US panel: Reforms needed to prevent offshore oil spills

By Mike McCarthy Jan 11, 2011, 21:34 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 mishaps in the future, according to a final report on the disaster.

   The National Commission on BP Deepwater Horizon and Offshore Drilling issued its report Tuesday, 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. The leak was finally plugged in September. Eleven rig workers died in the blast, which was caused by the failure of a device designed to prevent such blow-outs.

   The oil wreaked havoc on wildlife and the shoreline along a four- state stretch of the Gulf coast, as well as on the fishing and seafood insdustries. 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. It also called for developing a more comprehensive response plan in the event of another spill.

   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 however agreed, under pressure from Obama, to establish a 20-billion-dollar fund to cover compensation needs.

   Graham also called for greater integration of science and management to create better standards for offshore oil drilling, 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.

The Obama administration has been gradually lifting a ban on offshore drilling that was enacted after the explosion, allowing companies to apply for drilling permits in some coastal areas. The report said higher standards must be established for drilling in the Arctic, where harsh weather creates more hazardous conditions for drilling.

The US government in November announced a lawsuit against BP and the other firms over the oil spill for violating US environmental laws. The lawsuit asks for civil penalties under the Clean Water Act and to declare eight of the defendants liable without limitation under the Oil Pollution Act for all removal costs and damages caused by the spill.

   BP has said total costs from the spill are expected to reach about 40 billion dollars, including the 20 billion dollars set aside for compensation payments in the agreement with the US government.