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By LOGA Member & Badger Oil Operations Manager Steve Maley (original article)

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Original Article

NEW ORLEANS — The ban on deepwater petroleum drilling in the Gulf of Mexico is being challenged by a Louisiana oil services company that claims the federal government has not shown justification for the shutdown.

The moratorium shut down 33 drilling rigs, many of which Hornbeck said it has contracts to serve.

At the center of the suit is Interior Department Secretary Ken Salazar’s May 27 report on safety measures in the Gulf, which led to the moratorium. Hornbeck said the government’s own inspections of 29 of the 33 drilling rigs turned up nothing more than minor violations.

“The report contains no finding or evidence of a systemic failure by rig operators, drillers or other participants in offshore drilling operations to comply with current regulations or existing permits,” the suit said.

Hornbeck also said the moratorium, which it calls arbitrary and capricious, runs afoul of federal law governing offshore lease development requiring the government “to balance orderly resource development with the protection of human, marine and coastal environments.”

The suit comes as many industry officials warn that a six-month moratorium will mean a much-longer slowdown in the Gulf as deepwater rigs leave the region to take long-term contracts in foreign markets, costing the Gulf thousands of jobs.

Hornbeck, which employs about 1,300 people, said the moratorium illegally interferes with its business contracts.

“Hornbeck is suffering immediate irreparable harm and will continue to suffer immediate harm to its business, including the irretrievable loss of its vessel fleet’s useful life, loss of its crews that have long been associated with their particular vessels, loss of Hornbeck’s shore-side teams and disruption of Hornbeck’s long-standing contractual relationships,” the suit said.

Interior Department spokeswoman Kendra Barkoff, said the moratorium “is based on the need for a comprehensive review of safety in deepwater operations in light of the BP oil spill.”

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LOGA’s “Send in your 1-minute video against the moratorium” campaign was covered this morning on CNN’s American Morning show.  In a report filed by CNN correspondent Carol Costello, CNN’s American Morning highlighted the adverse economic effects of a deepwater drilling moratorium imposed by the President on the entire Gulf south.  Watch the video here: http://bit.ly/amAHEA

Deepwater Drilling Moratorium Remains in Place, Shallow Water Drilling May Continue in Compliance with Stronger Safety Requirements

WASHINGTON, DC ˆ The Department of the Interior today issued a directive to oil and gas lessees and operators on the Outer Continental Shelf implementing stronger safety requirements that Secretary of the Interior Ken Salazar recommended in his 30-day safety report to the President.

The Notice to Lessees focusing on safety measures („Safety NTL‰) issued today applies to both deepwater and shallow water operations, although drilling operations in water deeper than 500 feet remain under a six-month moratorium.  Shallow water drilling operations and production activity in both deep and shallow waters are not under a moratorium and will continue, provided they are in compliance with the new safety requirements.
„Oil and gas from the Outer Continental Shelf remains an important component of our energy security as we transition to the clean energy economy, but we must ensure that offshore drilling is conducted safely and in compliance with the law,‰ said Secretary Salazar.  „The deepwater drilling moratorium that is in place will provide time for the Presidential Commission to complete its work, but production and shallow water drilling may continue under the stronger safety requirements that we are implementing today.‰
The Safety NTL issued today implements the seven safety requirements that Secretary Salazar‚s 30 day safety report to the President determined could be implemented immediately.  Under the NTL, lessees and operators are required to:
Show certification by the operator‚s Chief Executive Officer that they are conducting their operations in compliance with all operating regulations and that they have tested their drilling equipment, ensured that personnel are properly trained, and reviewed their procedures to ensure the safety of personnel and protection of the environment;
Provide certification from a Professional Engineer ˆ before beginning any new drilling operations using either a surface or subsea blowout preventer (BOP) stack ˆ of all well casing and cement design requirements, including that there are at least two independent tested barriers for the well, and adhere to new casing installation procedures;
Provide independent third-party verification, before drilling any new well, that the BOP will operate properly with the drilling rig equipment and is compatible with the specific well location, borehole design and drilling plan;
Provide independent third-party verification that shows that the blind-shear rams installed on the surface or subsea BOP stack are capable of shearing the drill pipe in the hole under maximum anticipated surface pressures;
Adhere to new inspection and reporting requirements for BOP and well control system configuration, BOP and well control test results, BOP and loss of well control events, and BOP and loss of well control system downtime;
Receive independent third-party verification, before spudding a new well, of re-certification of BOP equipment used on all floating drilling rigs to ensure that the devices will operate as originally designed, and that any modifications or upgrades conducted after delivery have not compromised the design or operation of the BOP;

