US panel: Reforms needed to prevent offshore oil spills (1st Update)

Jan 11, 2011, 16:31 GMT

   Washington - 'Significant errors and misjudgement' within the oil industry and US government helped lead to the BP oil spill in the Gulf of Mexico last year, and vast reforms must be enacted to prevent similar disasters in the future, a final report released Tuesday said.

The National Commission on BP Deepwater Horizon and Offshore Drilling issued its final report, calling for new reforms in the US regulating body and within the oil industry to improve safety and minimize risk.

   'We concluded that these mistakes amounted to a significant failure of management,' former senator Bob Graham, co-chairman of the commission, said at a press conference in Washington.

   Millions of gallons of oil poured into the Gulf of Mexico in the months following the April 20 explosion on the Deepwater Horizon drill rig leased by BP Plc. Eleven rig workers died in the blast, which was caused by the failure of a device intended to prevent such blow-outs.

The oil damaged wildlife and shoreline along a four-state stretch of the Gulf coast.

President Barack Obama created the commission in May to study the disaster and make recommendations to guard against future spills.

The commission called for creating a new independent agency responsible for safety and establishing environmental standards of offshore drilling, located within the Department of Interior.

The report said a new approach must be taken to better assess the risks of certain oil drilling operations. To give more incentive for industry to improve, it also called for raising the limit on how much money oil firms must pay to compensate victims of such disasters and assuage other economic damage.

Current US law limits such compensation to 75 million dollars, and the US Congress failed in its attempt to lift the cap since the disaster. BP has however agreed, under pressure from Obama, to establish a 20-billion-dollar fund to cover compensation needs.

There needs to be a greater integration of science and management to create better standards for offshore oil drilling, Graham said, adding that the United States lags behind some other countries.

'Sadly the United States has one of the lesser records in terms of the safety of its offshore drilling practices,' Graham said.

The commission blamed BP Plc, the oil company that owned and operated the well, in addition to Transocean Ltd, the company that owned the Deepwater Horizon oil rig, which exploded and sank. Halliburton Co, an oilfield services company which also worked on the project, also shares responsibility, the report said.