Part 2 examines how the US Minerals Management Service repeated the regulatory capture failures of the UK's Piper Alpha era, leading to the Deepwater Horizon catastrophe.
By Nicholas R. Zabaly · 12 min read · Topics: quality-management, oil-gas, deepwater-horizon, piper-alpha, regulatory-compliance, case-study
Part 2 in an Ongoing Multi-Part Series
Series Format
This series of articles considers the Piper Alpha (1988) and Deepwater Horizon (2010) oil rig explosion disasters from a quality management perspective. Analysis of both accidents utilizes the official incident reports, as well as contemporary journalistic accounts and the memories of survivors, as source material.
It is important to note that, in identifying where things went wrong or could have been done better, the intention of this series is not to cast blame or assign responsibility, but rather to identify process failures which could (and have) happened to innumerable other operators and individuals. The purpose of analyzing history is to learn from it and improve, rather than to retroactively seek targets for culpability.
Each installment of the series will consider a different area of quality management where, in one or both of the accidents, failures occurred. Cumulatively, these failures led to the ultimate site failure that resulted in disaster. By examining all sides of the problem, multifaceted solutions and paths toward more responsible future management practices can be identified.
Deepwater Horizon: Repeating the Mistakes of Piper Alpha
Unfortunately, although the lessons of Piper Alpha resulted in significant changes in the UK, these lessons were not learned in the US. Perhaps this was inevitable: part of the challenge the UK had already faced was the collusion between government regulators and powerful oil companies which, predominantly, were American.
In fact, the very strategy of UK oil exploitation in the 1960s revolved around a strategy “conditioned on the importation of a US style production regime” where “Britain’s oil was to be extracted at the fastest rate possible, with limited State control.”[1] The idea that regulators and regulated would be intermingled was familiar to the American operators, for in the United States, they had existed under very similar conditions.
In 1982, the US government created the Minerals Management Service (MMS), a new regulatory body for the oil and gas industry. This entity was set up in exactly the same way that the UK’s DoE had been organized: the exact same governmental body was tasked with regulation, as well as with approving drilling permits and collecting revenues to fund the government.
Indeed, an article in The Denver Post published in the wake of the Deepwater Horizon disaster stated that MMS had been “a conflicted agency” from its creation.[2] The priority of MMS was to provide revenue – vast amounts of revenue. Through 2008, the service had provided over $200B to federal, state, and tribal accounts; moreover, it operated at an astonishing 98% profitability rate, placing it in the top 10 government entities in terms of revenues derived.[3][4]
However, from the very start, MMS was completely inadequate to provide genuine safety guidance, regulatory heft, or quality management oversight for the oil and gas industry.
As in the UK, staffing interchange between MMS and the industry was omnipresent. Among the examples cited in The Denver Post exposé were a former MMS employee who left to set up an oil consulting firm, then won a rigged bidding process with MMS. In another instance, an MMS employee who suppressed an environmental impact report which would have prevented drilling in a particular area went on to work for an oil company which drilled in the exact same area.
MMS employees tasked with regulating offshore oil facilities frequently worked for several years on the rigs, then at MMS, and then back at the rigs; in some instances, they were personal friends with the industry representatives they were meant to oversee. In other instances, reported by The Denver Post , the oil and gas industry bribed MMS employees to ignore quality management and safety requirements, gifting them with cash, drugs, and sex.[2]
Unique problems also existed in the Gulf region, which did not extend to MMS inspectors elsewhere in the country. In a comprehensive fault analysis conducted by NASA’s Academy of Program/Project & Engineering Leadership (APPEL) Knowledge Systems department, chronic short staffing in the Gulf was identified as a major contributing factor to insufficient quality management.
The APPEL study found that for the Pacific region, MMS had 5 inspectors who were tasked with regulating 23 facilities – a ratio of 1 inspector to every 5 sites. However, in the Gulf, 55 inspectors were expected to regulate over 3,000 facilities – a ratio of 1 inspector to every 54 sites.
MMS inspectors were not trained in how to evaluate essential drilling elements, including rupture discs, long-string well designs, lockdown sleeves, or temporary abandonment procedures – all of which were required, under MMS rules, to be evaluated in order for an operator to be granted a drilling permit. When investigating these elements, MMS staff simply provided blanket approvals, without even knowing what they were looking at or whether it was in compliance.
MMS was also unable to keep up with the fast pace of innovation within the industry; new technologies and approaches to offshore drilling had been developed since the 1980s, yet MMS had no staff, budget, or internal willingness to create quality management guidance. As a result, vast swaths of offshore industry practices were not regulated at all.
This specifically extended to the cementing of a drilling well (a fundamental aspect of offshore well construction); no regulation or oversight of any kind existed regarding cementing, the minimum standards for types of cement used, or the necessary negative-pressure testing of a well’s integrity after cementing was finished. All three of these unregulated areas proved to be fatal to the Deepwater Horizon.[5]
More broadly, the MMS process culture was crippled from both internal and external forces. Well-meaning staff would propose actions which would refine (or even establish) quality management systems, but the organization would never implement them. The NASA APPEL study identified a particularly striking failure which directly affected the Deepwater Horizon’s outcome.
