Printed from BusinessInsurance.com

Energy sector operations made safer in five years since BP explosion

Posted On: Apr. 12, 2015 12:00 AM CST

The offshore energy industry in general and BP P.L.C. in particular have taken a series of steps to improve safety in the five years since the Deepwater Horizon disaster in the Gulf of Mexico.

Millions of gallons of oil spilled into the ocean after a blowout preventer failed at the Macondo well and set off an explosion and fire April 20, 2010, killing 11 workers and sparking litigation that has yet to be resolved (see related story).

In addition to indelibly altering livelihoods and ecosystems, the disaster has changed the way companies in the offshore energy industry, as well as their regulators and insurers, view safety and risk management (see related story).

The disaster has cost BP more than $40 billion.

One example of how the energy industry's safety posture has changed since the blowout is establishment of HWCG L.L.C., a consortium of 16 offshore energy firms and service providers tasked with responding to subsea oil spills to protect people, property and the environment. Members include Marathon Oil Co., Noble Energy Inc. and W&T Offshore Inc.

The consortium shares assets, personnel and technical resources that member companies can use when there is an incident, said David Coatney, Houston -based managing director of HWCG.

“The primary response solution is comprised of specific-purpose capping stacks, which leverage long-existing blowout preventer technology that has been adapted for rapid response to a loss of well control,” Mr. Coatney said. “We also have vessels from contracting service vendors who have readily deployable equipment to be able get the capping stacks in place.”

Similarly, BP, Chevron Corp. and ExxonMobil Corp. are members of the Marine Well Containment Co., which also offers emergency response resources and expertise to its members.

In addition to collaborative ventures, companies are taking their own steps to increase offshore safety.

BP has developed a $50 million global deepwater well cap and tooling package that can be quickly transported by air to wells throughout the world, a company spokesman said.

Another innovation is the use of well simulator rooms, such as one BP opened on its Houston campus, to train workers how to use the complex and evolving equipment employed in offshore drilling.

“The simulators now are very sophisticated and are invaluable for training,” said Terry N. Gardner, Houston-based senior associate at energy consulting and training firm EKT Interactive Inc., which helps train employees of several large oil companies.

Another technology that has helped offshore energy companies manage risk is increased use of real-time monitoring and data from offshore operations, said Robert G. Bea, professor emeritus of civil and environmental engineering at University of California, Berkeley.

Indeed, BP has a monitoring center in Houston that focuses exclusively on Gulf wellbore monitoring and provides real-time data on well pressures and flow rates.

“Some companies have taken reasonably aggressive actions, such as establishing real-time data centers, much as they do for commercial aviation,” Mr. Bea said.

He said the enhanced focus on safety is vital as offshore drillers look to tap energy reserves in places such as the Chukchi Sea in the Arctic Ocean. “This is a really different environment,” he said. “It's like the challenge NASA faces going from operating on the moon to operating on Mars.”

Mr. Gardner, a 40-year veteran of offshore operations, said operating safely is long ingrained in the offshore industry, and the BP disaster only reinforced it.

“Historically if you look at the offshore drilling industry, the accident rate has been extremely low, and that's because they know that the consequences are so high when you have a failure,” he said. “There has recently been a renewed recognition within the industry that if we were going to continue to do aggressive operations offshore that we would have to tighten up on safety and risk management.”

Paul Garrot, Houston-based vice president and product line manager of energy at Ironshore Inc.'s specialty casualty business, said underwriters credit energy companies for the strides they have made in safety and risk mitigation since the accident.

“Five years out, I think that offshore is an improved risk, and I think that if there was another incident, there would be an improved response from what we saw at Macondo from BP,” Mr. Garrot said. “The insurance industry realizes that, and that's why there is a lot of capacity for writing offshore risk.”