Minerals Management Service

BP’s Procedural Spills

Another thing that happened while I was tromping around one of the most beautiful places on earth (Yosemite) is that the BP drilling rig that had an explosion and fire last week sunk and oil has started to spill into the Gulf (as this dramatic NASA picture makes clear). In the last day, the Minerals Management Service (one of the federal agencies that regulate offshore drilling) has released documents showing that BP was cited in 2007 for training problems related to a similar problem in 2002.

BP Exploration & Production, which owns the deep water rig that exploded last week in the Gulf of Mexico, was cited in 2007 for inadequately training employees in well control, according to the US Minerals Management Service.

The conditions of the training are the same as those suspected in the possible blowout aboard the TransOcean Deepwater Horizon, which left 11 workers missing and presumed dead.

MMS slapped BP with $41,000 in fines in October 2007 after a series of violations related to a near-blowout five years earlier.  In November 2002, the Ocean King rig, operated by Diamond Offshore Drilling, in the Gulf had to evacuate all 65 of its workers for nearly two days after operators detected a dangerous rise in gas pressure.  The rig, which had been drilling at a depth of more than 5,000 feet, didn’t resume work for nearly a week, according to the MMS report.

Unlike last week’s disaster, workers were able to keep the well from leaking by using cement and mud to plug the well.  The same subcontractor, Diamond Offshore, was also used when BP was fined $25,000 in 2004 for bypassing a gas detection system while drilling.  A BP spokesman in London says the company still uses Diamond Offshore as a contractor.

KEY SAFETY PROCEDURES

In the 2002 incident, the MMS said that BP and Diamond Offshore were unaware that some of the key safety procedures they used to initially stop the dangerous rise in pressure could have contributed to a blowout.  The MMS cited BP for what it called “no formal procedures” and “no written guidelines” to follow in case of an emergency.  MMS also cited BP and contract workers in the incident for what they said was a “lack of knowledge of the system, and lack of pre-event planning and procedures.”

Let me give some background on this. In the 1990s, I worked for a company that consulted on safety procedures for the oil industry (a writer who reported to me did some procedures for one Amoco refinery, which was subsequently purchased by BP; we bid on, but did not get, a job that included BP; and we did some procedures for a drilling entity that has since been purchased by Halliburton, which is involved here as well). The way in which the government forces oil companies to operate in ways which minimize the safety and environmental danger of inherently dangerous processes is to ask (either nicely or by mandating) a set of procedures to cover both normal and emergency procedures. It’s a way of setting up documented procedures which can be trained and audited; the procedures allow the government to check whether the operators are operating as safely as possible. Just as importantly, it’s a way of proactively making sure that in case something does go badly wrong, the operator in question–and more importantly, the workers actually doing the work–will have a way of figuring out what to do quickly enough so as to minimize the safety and environmental damage.

MMS is saying that in 2002, BP not only had none of these procedures, but it hadn’t trained the workers and contractors on the rig, and as a result, the workers did the wrong thing to contain the damage. BP got lucky in 2002, because doing the wrong thing did not exacerbate the problems.

Continue reading

What Republicans REALLY Mean When They Say Drill! Baby! Drill!

They mean sex, corruption, and political scandal.

I first covered the scandal that is breaking big today at about the same time as Governor Palin took the oath of office in Alaska. 

This appears to have been the scam: Some time ago, the Interior Department introduced a "royalties in kind" program, which allowed oil companies to pay for the privilege of drilling for oil on our land in kind–in oil and gas–rather than in cold hard cash. The gimmick is that it was supposed to facilitate accounting. Up until recently (don’t worry–I’m going to figure out these dates), the oil went into the Strategic Petroleum Reserve (SPR).* But the SPR apparently is all filled up now, so recently the US government started contracting with companies to sell the oil on the "open market." But, as these things are bound to happen in the BushCo world, we didn’t take open bids for the contracts to sell the oil. We apparently just gave companies with ties to a bunch of Interior Department employees in Denver the contracts, which of course meant we got less money than we otherwise would have.

I even predicted,

How appropriate–this Administration will begin with an oil scandal. And it looks like it will end with one, too. 

That looks to be prescient, as the Department of Interior Inspectors General’s Report describing the scandal has thrown a whole lot of sex and drugs and improper gifts into the mix.

Government officials handling billions of dollars in oil royalties engaged in illicit sex with employees of energy companies they were dealing with and received numerous gifts from them, federal investigators said Wednesday.

The alleged transgressions involve 13 Interior Department employees in Denver and Washington. Their alleged improprieties include rigging contracts, working part-time as private oil consultants, and having sexual relationships with — and accepting golf and ski trips and dinners from — oil company employees, according to three reports released Wednesday by the Interior Department’s inspector general.

The investigations reveal a "culture of substance abuse and promiscuity" by a small group of individuals "wholly lacking in acceptance of or adherence to government ethical standards," wrote Inspector General Earl E. Devaney.

The reports describe a fraternity house atmosphere inside the Denver Minerals Management Service office responsible for marketing the oil and gas that energy companies barter to the government instead of making cash royalty payments for drilling on federal lands. Continue reading

Is Dick Stealing from the US and Giving to His Friends, Again?

Remember the Minerals Management Service? That’s the Department of Interior agency that is supposed to make sure that when oil companies drill on US or Native American lands, the landowner gets a sufficient return for the oil or gas they take out of the land, or, alternately, that a sufficient amount of oil to account for the royalty on the drilling rights is given back to the US. It’s been at the center of scandal before:

For a while, when oil companies drilled oil on federal land, one of three things would happen:

  • The oil companies would cheat and tell the government they drilled less oil than they had
  • When such fraud was identified, DOI would order its auditors to overlook the cheating
  • The byzantine rules governing royalties would make it hard to collect the money you and I are owed

So DOI started a new program. We’d let someone drill oil, and in exchange, the oil company would put a similar amount of oil into the strategic reserve. But when the strategic reserve filled up, the government started using brokers to sell our oil.

It turns out that Susan Wooldridge and Steven Griles had some close ties (as in, sharing a house) to one of the companies bidding to be that broker company, and that that company got to sell our oil even though another broker was willing to charge a higher rate (and therefore pay taxpayers more money). So basically, these two lovebirds accepted a bribe and sold our oil to the lowest bidder.

To fix that problem, they established a Royalty Management Subcommittee, which was supposed to watch out for our interests:

it’s supposed to study:

  • The extent to which existing procedures and processes for reporting and accounting for federal and Indian mineral revenues are sufficient to ensure that the Minerals Management Service receives the correct amount.

  • The audit, compliance and enforcement procedures and processes of the Minerals Management Service to determine if they are adequate to ensure that mineral companies are complying with existing statutes, lease terms, and regulations as they pertain to payment of royalties.

  • The operations of the Royalty in Kind program to ensure that adequate policies, procedures and controls are in place to ensure that decisions to take federal oil and gas royalties in kind result in net benefits to the American people.

Though the Royalty Management Subcommittee proved it wasn’t really interested in transparency and oversight, seeing as how it had a penchant for meeting in secret.

Now, to be fair, the Royalty Management Subcommittee just got started last year, and it takes a long time to reverse Dick Cheney’s corrupt ways. But an IG audit by the Department of Energy has discovered that there are completely inadequate controls on the oil that’s supposed to go into our Strategic Public Reserve, and over a quarter of the oil is disappearing. Continue reading

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