Have a secondary control system for subsea BOP stacks with remote operated vehicle (ROV) intervention capabilities, including the ability to close one set of blind-shear rams and one set of pipe rams.  The subsea BOP system must have an emergency shut-in system in the event of lost power, as well as a deadman system and an autoshear system;
Conduct ROV Hot Stab Function Testing of the ROV Intervention Panel on subsurface BOP stacks; and
Provide documentation that the BOP has been maintained according to the regulations.
Drilling operations that are not subject to the deepwater drilling moratorium must fulfill their BOP reporting requirements by June 17 and submit the required safety certifications by June 28.  Failure to provide required certifications will result in the issuance of an incident of non-compliance and may result in a shut-in order.
In the coming days, the Department of the Interior will be also be issuing expanded requirements for exploration plans and development plans on the Outer Continental Shelf, said Bob Abbey, who is the Director of the Bureau of Land Management and who has also been called upon to serve as Director of the Minerals Management Service.  The Department of the Interior and the Council on Environmental Quality are also conducting a review of MMS‚ procedures under the National Environmental Policy Act.
„We are following an orderly, responsible process for implementing stronger safety and environmental requirements of offshore drilling,‰ said Abbey.  „We need to make sure that drilling is done right, that it is done safely, and that oil and gas operators are following the law.‰

Here is the link to the NTL:

http://www.doi.gov/deepwaterhorizon/loader.cfm?csModule=security/getfile&PageID=34536

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Original Article

Members of a panel of experts brought in to advise the Obama administration on how to address offshore drilling safety after the Deepwater Horizon disaster now say Interior Secretary Ken Salazar falsely implied they supported a six-month drilling moratorium they actually oppose.

Salazar’s May 27 report to President Barack Obama said a panel of seven experts “peer reviewed” his recommendations, which included a six-month moratorium on all ongoing drilling in waters deeper than 500 feet. That prohibition took effect a few days later, but the angry panel members and some others who contributed to the Salazar report said they had reviewed only an earlier version of the secretary’s report that suggested a six-month moratorium only on new drilling, and then only in waters deeper than 1,000 feet.

“We broadly agree with the detailed recommendations in the report and compliment the Department of Interior for its efforts,” a joint letter from the panelists to various politicians says. “However, we do not agree with the six month blanket moratorium on floating drilling. A moratorium was added after the final review and was never agreed to by the contributors.”

An Interior Department spokeswoman agreed that the experts had not given their blessing for a moratorium, and said the department did not mean to leave the impression they had. In fact, she said, the experts were merely asked to review 22 safety recommendations in the report.

“We didn’t mean to imply that they also agreed with the moratorium on deepwater drilling,” the spokeswoman, Kendra Barkoff, said. “We acknowledge that they were not asked to review or comment on the proposed moratorium and that they peer-reviewed the report on a technical basis. The moratorium on deepwater drilling is based on the need for a comprehensive review of safety in deepwater operations in light of the BP oil spill.”

The experts’ criticism of the moratorium and effort to distance themselves from it come as oil production companies prepare to move mobile deepwater rigs out of the Gulf of Mexico, threatening thousands of jobs in Louisiana that support those drilling operations with supply boats and shoreside services.

“A blanket moratorium is not the answer. It will not measurably reduce risk further and it will have a lasting impact on the nation’s economy which may be greater than that of the oil spill,” the letter says. “We do not believe punishing the innocent is the right thing to do.”

One of the panelists who signed the letter, University of California at Berkeley engineering professor Bob Bea, said in an e-mail message that a moratorium should be reserved for “unconventional, very hazardous operations” and shouldn’t apply to the “majority of conventional offshore operations, (which) meet fundamental requirements for acceptable risks.”

“Moratorium was not a part of the … report we consulted-advised-reviewed,” Bea wrote. “Word from DOI (Interior Department) was it was a W(hite) H(ouse) request.”

The National Academy of Engineering provided seven reviewers for Salazar’s safety report, and the academy’s Ken Arnold, an oil and gas industry consultant, wrote a scathing cover letter Tuesday that concludes: “The Secretary should be free to recommend whatever he thinks is correct, but he should not be free to use our names to justify his political decisions.”

Five of the seven reviewers signed the complaint letter: Bea; Benton Baugh, president of Radoil Inc.; Ford Brett, managing director of Petroskills; Martin Chenevert, director of drilling research for the department of petroleum and geophysical engineering at the University of Texas; and Hans Juvkam-Wold, petroleum engineering professor emeritus at Texas A&M University.

Eight other industry experts were interviewed for the creation of Salazar’s report. Two of them also signed the letter: E.G. “Skip” Ward, associate director of the Offshore Technology Research Center at Texas A&M University, and Tom Williams, a former undersecretary of the interior.

“We were very upset,” Ward said. “We would have understood if (Salazar’s report) said, ‘These are good recommendations from the panel, but we have decided to declare a six-month moratorium instead.’ But instead, they’re kind of using our input for cover to do something that didn’t have much to do with our recommendations.”

The panelists said even Salazar’s report clearly shows the deepwater safety record is generally strong, making the moratorium all the more puzzling.

Ward said he was optimistic to hear that the Interior Department put several new safety measures into a directive to oil companies Tuesday. Arnold said it could mean the federal government is serious about moving more quickly than six months to implement new safety requirements and lift the crippling moratorium.

But Tuesday’s directive was accompanied by an Interior Department news release emphasizing that the six-month moratorium on deepwater drilling remains in place, and that meeting the new safety requirements will only allow shallow-water drilling and deepwater production activities to resume.

