Consensus Study Report

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This activity was supported by the Gulf Research Program of the National Academies of Sciences, Engineering, and Medicine. Any opinions, findings, conclusions, or recommendations expressed in this publication do not necessarily reflect the views of any organization or agency that provided support for the project.

International Standard Book Number-13: 978-0-309-69977-8
International Standard Book Number-10: 0-309-69977-0
Digital Object Identifier: https://doi.org/10.17226/26873
Library of Congress Control Number: 2023938865

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Suggested citation: National Academies of Sciences, Engineering, and Medicine. 2023. Advancing Understanding of Offshore Oil and Gas Systemic Risk in the U.S. Gulf of Mexico: Current State and Safety Reforms Since the Macondo Well–Deepwater Horizon Blowout. Washington, DC: The National Academies Press. https://doi.org/10.17226/26873.

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COMMITTEE ON PROGRESS AND OPPORTUNITIES TOWARD DECREASING THE RISK OF OFFSHORE ENERGY OPERATIONS

Richard A. Sears (Chair), Stanford University, Stanford, California

Norman A. Abrahamson (NAE), University of California, Berkeley

Paul G. Bradley, Health and Safety Executive, Aberdeen, United Kingdom

Manson K. Brown, U.S. Coast Guard (retired), Neptune Beach, Florida

Paul S. Fischbeck, Carnegie Mellon University, Pittsburgh, Pennsylvania

Dwight Johnston, Independent Consultant, Mandeville, Louisiana

Ulku G. Oktem, Near-Miss Management, Philadelphia, Pennsylvania

S. Camille Peres, Texas A&M University, College Station

Kathy A. Seabrook, Global Solutions, Inc., Mendham, New Jersey

Charles R. Williams II, Independent Consultant, Cypress, Texas

National Academies of Sciences, Engineering, and Medicine Staff

Mark S. Hutchins, Study Director, Consensus and Advisory Studies, Transportation Research Board

Stephen R. Godwin, Scholar, Consensus and Advisory Studies, Transportation Research Board

Thomas R. Menzies, Jr., Director, Consensus and Advisory Studies, Transportation Research Board

Jennifer A. Cohen, Senior Program Officer, Gulf Research Program

Daniel Talmage, Program Officer, Board on Human-Systems Integration, Division of Behavioral and Social Sciences and Education (after August 2021)

Jenell Walsh-Thomas, Program Officer, Board on Human-Systems Integration, Division of Behavioral and Social Sciences and Education (until August 2021)

Thelma L. Cox, Program Coordinator, Gulf Research Program

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NOTE: See Appendix C, Disclosure of Unavoidable Conflicts of Interest.

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Acknowledgments

The committee wishes to thank the individuals participating in the briefings and discussions over the course of the study and making other contributions to the committee’s work:

From the Gulf Research Program (GRP):

From Sphera:

From the Bureau of Safety and Environmental Enforcement:

From the Bureau of Transportation Statistics:

From SA Technologies, Inc.:

From Winning Culture LLC:

From Baker Hughes:

From the American Bureau of Shipping:

From the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling:

From the International Association of Oil & Gas Producers:

From the International Association of Drilling Contractors:

REVIEWERS

This Consensus Study Report was reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise. The purpose of this independent review is to provide candid and critical comments that will assist the National Academies of Sciences, Engineering, and Medicine in making each published report as sound as possible and to ensure that it meets the institutional standards for quality, objectivity, evidence, and responsiveness to the study charge. The review comments and draft

manuscript remain confidential to protect the integrity of the deliberative process.

We thank the following individuals for their review of this report:

Although the reviewers listed above provided many constructive comments and suggestions, they were not asked to endorse the findings or conclusions of the report, nor did they see the final draft before its release. The review of this report was overseen by Chris T. Hendrickson (NAE), Carnegie Mellon University (emeritus), and Craig E. Philip (NAE), Vanderbilt University. They were responsible for making certain that an independent examination of this report was carried out in accordance with the standards of the National Academies and that all review comments were carefully considered. Responsibility for the final content rests entirely with the authoring committee and the National Academies.

PROJECT MANAGEMENT

This project was managed by Mark S. Hutchins under the supervision of Thomas R. Menzies, Jr., Director of the Consensus and Advisory Studies Division of the Transportation Research Board. Stephen R. Godwin and Hutchins assisted the committee in drafting the report. Jennifer A. Cohen, GRP, and Daniel Talmage, Board on Human-Systems Integration, also assisted and provided liaison with their respective units of the National Academies. Thelma L. Cox, GRP, provided administrative support. The report review process was managed by Karen Febey.

