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U.S. to Restructure Offshore Drilling Regulatory Agency in Wake of Oil Spill

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The Obama administration said it will restructure the little-known agency overseeing offshore drilling, splitting is regulatory oversight duties from its lease management responsibilities a joint task critics say is rife with conflict of interest.

U.S. Interior Secretary Ken Salazar said he will separate the safety and environmental enforcement activities of the Minerals Management Service into a separate, independent entity, after the agency has been blamed for decisions that may have led to the accident at Deepwater Horizon and the subsequent oil spill in the Gulf of Mexico.

"The job of ensuring energy companies are following the law and protecting the safety of their workers and the environment is a big one, and should be independent from other missions of the agency," Salazar said in a statement.

The MMS is also responsible for leasing offshore sites, collecting the royalties due the government, and permitting of operations. Critics say these duties give the agency a vested interest in higher profit at the oil companies, which may interfere with its regulatory decisions.

The agency erupted briefly into notoriety in 2008 when the department's inspector general found that employees in its Denver office, responsible for royalty collections, had parties with energy company representatives, had sex and used drugs with them, and accepted gifts, ski trips and golf junkets. Several of the employees were fired and others disciplined.

MMS has been blamed for specific actions that may have led to the Deepwater Horizon disaster including a decision last year that an acoustically-controlled shut-off valve, a standard safety feature in European offshore rigs, would not be required at the site. The agency also provided a waiver to BP exempting the oil giant from conducting an environmental analysis for the site because the risk of a spill in that area of the Gulf was "minimal or nonexistent."

According to the Center for Biological Diversity, an environmental group in Tucson, Ariz., MMS has approved 27 new offshore drilling operations since the April 20 accident in the Gulf, exempting all but one of them from environmental review. Two of the new operations approved were submitted by BP, which made the same assertions on drilling safety as it had for Deepwater Horizon, the group said.

Source: http://oilprice.com/Environment/Oil-Spills/U.S.-to-Restructure-Offshore-Drilling-Regulatory-Agency-in-Wake-of-Oil-Spill.html

By. Darrell Delamaide

 

I have an interest in the financial markets, commodities and Geopolitics.

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