Opening Remarks by Co-Chairmen William K. Reilly and Senator Bob Graham from Dec. 2 Deliberative Meeting
For Immediate Release: Dec. 2, 2010
Contact: Dave Cohen, Press Secretary
Media Release: Opening Remarks by Co-Chairmen William K. Reilly and Senator Bob Graham from Dec. 2 Deliberative Meeting
Co-Chair William K. Reilly’s Opening Remarks
Today marks the concluding phase, the last time that this commission together will deliberate in public on our responsibilities, and we will consider in the course of the day the recommendations that the staff has presented to us. I want to say that this is as good a staff as I have ever worked with. I think it is a tremendous tribute to the executive director Richard Lazarus and to the other members of this extraordinary team that they have displayed the energy, the creativity, the resourcefulness and the investigative congeniality which marks their best work. The fact that we are as prepared as we are after just four or so months of work by the commission is a great tribute more than to anyone else I think to the staff itself.
Today we'll have staff presentations and then deliberate on a safety culture on regulatory oversight, on environmental review, on drilling in the Arctic and on oil spill response. I am struck myself by the evolution in my own thinking in the course of the time that I have spent serving on this commission. I came into it persuaded as I think most people in the oil and gas industry may still be persuaded that this was a case of a company with at least a five-year history of severe safety challenges and misbehavior, and that we were dealing with essentially a rogue company. I think it has been conclusively and indisputably established that we have a bigger problem than that.
Three major companies, as Senator Graham just observed, were heavily involved in the decisions that are most questionable that were made on the Macondo rig, and this perception in some quarters of the oil and gas industry that Macondo was the consequence of one company's bad decisions simply doesn't stand. Our investigative team concluded that three major companies were fully implicated in the catastrophe and our staff further reported that other companies had no effective containment preparations and laughable response plans that promised to look out for any polar bears or walruses that happened on to the scene. The poor state of containment and response plans and capability in the Gulf of Mexico is indisputable evidence of a widespread lack of serious preparation, of planning, of management. That culture must change. It must change for so many reasons for the good of all of us. It must change among other reasons for the good of the oil and gas industry.
Reflect for a moment on this. A recent commission paper noted there was a point in the management of this crisis when industry experts feared the entire 120 million barrel reservoir might seep through the ocean floor and wreak total havoc. I would ask you to take a moment to reflect on this. What would we be talking about today if the well couldn't be canned? If it was still pumping 60 thousand barrels a day into the Gulf, if the shores of Gulf Resorts in Mississippi, Alabama and Florida had been smothered with oil and if the videos were still being shown 24/7 on every cable network and news website around the world, I can assure you we wouldn't be here debating how long it will take to jump start the permitting process in the Gulf or the Arctic. We'd be having an existential conversation about whether offshore drilling should ever be permitted in US coastal waters again.
Even the companies with fine safety and environmental management systems, and we have heard from them and we have studied and come to admire those systems, these companies that were not implicated in the Macondo explosion themselves nevertheless found themselves shut in the Gulf because of other companies' mismanagement, because of a decision over which they had no control. The failure of three companies on one rig ended up shutting down 33, and that was a risk that even the best risk management systems did not anticipate and did not control.
So let me say as emphatically as I can the oil and gas industry needs to embrace a new safety culture. The series of decisions that doom Macondo evidenced a failure of management, and good management could have avoided the catastrophe. A new safety culture is important. It is not enough. Drilling for oil in deep water is risky but so is flying or operating submarines and nuclear reactors. The systems and the industry safety -- the systems represented in an industry safety institute particularly of the sort that the nuclear industry has developed, the Institute for Nuclear Power Operations, particularly offer useful lessons on how to ensure management that is judged and incentivized to implement best practices and called out when it doesn't.
Commission staff have identified a whole range of issues to which we must respond. I think that the self-interest of the oil and gas industry that considers it does have superior systems of safety and management lies in the reassurance that it could obtain with a safety institute the reassurance that the laggards in accident prone companies can be brought up to a higher standard by its peers. That is the history of other industries which have confronted serious catastrophes. Well, the essential foundation of good risk management is high quality, no nonsense regulation. Staff presentations and staff investigations have made clear as have other investigations that federal regulators and inspectors have failed utterly to keep abreast of the profoundly sophisticated technologies involved in deep water exploration and development.
