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MEI Market Note No. 170: OTC 2013 (Part II) — Offshore Safety Culture

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At first, it seemed that the reaction of both the oil industry and the federal government to the unprecedented blowout in the Outer Continental Shelf (OCS) on April 20, 2010 (and its ensuing oil spill of nearly 5 million barrels), was to focus on how to prevent another incident of similar magnitude—another Macondo.

With a perspective of three years, however, an alternative view is more compelling: industry and the executive branch want to assure American public opinion that the continued development of the OCS is in the national interest, and that proper measures have taken.

Regarding the Macondo incident itself, the many reports, including a Presidential Commission, faulted all parties, operators, contractors, regulators and policymakers. The parties were seen as complicit in a culture that was lax in safety, environmental protection and public oversight.

Drawing on the experience of other regulators, in the U.S. and abroad (especially those in Norway and the UK), the conclusion was reached that a compliance-oriented approach to safety would lead to complacency and great risk. In late 2011, the Department of the Interior mandated a safety policy known as SEMS (Safety and Environmental Management System). Each operator on the OCS will devise its own SEMS, taking into account the risks associated with both process and occupational safety.

The immediate cause of the Macondo accident was a sociological dynamic made possible by the absence of strict, prescriptive regulation regarding the basic requirements for well completion and temporary well abandonment. Our conclusion is that while the overall safety comfort level in the OCS may have improved since 2010, the new safety philosophy ignores specific steps to make a Macondo-2 less likely.

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