U.S. Cites Safety Lapses After Black Elk Gulf of Mexico Fire

Federal regulators ordered Black Elk Energy Offshore Operations LLC to improve its safety procedures after a fatal Nov. 16 explosion and fire on an oil platform in the Gulf of Mexico.

The U.S. Bureau of Safety and Environmental Enforcement said it sent a letter today to Black Elk alleging the Houston- based company has “repeatedly failed to operate in a manner that is consistent with federal regulations,” according to a statement. The bureau said the closely held company could lose its privilege to operate in the U.S. outer continental shelf if it does not “demonstrate improved performance.”

Black Elk must submit a performance improvement plan by Dec. 15 to show how it will ensure compliance at its operations, the bureau said. The letter precedes any possible enforcement actions that may come after an investigation of the Nov. 16 fire at a Black Elk platform in West Delta Block 32.

“We appreciate the perspective of the Bureau of Safety and Environmental Enforcement,” Leslie Hoffman, a spokeswoman for Black Elk, said in an e-mail today. “Safety is a high priority for Black Elk Energy and we will continue to work cooperatively with local and national federal agencies to understand exactly what happened with the incident at our platform in the Gulf of Mexico.”

Incident Breakdown

The company is a designated operator for 98 production platforms in the Gulf, the bureau said. Black Elk was cited for 156 incidents of non-compliance this year, 99 last year and 60 in 2010, the bureau said. The U.S. has issued a $307,500 civil penalty fine for an incident of non-compliance related to an inspection.

The list of incidents of non-compliance for the company included 158 warnings, 145 notices to shut a component and 12 to shut a facility, the bureau said.

Black Elk said in a statement dated yesterday on its website that was suspending the formal search for the remaining worker who’s missing after the accident. The company previously said it recovered the body of another worker who had been missing. Workers from Grand Isle Shipyard had been on the platform performing tasks, Black Elk Chief Executive Officer John Hoffman said in an interview last week.

Also today, Standard & Poor’s Ratings Services said it placed Black Elk’s ratings, including CCC+ long-term corporate credit ratings, on credit watch with negative implications.

Black Elk holds stakes in more than 854 wells on 155 platforms off the coasts of Louisiana and Texas in the Gulf, in water depths ranging from less than 10 feet to more than 6,000 feet, according to the company’s website. The company, formed in 2007, is about 75 percent-owned by Platinum Partners LLP, a New York-based hedge fund.

To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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