Spill commission collects comments

Posted: Thursday, September 09, 2010

ANCHORAGE - The co-chairman of the presidential commission investigating the Deepwater Horizon oil spill in the Gulf of Mexico said there's a difference between his group and Interior Department reviewers - he's also investigating the Interior Department.

"To the extent that you have to look at the cause and root cause, you have to look at the regulator," Bill Reilly said Wednesday in an Associated Press interview.

The former Environmental Protection Agency administrator was in Anchorage to conduct a "listening session," collecting comments from Alaskans on offshore drilling.

President Barack Obama created the commission in May to examine the circumstances of the Gulf of Mexico spill and to develop options for guarding against another. The commission will submit its report by mid-January.

Interior Secretary Ken Salazar in June scrapped the agency that oversaw drilling in the Gulf and in Alaska, the Minerals Management Service, and replaced it with the Bureau of Ocean Energy Management, Regulation and Enforcement. Salazar said that change was more that cosmetic: the agency was divided into three separate entities to eliminate conflicts of interest.

Salazar also put in place a moratorium on deep water drilling and made a separate but related decision to halt exploratory drilling that Shell Oil had planned in Alaska's Beaufort and Chukchi seas.

The new head of the agency, Michael Bromwich, was in Alaska last month for a fact-finding forum on the moratorium, and whether it should be lifted.

Reilly said the presidential commission also will look at the future of offshore oil and gas.

"But to the extent that you have to look at the cause and root cause, you have to look at the regulator," he said. "There are certainly indications that the regulator was challenged as you look at the IG (inspector general) reports that have been done on MMS over the years. And the regulator, after all, did approve that well design."

The commission has already collected testimony from other players in the petroleum business. One model for the revamped MMS could be the Institute for Nuclear Power Operations, a not-for-profit organization created by industry members that reviews all aspects of a reactor's operation, grades it and reports to government regulators, insurance companies and others, he said.

It's a way for companies to police another company's behavior - something lacking in the petroleum industry as all companies halt deep water drilling, Reilly said.

"Some of the big companies have risk management systems that are very sophisticated," he said. "It's always interesting to me to look at them and say, 'That's great. You've protected against almost every risk, but you just suffered a shutdown of all your activities as a consequence of something that you had nothing to do with. Where's the risk protection?' This would be an answer to that."

The commission will evaluate criticism that MMS inspectors were too cozy with the industry and that categorical exclusions - taking an environmental assessment for one rig and applying it to many more - were too broad.

University of Alaska Anchorage Chancellor Fran Ulmer, the state's former lieutenant governor, is another member of the commission. Over two days, Reilly and Ulmer plan sessions with representatives of oil companies, environmentalists, federal agencies and Alaska Native groups for comment on Arctic Ocean drilling.

Shell has a sophisticated risk management regimen and operates to a high standard, Reilly said. However, like other petroleum companies, it's sensitive to time delays and can argue that the rules for Arctic drilling should not be changed.

"But we're in a different world now," Reilly said. "We've seen that the rules were not good enough in the gulf. Both the industry and the regulator have some explaining to do."

At the listening session Wednesday night, Reilly and Ulmer heard mixed reaction to Arctic offshore drilling.

Richard Brown said halting drilling would close off the economic lifeblood of Alaska, which receives 90 percent of its general fund revenue from the petroleum industry.

But Lois Epstein of the Wilderness Society urged the commission to try to ensure that regulators are reminded that their clients are the public, not petroleum companies.

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