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Federal regulators haven’t kept up with oil drilling expansion

While oil and gas companies have pushed the frontiers of offshore drilling into deeper, more dangerous waters over the last decade, their government watchdogs stayed behind in the shallows, clinging to long-standing practices and failing to plan for new hazards, according to scores of federal documents and interviews with government officials and outside auditors.

So when the Deepwater Horizon barge, leased by BP, exploded April 20 and 5,000 barrels of oil started flowing daily into the Gulf of Mexico, neither the oil companies nor their regulators in the Interior Department were ready.

There was no written protocol, no history of drills to simulate a disaster anywhere close to this size. Interior analysts had calculated that the chances of any spill exceeding 1,000 barrels were 3% to 5%. There are no records to suggest anyone had seriously considered the possibility of such a nightmare coming true.

Computer analyses projected only a 7% chance that in a month’s time a spill in the area where the BP leak began could drift into the marshes and bayous of St. Bernard Parish, La. Oil from the spill began washing up in the parish Thursday, 16 days after fires erupted on the Deepwater Horizon and sent it to the bottom of the gulf, leaving 11 workers missing and presumed dead.

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As a result, officials found themselves inventing untested plans as the BP spill worsened. Company officials are putting their hopes on a temporary fix, a concrete-and-steel containment box that was lowered over the main leak Friday. The box is designed to funnel the oil flow via pipes into a ship. But it ran afoul that same night when it became clogged with gas and water crystals that look like slush.

It could take days to remedy that problem — and officials can’t guarantee success. And even then, it won’t permanently stop the flow of oil from BP’s well head. Plan B, drilling a relief well, could take three months.

Officials who oversee offshore drilling defend their risk assessment models and oversight practices, noting that it’s been 30 years since there has been a major offshore blowout anywhere in the world.

But documents and interviews suggest the Minerals Management Service, the branch of the Interior Department that oversees oil and gas drilling on federal land and offshore, has fallen behind in several of its fundamental regulatory duties, including enforcing environmental and safety rules, assessing the risks of energy exploration and calculating how much money the federal government is owed in oil and gas royalties.

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At the same time, the management service has taken pains to help the energy industry move ahead with cutting-edge technologies to drain fossil fuels from increasingly remote locations. Its confidence in the industry appears entrenched, according to audit findings and interviews.

For example, MMS safety inspections have consisted mainly of helicopter visits to offshore rigs to parse the company’s results of self-administered tests. MMS officials say their risk modelers essentially trust that new industry drilling techniques will be as safe as the simpler techniques of the last several decades.

Safety regulators have exempted many new technologies from formal procedures to create rules, instead collaborating with industry groups to make certain those technologies comply with regulations crafted for less-challenging drilling techniques, under a process called “alternative compliance.”

The Government Accountability Office, the nonpartisan research arm of Congress, has criticized the environmental and technological expertise of the agency in a series of reports. In March, a GAO report found that MMS suppressed its own scientists’ concerns over proposed Arctic drilling — a prospect far riskier than Gulf of Mexico exploration because of its remote locale and treacherous ice-filled seas. The office also found that the agency possessed no formal handbook for conducting legally required environmental reviews of drilling projects.

The service also lagged in one of its most fundamental tasks — ensuring oil companies accurately report oil flows used to calculate royalties, the GAO found. MMS had not updated some of its measurement standards in two decades, had fallen behind current technologies, and failed to meet inspection and calibration goals aimed at maintaining accurate measurements.

“What MMS struggles with is striking that balance between developing the resource and ensuring the environmental considerations are thought out,” Mark Gaffigan, a director in the GAO’s natural resources division, said in an interview. “The question is whether they’ve really thought everything through and are taking a look at all the changing technologies…particularly as you get into higher degrees of difficulty” such as deepwater drilling.

Interior leaders say they will evaluate the entire system of regulating offshore drilling as part of a series of investigations into the BP spill.

“We’re looking at everything,” Matt Lee-Ashley, an Interior spokesman, said in a written statement. The investigations, he added, “will help us get to the bottom of what happened and determine what changes might need to be made to ensure this never happens again. We expect an important part of this work will include an evaluation of the risk-assessment modeling currently employed. Those findings will direct what changes, if any, may be required.”

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To drill in federal waters, companies must clear a series of MMS reviews, including several meant to gauge environmental risk. Companies must detail the equipment and procedures involved in their operations and develop contingency plans to respond to accidents.

But even though MMS approved a BP spill-prevention plan last year that said the “worst case” blowout could spew 250,000 barrels of oil a day — the equivalent of an Exxon-Valdez-size catastrophe once a day — no one appears to have developed a response plan for that scenario.

MMS calculates the risk of a major spill based on historical precedent, even as gulf drilling moves into unprecedented depths. Because of that, the assessments don’t accurately reflect new challenges of drilling for oil far from equipment and support, to depths inhospitable to divers, where extremes of pressures and temperatures can tax materials such as cements used to fix casings, or synthetic materials used for seals and valves.

In addition, unfamiliar formations in the deep sea can contain hidden surprises, such as contaminants or layers of unforeseen high pressure. A gas leak at the seafloor may result in gas expanding very quickly as it travels the long distance to the water’s surface — in the worst case, producing blowouts. Such a scenario is being investigated in the Deepwater Horizon disaster.

Even though the BP drilling project faced all those challenges, MMS officials last year concluded after a month of study that it did not pose a large enough spill risk to warrant a detailed review under the National Environmental Policy Act. Decisions to grant those so-called categorical exclusions from the act have become common practice at MMS, which granted two dozen of them even after the Deepwater Horizon sank.

Officials say that MMS’ frequent spill-preparedness drills, sprung upon unsuspecting oil companies in the dead of night, have never approximated anything close to a blowout the size of the Horizon disaster. Instead, the drills often model one of the most common types of spills to occur in the gulf: a discharge of 50 to 100 gallons of fuel in a botched interchange between rig and tanker. Officials and outside supporters say the practice means the management service is focusing on the most likely scenarios.

Lynn Scarlett, a former deputy secretary of Interior, said budget constraints have hamstrung MMS’ ability to meet more demanding responsibilities as energy prospecting has moved farther offshore.

“In the deep water — that’s precisely when these agencies need more resources to deploy the most extensive analysis that is available to us,” she said. “Unfortunately, they don’t have those resources available to them. That may ring hollow to the American public. But I have sympathy for agencies that are asked to do so much.”

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BP officials said again Friday that since such an event had never occurred, they couldn’t be expected to have tools on hand to stanch the oil leak.

A collection of federal agencies focused largely on skimming the slick and spraying chemical dispersant to break up the oil. Responders even began to corral the oil slick in booms and light it on fire, but discovered there were not enough flame-resistant fire booms.

Robotic submarines could not manipulate a mechanism designed to prevent blowouts, although they succeeded in cutting a pipe and installing a valve to stop one leak. Now BP officials are looking to the untested cofferdam to give them time to find a permanent fix.

Privately, some federal officials predict the spill will force major changes in how the government regulates drilling and prepares for spills. And even the current system virtually guarantees officials will be more prepared next time: Government risk models based only on a precedent now have one.

jtankersley@latimes.com

julie.cart@latimes.com

Times staff writer Jill Leovy in Los Angeles contributed to this report.


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