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Preface

The 2010 Macondo well Deepwater Horizon blowout, explosion, and resulting fatalities, injuries, and oil spill in the Gulf of Mexico was the nation’s most catastrophic offshore disaster. Although failures of technologies and systems were implicated and individuals blamed, multiple subsequent evaluations of the causes of the disaster attributed them to failures or lapses in management, organizations, and regulation. At the 10th anniversary of the Macondo incident, the Division Committee of the Gulf Research Program (GRP), which provides strategic direction to GRP, asked for an assessment of whether systemic risk management by industry and regulators designed to avoid another offshore disaster was improving over time. The detailed elements of the Statement of Task (SOT) for making this assessment are described in Chapter 1.

The National Academies of Sciences, Engineering, and Medicine appointed a 10-member committee of experts led by Richard A. Sears, Adjunct Professor, Stanford University, to carry out this assessment. The committee members have expertise in petroleum engineering, geophysics, offshore oil and gas operations and safety management, human factors, offshore safety regulation in the United States and the United Kingdom, standards, process safety, safety management systems, and risk assessment. Individual members have backgrounds in offshore oil and gas management, regulation, federal enforcement, risk assessment, and safety practices in the chemical and refining industries, nuclear power, and large dams. Three members have several decades of management experience in offshore oil and gas operations including safety policy and practice.

The current report is one of three that is being sponsored by GRP and focuses on systemic offshore risk. The other two studies focus on human health and community resilience¹ and long-term environmental trends.²

Over the years, and particularly following the Macondo incident, concerns have been expressed about issues regarding systemic risk in offshore oil and gas operations. The work by this committee represents one of the first attempts to deconstruct systemic risk into its component parts so that it can be assessed and discussed in something other than generalized terms. It is that work that forms the nucleus of this report and is presented in detail in Chapter 4.

In carrying out its SOT, the committee gathered information about systemic risk management from national and international organizations. Individual experts from the offshore industry gave presentations on improved safety practices and technologies. Representatives of major U.S. associations that often speak on behalf of offshore oil and gas exploration and production companies declined invitations to meet with the committee. The committee also reviewed numerous reports and articles about the causes of the Macondo incident and recommended reforms and analyses of specific dimensions of systemic risk management.

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¹ See https://www.nationalacademies.org/our-work/a-report-series-on-progress-toward-human-health-and-community-resilience-in-the-gulf-of-mexico-region.

² See https://www.nationalacademies.org/our-work/a-report-series-on-long-term-environmental-trends-in-the-gulf-of-mexico.

Contents

SUMMARY

1 INTRODUCTION

Definitions

Brief Overview of the U.S. Offshore Industry and Safety Record

Macondo Well Blowout and Explosion

Systemic Risk Concept Applied to Offshore Safety

Report Organization to Address the Statement of Task

References

Annex A: Generic Structure, Features, and Operations of the Offshore Oil and Gas Sector

Annex B: Main Conclusions Drawn About Principal Causes of 2010 Macondo Blowout from Three Major Independent Investigations

2 CHANGES IN OFFSHORE SAFETY SINCE 2010

Introduction

Major Recommendations Adopted and Other Safety Improvements Since 2010

Major Report Recommendations Not Broadly Adopted

Conclusions

References

3 AVAILABLE EMPIRICAL INDICATORS OF OFFSHORE INDUSTRY RISK PROFILE

Introduction

Data Sources and Gaps

Conclusions

References

4 A MODEL FOR ASSESSING INDUSTRY RISK PROFILE

Introduction

Process for Estimating Offshore Industry Risk Profile

Definitions and Assessments of the 15 Elements That Comprise Systemic Risk

Summary and Conclusions

References

5 INCENTIVES OF THE OFFSHORE OIL AND GAS INDUSTRY REGULATORY STRUCTURE

Regulatory Framework

Regulatory Incentives and Disincentives

Conclusions

References

6 GULF RESEARCH PROGRAM ACTIVITIES: CONTRIBUTIONS TO A BETTER UNDERSTANDING OF SYSTEMIC RISK REDUCTION

Introduction

Background

Assessment Process

Assessment of Gulf Research Program Activities

Disseminating Findings from Grant Research

Promising Activities for the Future

Conclusions

References

7 ENERGY TRANSITION AND SYSTEMIC RISK MANAGEMENT IN THE OUTER CONTINENTAL SHELF

Introduction

The Energy Transition and Risk Management

Conclusion

References

8 SUMMARY OF CHAPTER CONCLUSIONS

Introduction (Chapter 1)

Changes in Offshore Safety Since 2010 (Chapter 2)

Available Empirical Indicators of Offshore Industry Risk Profile (Chapter 3)

A Model for Assessing Industry Risk Profile (Chapter 4)

Incentives of the Offshore Oil and Gas Industry Regulatory Structure (Chapter 5)

Gulf Research Program Activities: Contributions to a Better Understanding of Systemic Risk Reduction (Chapter 6)

Energy Transition and Systemic Risk Management in the Outer Continental Shelf (Chapter 7)

Reference

APPENDIXES

A RECOMMENDATIONS FROM KEY REPORTS

B STUDY COMMITTEE BIOGRAPHICAL INFORMATION

C DISCLOSURE OF UNAVOIDABLE CONFLICTS OF INTEREST

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