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Before Rig Explosion in Gulf, Scant Difference Between BP and Other Drillers on Safety

By MIKE SORAGHAN of Greenwire
Published: June 24, 2010

To look at the safety records of the offshore drilling companies before the Deepwater Horizon rig exploded and sank on April 20, there was little difference between BP America Inc. and its peers in the deep waters of the Gulf of Mexico.

According to a Greenwire analysis of Interior Department records, BP ranked a close third in penalties for safety violations. And statistics compiled on injuries and fires show that BP’s records were comparable to those of other deepwater drilling companies.

When U.S. District Judge Martin Feldman lifted the Obama administration’s moratorium on offshore drilling Tuesday, he suggested Interior Secretary Ken Salazar should have looked at the safety records of the other companies that were hit by the moratorium (E&ENews PM, June 22).

“The secretary’s determination that a six-month moratorium on issuance of new permits and on drilling by the thirty-three rigs is necessary does not seem to be fact-specific and refuses to take into measure the safety records of those others in the Gulf,” Feldman wrote in his preliminary injunction (pdf). In a footnote, he noted that Interior’s “blitz” inspection after the explosion found all 33 other rigs in deep water to be safe.

Industry executives and oil-state lawmakers have also questioned BP’s safety practices, seeking to cast the spill as an aberration. But before the “blitz” inspection, there was little to distinguish BP from the other drilling companies. In fact, the now-defunct Minerals Management Service had lauded BP’s safety record.

At the time of the spill, BP was a finalist for the agency’s SAFE award, along with Eni US Operating Co. and Exxon Mobil Corp. The ceremony at which the winner would have been chosen was postponed after the Deepwater Horizon disaster, which killed 11 and has allowed thousands of barrels a day of crude oil to gush from the seafloor into the Gulf.

The canceled event was also to include the presentation of an Offshore Leadership Award to a BP training manager. The award recognizes individuals whose “exceptional performance has raised the bar for safety achievement, improved environmental protection, enhanced resource recovery and conservation, or inspired innovation and outstanding performance by others.”

Transocean Ltd. also was lauded by MMS for safety, winning a SAFE award in 2008. On the day of the explosion, BP and Transocean employees were on the Transocean-owned rig to celebrate that seven years had passed without a major accident.

MMS, before Salazar dissolved it earlier this month, compiled records of civil fines paid since late 1997. Chevron U.S.A. paid the most, $2.1 million, according to the Greenwire analysis. Kerr-McGee Corp. and Anadarko Petroleum Corp., which have merged, came in second at $781,000. BP was a close third at $766,000.

Anadarko’s fines came mostly from its merger partner, Kerr-McGee, including a nearly $500,000 fine in which two subsurface safety valves were found leaking but were left in service without repair. One valve leaked for 186 days; the other leaked for 365 days.

Chevron’s fines included an $810,000 penalty after a “firewater” system was left inoperable for 81 days. BP was fined $190,000 after a fire broke out because of an improperly installed “diverter system” causing damage to property and the environment. Chevron spokeswoman Margaret Cooper said Chevron’s numbers are higher because the company has many more operations in the Gulf than other companies. She said that Chevron’s average total recordable incident rate from 2004 to 2008 was 0.53 recordable injuries per 200,000 hours worked, while the offshore energy industry average over the same time period was 0.93 incidents.

From 2004 to 2008, Chevron’s Gulf of Mexico average spill volume rate was seven times lower than the offshore energy industry’s average (OCS operators). The industry averaged 3.9 barrels per every million barrels produced. Chevron’s spill volume rate over the same time averaged 0.53 barrels for every million barrels produced. In 2009, Chevron spilled a total of 6.8 barrels (286 gallons).

In 2008, Chevron was awarded the MMS national Safety Award for Excellence and has been a finalist for this award several consecutive years. This April, Chevron won two additional MMS district safety awards.

During the same time span, Shell was fined $325,000 and Exxon Mobil was fined $280,000. ATP Oil & Gas Corp., in which Feldman has invested, was fined $35,000 for two incidents.

Last year, there were eight injuries at BP offshore work sites, according to Interior records. Chevron had nine; Exxon Mobil had three; ATP had four and Murphy Exploration & Production Co. had nine. Three companies were cited for “loss of well control,” including Stone Energy Corp., Murphy and LLOG Exploration Offshore Inc., but BP was not. BP had four fires, while Chevron had 15, Exxon had 14 and Kerr-McGee had two.

In his preliminary injunction Tuesday, Feldman found that the Obama administration had not provided adequate reasoning for the blanket drilling ban in deep water.

“What seems clear is that the federal government has been pressed by what happened on the Deepwater Horizon into an otherwise sweeping confirmation that all Gulf deepwater drilling activities put us all in a universal threat of irreparable harm,” Feldman wrote in his 22-page ruling.

“The blanket moratorium, with no parameters, seems to assume that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger.”

The White House and environmental groups said they would appeal the ruling, and drillers indicated they would not send rigs back out until they had a clearer picture of the legal situation.

The administration’s order last month suspended drilling at 33 exploratory wells while an independent panel conducts a six-month study of offshore drilling safety.

Oil companies and Gulf state politicians have criticized the move, saying it will serve as an economic blow to an already struggling region. The legal challenge was filed by a group of offshore service companies that shuttle people and supplies to offshore drilling rigs.

Click here (pdf) to read the preliminary injunction from District Judge Feldman.

Copyright 2010 E&E Publishing. All Rights Reserved.

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