More than 20 years before the accident, a rule change was proposed within MMS that would have mandated that all oil rig operators have plans for managing environmental and safety risks. Yet MMS never adopted their own rule. Industry influence, as well as political appointees, blocked the implementation. This meant that MMS, and by extension the entire US industry, was decades behind the predominant standards found throughout the rest of the world (including the UK, after Piper Alpha).
On certain occasions, interference in MMS’ ability to define their own quality management systems came from the highest levels. In 2003, the White House itself took direct action to prevent MMS from implementing quality management standard changes which would have updated key risk indicators and reporting standards.[5]
The situation was so bad by 2010 that an anonymous scientist employed by MMS said that no amount of reform could change the culture and the pressure applied to it; instead, the scientist advocated dissolving the service and starting over.[2]
As with the UK’s DoE, the fundamental role of MMS was to shield the industry from responsibility, and to establish an aura of compliance which in fact did not exist. “If you went into one of their offices, you’d probably find them watching Leave it to Beaver and rubber-stamping permits,” Kierán Suckling, a representative for the environmental group the Center for Biological Diversity, angrily proclaimed after the Deepwater Horizon disaster.[2] Hyperbolic as the quote was, Suckling was not entirely off-base.
The NASA APPEL study found that MMS had never performed a National Energy Policy Act (NEPA) review of the entire Macondo Prospect (the section of the Mississippi Canyon where the Deepwater Horizon was operating), despite the review being required by law as a minimum clearance standard before drilling could be authorized. Instead, MMS provided a ‘categorical exemption,’ one of the approximately 250-400 that were given each year to Gulf oil rig operators in the leadup to the disaster.
A ‘categorical exemption’ was defined as a project which would have “no significant individual or cumulative effect on the quality of the human environment,” which would have been untrue even if no disaster had occurred. The justification for this decision was an internal citation of a prior MMS report, which had concluded that dangers were real and review justified; however, in the final report those conclusions were deleted due to industry and political pressure.[6]
The NASA APPEL found additional evidence of these failures, citing a specific instance where MMS research into blowout-preventers (the critical last line of defense to prevent an oil spill in the event of a catastrophic well accident). In that instance, MMS had set a standard for what a blowout-preventer’s minimum performance would need to be. The industry questioned this, saying it was too rigorous.
As a result, MMS immediately cut the requirements of the minimum standard in half, without having first performed any analysis or review. Subsequently, third-party studies found the industry’s claims were completely wrong, and that the new MMS standard was wholly inadequate. MMS then commissioned two studies of its own, both of which concluded the same. Yet, MMS never revised its quality standard, and deliberately ignored the information from both studies.[5]
These cumulative actions, as well as other instances of manipulating scientific findings, led the Union of Concerned Scientists to say that MMS had committed “abuses of science” in the leadup to the Deepwater Horizon disaster.[6]
In the aftermath of the catastrophe, Interior Secretary Ken Salazar split MMS into three separate agencies so as to avoid future conflicts of interest. Of these, the agency which succeeded MMS with regard to quality management and safety was the Bureau of Safety and Environmental Enforcement (BSEE), which remains the relevant entity today.
Government Accountability Office investigations have found that the agency has made some progress since establishment, but that BSEE “has struggled to successfully implement key initiatives to improve offshore oversight.”[7]
Governance culture was at the root of the Piper Alpha and Deepwater Horizon tragedies, but a disregard for observed and measured data was also central. Even with poor governance, comprehension of data which was available far in advance should have been able to prevent both disasters.
In the upcoming installments of this series, we will explore the disregard for data which directly led to both accidents, and explain how subsequent safety quality management improvements have made such oversights less likely today.
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Authors
Nicholas R. Zabaly is the Editor-in-Chief of QMS2GO’s research and knowledgebase operations. An experienced researcher and technical writer, he has worked closely with the company since its foundation and serves as its lead article writer.
Additional References and Resources
Charles Wolfson and Matthias Beck / New Solutions – The British Offshore Industry After Piper Alpha
David Olinger and Mark Jaffe / The Denver Post – Tracking Down Minerals Management Service’s Dysfunctional History of Drilling Oversight
U.S. Department of the Interior Minerals Management Service – Budget Justifications and Performance Information Fiscal Year 2010
Louis Jacobson / PolitiFact – Issa Says Oil Royalties Trail Only Taxes in Generating Revenue for the Federal Government
NASA APPEL Knowledge Services – Academy Case Study: The Deepwater Horizon Accident Lessons for NASA
The Union for Concerned Scientists – The Minerals Management Service: Bad Science in the Name of Private Interest
U.S. Government Accountability Office – Oil and Gas Management: Stronger Leadership Commitment Needed at Interior to Improve Offshore Oversight and Internal Management
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