Seen Aiding U.S. Inspectors

Oil-drilling inspectors would gain insight into safety practices by flying to Gulf of Mexico rigs on helicopters leased by regulated companies and living for a time with workers, the National Research Council said in report.

The Bureau of Safety and Environmental Enforcement also should hire more capable employees, increase training and charge companies a fee to cover costs for stricter oversight, the council recommended.

Extended rig visits would let inspectors observe the culture beyond “obvious violations” such as loose handrails or corroded walkways, the council said in a study for the Interior Department unit, also known as BSEE. Agency inspectors are barred from such travel on corporate aircraft to avoid the appearance of a conflict, the report said.

“Other regulatory organizations use operator-furnished transportation and accommodations with no adverse effect on the integrity of the process,” the council said in the report by a nine-member committee of academics, consultants and engineers. “BSEE should consider doing the same to increase the quality of its inspections and to reduce expenditures.”

‘Cozy, Corrupt’

The agency sought the study from the nonprofit council in an effort to improve regulation of oil and gas exploration in federal waters after the BP Plc (BP/) Deepwater Horizon rig explosion in April 2010. President Barack Obama revamped oversight to eliminate what he called the “cozy and sometimes corrupt relationship” between oil companies and regulators. As a consequence, inspectors avoid traveling on helicopters leased by companies or eat food provided by rig operators, a practice that the National Research Council said might be modified.

“If it’s a matter of having an inspector out there for a day or two, as opposed to having four or five different trips, that could make sense,” Erik Milito, a director at the American Petroleum Institute, the largest trade group for the U.S. energy industry, said today during a conference call.

The Interior bureau is committed to working with the scientific community to enhance safety regulations, Nicholas Pardi, a spokesman for the agency, said in an e-mail.

The California State Lands Commission said that travel to oil installations helps its inspectors determine “what is really going on,” according to the report.

Alaska Rigs

The Bureau of Safety and Environmental Enforcement plans to have an inspector on the Royal Dutch Shell Plc (RDSA)’s rigs drilling in the Arctic, if the agency allows Shell to start exploration this year.

“It’s a good idea to have the inspectors spend more time on the rigs, and it doesn’t trouble me that they might travel via an oil-company helicopter,” David Pettit, senior attorney at the Natural Resources Defense Council, said today in an e- mail. The New York-based environmental group advocates for increased safety measures to prevent disasters similar to BP’s spill.

The National Research Council, the principal operating agency of the National Academy of Sciences and the National Academy of Engineering, also recommended that the department create a whistle blower program so that employees can report energy companies’ violations and inappropriate behavior of Bureau of Safety and Environmental Enforcement personnel.

Interior Department already has an online and telephone hotline for whistleblowers, agency spokesman Pardi said.

The Obama administration tomorrow opens almost 39 million acres in the Gulf of Mexico, near the site of BP disaster, for oil and gas exploration. The Interior Department plans to unseal bids for blocks of land off the coasts of Louisiana, Mississippi and Alabama that may lead to production of more than 1 billion barrels of oil.

The BP disaster, 40 miles (64 kilometers) off the Louisiana coast, killed 11 workers, destroyed a $365 million rig and spilled 4.9 million barrels of oil, the most ever in U.S. waters.

To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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