To protect the public interest the Interior Department will require more funds, more inspectors, more engineers, more professionals who know the oil and gas industry and are the equal of the industry personnel they regulate. It is widely acknowledged that the generation of revenue has driven the old MMS, and it took in a lot of money, billions annually. The money from oil and gas leases should be more than sufficient to finance the agency reformation that is needed. Secretary Salazar has recognized the need to separate leasing and revenue generation from environmental and safety regulation. We will consider today whether to recommend that he go further and construct an impenetrable wall in environmental and safety regulators insulated from those who auction and lease and manage the money those activities generate. That is what other countries have done, UK and Norway most recently after their own disasters.
A word about the proposals we are considering. We meet at a time of national preoccupation with reducing federal expenditures. We are sensitive to the realities of the country's fiscal precariousness. Neither a safety case nor a safety institute need entail federal appropriations or even congressional action, and the improvements in the Interior Department's regulatory capability are, we believe, relatively modest, and failure to upgrade the quality of federal regulation would be a national scandal. As both the CEOs of Exxon Mobil and of Shell have observed, industry requires a competent regulator. I call on the industry to support in Congress the increase in resources BOEMRE so badly needs to become competent.
Oil is a strategic resource and is important to the security and the economy of the United States. My own experience with the industry leaves no doubt about the industry's technological savvy and its ability to manage risks and to fuel the economy. We are not dealing here with a sick or failing or unsuccessful industry but with a complacent one. The industry created the Marine Well Containment Corporation as an important industry commitment that addresses shortfalls in containment. We need more such initiatives. So we will now hear presentations about the shape that some of these initiatives might take and the recommendations that the commission will consider.
Co-Chair Bob Graham's Opening Remarks
The oil and gas off our shores is an American asset. The American government is not just the regulator of offshore oil. It is also the steward of the American people of this asset. In a real sense we are the landlord and have an obligation to respond when the public trust has been abused. President John Adams said facts are a hard thing. There are some facts that I believe we have uncovered.
One, our investigation has determined that there are fundamental weaknesses in the U.S. government's regulatory approach. Most Americans would be surprised and disappointed as I was to learn that America lags behind other countries in how we regulate and oversee oil and gas exploration and production. This fact points towards the need for alternative strategies such as a commitment to safety procedures as a condition of drilling on sea beds which belong to the people of America.
Two, the oil and gas industry at large has an obligation to respond. It is not enough in my view to lay the blame solely on a few rogue companies. The companies involved in this disaster are major players in the Gulf and the contractors are used throughout the world. At last month's hearing I was very impressed with the CEOs of Exxon Mobil and Shell and their demonstrated commitment to industry-wide safety. They must continue as strong advocates for new and for effective industry-wide regimes which compliment effective federal government and execution of lease conditions.
Three, America's current energy non-policy is unsustainable. With minimal awareness and virtually no considered debate we have positioned ourselves as the user of 22 percent of the world's petroleum while we control only three percent of known reserves under America's lands and waters. This commission has an opportunity to speak to this radical imbalance which threatens our national security. Last month the head of our investigative team Mr. Fred Bartlett put it well when he said a hundred years from now we want the world to say they changed the safety regime in offshore drilling. This is a worthy aspiration with one significant exception. The world should say this in 2011, not in 2110. As a nation we have the opportunity to make this change. We have a chance to learn the lessons from this disaster in a way that makes our oil and gas industry stronger, our workers safer, our environment healthier and our national security more secure.
Finally, I would like to note that I am very impressed with what we have been able to accomplish without subpoena power. I remain mystified as to why a few Senators decided to deny this commission this power when subpoena power has been granted as almost an absolute for congressional commissions which have analogous responsibilities to ours. The lack of subpoena power has made our commissions work more difficult. Our success is a testament both to the determination and skill of our team and to the plain fact that the problems of and deficiencies with the current safety regime are so egregious. Over the next two years we will discuss our findings and how we propose to translate them into reforms that are worthy of our great nation. Thank you.