Arnold said he had at least hoped that deepwater production drilling could continue under the new safety guidelines, but believes it is still prohibited under the moratorium. He said he reluctantly agreed that some moratorium on exploratory drilling was necessary, but he’s not sure any amount of new regulations will address what went wrong on the Deepwater Horizon.

“For six hours they were getting information that things were not right on that rig and they were continuing to rationalize that things were OK,” Arnold said. “It was a group-think kind of thing, and there were a bunch of things that were on the borderline. … When you keep adding up the mistakes, you end up in a situation where a big problem sneaks up on you. We’re not going to solve that with all of these new equipment requirements.”

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David Hammer can be reached at dhammer@timespicayune.com or 504.826.3322.

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By LOGA Member Steve Maley, Badger Oil Corporation (Original Article)

President Obama and Interior Secretary Salazar have done their best to shift the blame of the Deepwater Horizon disaster to the Bush Administration and the supposed ‘cozy relationship’ it fostered between the Minerals Management Service and the oil and gas companies it regulates.

The public consciousness perceives a corrupt and incompetent agency, turning a blind eye to the shenanigans of their industry buddies.

In reality:

• Statistical measures of offshore safety performance improved significantly throughout the Bush years.
• Ditto the drilling well blowout incident rate.
• Bush-era internal investigations led to significant improvement in ethics throughout the organization.
• The Bush Administration increased royalty rates on new leases for the first time in recent memory.

Don’t take my word for it; here are the MMS documents.

Offshore Safety Performance 1996-2008

Offshore Well Blowout Rate 1996-2008

Here’s the source of these two charts.

Ethics Investigations

The Denver Royalty-in-Kind office was a failure of management that did not reflect on either the agency’s regulatory stance or its relationship with the offshore lessees. I blogged about it here, in 2008 when the story broke, and here, just last month. Regardless, this was a Bush-era investigation.

Another Bush-era investigation led to the 2008 convictions of two MMS officials, Jimmy Mayberry and Milton Dial, who colluded to land Mayberry a lucrative consulting arrangement with MMS upon his retirement. Again, this corrupt activity involved revenue collection out of the Denver office, not the offshore regulatory function. The list of Federal agencies which are immune to such insider nest-building is quite short.

A third Bush-era ethics probe is germane to the issue of MMS’s regulatory oversight. An insider tip fingered the head man at the MMS Gulf of Mexico Region in New Orleans.

This investigation was initiated in 2006 based on allegations made by Chris Oynes… . Oynes alleged that Donald C. Howard, Regional Supervisor, GOMR, had attended one or more hunting trips with officials of offshore oil and gas companies. …

On February 3, 2009, Howard was sentenced to one year of probation. He was also ordered to pay a $3,000 fine and a $100 special assessment. In addition, he was ordered to perform 100 hours of community service…

Does the name Chris Oynes, the informant, ring a bell? It should: he’s the guy who was excoriated just a couple of weeks ago when he announced his resignation from MMS. Chris was the associate director of Offshore Energy and Minerals Management who many blamed for the deepwater royalty relief foul-up. The Deepwater Horizon incident was the last straw.

But, but, but…. I thought Oynes and the organization tolerated corruption!?

[Sound effect of heads exploding.]

Actually, the Howard investigation plays a role in the latest MMS ethics scandal to hit the wires, involving several inspectors in the Lake Charles, LA district office.

The investigation follows a report citing workers from the MMS accepting gifts, viewing pornography and possibly allowing oil workers to fill out their own inspection reports.

The report found it was commonplace before 2007 for MMS employees at a Lake Charles, Louisiana office to receive gifts including sporting event tickets and hunting trips from energy companies, Reuters reported.[emphasis added]

Before 2007? Maybe the Inspector General’s Report, rushed to press to bolster the Administration’s case against the MMS, will shed some light on the significance of that timing:

…[A]cceptance of gifts from oil and gas companies were widespread throughout that office, but appeared to have declined after the investigation and termination of Don Howard in January 2007 for his acceptance of a gift from one of these companies.

…[W]hen MMS supervisor Don Howard, of the New Orleans office, was investigated and later terminated in January 2007 for his gift acceptance, this behavior appears to have drastically declined.

You can read the report and decide just how egregious the ethical lapses were, but the fact remains that a Bush-era investigation ended the improper acceptance of meals, gifts, and invitations to sporting events. And what is the outcome of the case under President Obama, after all this huffing and puffing?

On October 15, 2009, the U.S. Attorney’s Office for the Western District of Louisiana declined this case for prosecution. This case is being referred to the Director of the Minerals Management Service for any action deemed appropriate.

I’ve heard that one inspector is on administrative leave.

During the Bush era, offshore safety and well control statistics markedly improved. That’s either a sign of regulatory success or of an industry that’s serious about making improvement. Ethics investigations rooted out corruption in the management ranks, and the lower echelons of the organization quickly got the message that their (mostly) petty gifts and gratuities would no longer be tolerated.

You are reading this here, and not in the mainstream media, because it is much easier for “professional journalist” to be force-fed the Administration’s narrative than to do a little basic fact-checking.

Cross-posted at RedState.com.