WASHINGTON—Offshore energy companies say they are worried that U.S. government oversight will become onerous and insurance will be harder to find and expensive if a presidential commission's recommendations are adopted.

In its 381-page report released this month, the seven-member National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling concluded that preventable “human and engineering failures” caused the Deepwater Horizon explosion and fire that killed 11 workers and leaked millions of barrels of oil in the Gulf of Mexico.

The commission, which President Barack Obama appointed last May after the April 2010 explosion and fire, said the disaster resulted from “years of industry and government complacency and lack of safety.”

Part of the commission's mandate was to suggest ways to make drilling safer and accidents less likely, and the commission responded with several recommendations that include establishing a safety agency, significantly increasing the Oil Pollution Act liability cap, without specifying how much, and forming a mutual insurer if market conditions tighten and restrict coverage that is available to smaller energy operations.

In the coming months, the commission said it intends to testify before Congress, “meet with key administration officials and engage with industry leaders to advance implementation of the commission's recommendations.”

Legislators responded last week when House Democrats crafted a bill based partly on the recommendations. Notably among the provisions, the bill seeks to establish unlimited liability for companies responsible for oil spills. Under the Oil Pollution Act, liability for most damages is capped at $75 million except in cases of gross negligence, willful misconduct, violation of federal safety regulations, failure to report an incident, or refusing to cooperate with remediation activities, the commission's report said.

Energy companies say significantly increasing liability and adopting the report's other recommendations would restrict drilling operations and make insurance scarce to the point that all but the largest oil companies would be unable to afford the cost of operating in the Gulf of Mexico.

If implemented, the changes recommended in the report “will make it so tough to operate that we will see a decline in the Gulf of Mexico drilling industry,” said Don Briggs, president of the Louisiana Oil & Gas Assn. in Baton Rouge, La. “It truly will drive some companies out.”

Lee Hunt, president of the Houston-based International Assn. of Drilling Contractors, said the commission's suggestion that “only systemic reforms of both government and industry” will prevent a repeat of the Deepwater Horizon disaster is unfounded.

While there was “very poor judgment” shown in some decisions that led to the Deepwater Horizon incident, the causes “were not systemic to the industry or the other rigs (that were) working that day,” Mr. Hunt said.

Mr. Briggs agreed. “They did a study on one incident” but applied their findings across the entire oil industry. “That, I really felt, was wrong,” he said.

Some drilling procedures need to be re-examined, but the failure to properly manage the risk of an accident on the Deepwater Horizon “doesn't mean that's the policy of the entire industry,” Mr. Briggs said.

The commission recommends that Congress establish an independent safety agency within the Department of the Interior to oversee offshore drilling and renewable energy projects. The agency would be involved in project planning, design, construction, operating and decommissioning offshore drilling projects.

The commission also said a safety institute modeled after one already in place for the nuclear power industry should be set up to develop standards of excellence that would “ensure continuous improvement in safety and operational integrity offshore.”

“The nuclear model has worked well in the U.S.,” said Mr. Hunt, “but the commission knows it has not worked well internationally. We are a global organization. This would put us out of sync with regulations elsewhere. It would be Gulf of Mexico-specific and would not contribute to global safety,” while costing a lot of money to develop, he said.

If the $75 million liability cap were increased significantly or eliminated, such a move could drive up insurance costs and restrict coverage, some sources said. If that happened, the report suggests the energy industry consider forming a mutual insurer to provide additional capacity.

“This is a critical issue,” said Mr. Hunt. “Obviously rates will go up” if the cap is raised “and maybe insurance wouldn't be available.” If that happens, some companies, particularly smaller independents, are likely to find it too expensive and risky to do business in the Gulf.

“You will see companies redeploying their rigs to other markets,” Mr. Hunt said.

“We don't disagree that it needs to be changed,” Mr. Briggs said of the liability cap. “But it has to be something reasonable. If it's in the billions,” companies will simply say, “we're outta here,” he said.

However, Andrew Steptowe, upstream energy practice leader at Marsh Inc. in Houston, said raising or eliminating the liability cap isn't likely to have a major impact on the insurance market because oil pollution cleanup costs are not among the damages that are under the $75 million cap.

“There are six specific areas limited to $75 million,” Mr. Steptowe said. “So I don't think we will see a massive change.”

The six areas subject to the $75 million cap are damage to natural resources, subsistence use, revenues, profits, earning capacity and public services.

Removing the cap “obviously is significant but may not be in itself a game changer in respect of insurance,” said Bertil Olsson, Marsh's Houston-based U.S. energy practice leader.

Regardless of the implications of the commission's recommendations, “the insurance industry will respond,” said Mr. Olsson. “However, it is pretty clear that the more insurance that is needed, the more expensive it's going to get.”

Formation of an energy industry mutual might not draw a lot of interest, Mr. Steptowe said.

Small to medium-size deepwater drillers might need additional capacity, but shallow-water companies probably won't want to participate in a mutual that shares risks with deepwater operations that have much different exposures, Mr. Steptowe said.

As for the large deepwater drillers, most self-insure the bulk of their exposures and likely would have little use for a new insurer, he said.

Insurance brokers Willis Group Holdings P.L.C. and Aon Corp. declined to comment.

Oil Insurance Ltd., the Hamilton, Bermuda-based energy mutual that provides oil pollution liability coverage to its members, would welcome another mutual in the marketplace, said George F. Hutchings, the insurer's senior vp and chief operating officer.

“We would wholeheartedly support any mutual” formed to provide additional capacity, Mr. Hutchings said. But for it to be successful, there would need to be commercial market involvement in some fashion, he said.

OIL offers up to $250 million in per occurrence oil pollution limits to its members. If the liability cap is significantly increased for drillers, it will require more capacity than is available in the marketplace, Mr. Hutchings said.

As for whether the commission's report will result in safer offshore drilling, Mr. Hunt said drillers see no need for most of the recommendations.

“It is based on a false premise,” he said of the report's conclusion that systemic problems caused the Deepwater Horizon disaster, and its recommendations are not very different from what energy companies already have in place.

“Overall, I believe risk management is very good,” Mr. Briggs said. Hundreds of wells have been safely drilled in deep water in the Gulf of Mexico, “then one disaster throws everybody under the bus.”