Mark Latham, Associate Professor of Law, Vermont Law School
By Eric Amateis
Professor Latham spoke about the technology associated with deep water oil and gas exploration, and the need for improved awareness and regulation of its use. His initial interest in the subject stemmed from curiosity about the equipment that allows drilling at such great depths. For example, the oil rig involved in the Deep Water Horizon spill sat on the ocean’s surface, 5,000 feet above the sea floor. The well drilled an additional 13,000 feet below the sea floor to reach oil.
Modern deep water drilling is accomplished with floating oil rigs, as opposed to older models which were fixed to the sea floor. GPS technology and “thrusters” allow the rig to fight natural ocean currents and stay in place. To illustrate the challenges of deep water drilling Professor Latham quoted from Deepwater Petroleum Exploration and Production: A Nontechnical Guide – “Drilling a well in 1500 ft. of water is comparable to standing on top of the Sears Tower trying to stick a long straw in a bottle of Coke sitting on South Wacker Drive.”
The basic challenge, in terms of risk management, is controlling the pressure associated with drilling at great depths. Two things are critical to pressure control: the use of drilling mud, which is continuously injected through the drill pipe, and cementing, which ensures that oil under great pressure does not leak around or up through the well. As insurance, blowout “preventers” are designed to seal a well in the event of a leak and stop a widespread spill.
A blowout preventer is a massive steel structure many stories tall. The drill pipe is placed through the center of the preventer. The preventer contains several mechanisms designed to choke off the well in case of a leak. In the Deepwater Horizon spill, the blowout preventer failed, as did the blowout preventer on the relief well.
Government regulation of pressure control is relatively sparse, prescribing simply that the “best available” technology be used. Professor Latham was surprised to learn that blowout preventers are considered among the best available technology. In fact, there is some history of blowout preventer failure – Professor Latham provided examples of failed blowout preventers involved in spills as early as 1979 and as recent as 2009.
A 2004 study by West Engineering found that improvements in drill pipe technology were necessary to compliment expansion into deeper water (and higher pressure) drilling. The improvements in piping adversely affected the ability of blowout preventers to cut and seal the pipe in case of a blowout. Another problem is the inability to operate a blowout preventer sitting thousands of feet below the ocean’s surface in case the primary activation device fails. Minerals Management Service regulations “expect” secondary controls. Professor Latham points out that this language is a bit odd, as it falls short of “requiring” fail-safe devices.
Following Deepwater Horizon, the Material Management Service was restructured to address what many saw as an inherent conflict. The agency responsible for regulating and enforcing deep water drilling was also responsible for encouraging leasing of deep water oil fields, leading to what some saw as an overly cozy relationship between regulators and industry. Professor Latham is skeptical that this type of response will avert the next spill. Reasons given for this skepticism relate back to the technology at issue: the shear complexity of the technology, the deep water drilling environment, the frequency of drilling and blowouts, and a less-than-reliable last line of defense in the form of blowout preventers.
Regulating the hardware involved in deep water drilling presents a challenge for the agencies responsible. There is a shortage of engineers capable of reviewing the technical aspects of drilling permits, a shortage of manpower for inspecting the numerous wells, and lack of training for those compliance inspectors. These shortcomings lead to a lack of enforcement and thus deterrence.
The Final National Commission report found MMS regulations “inadequate” to manage the risks inherent in deep water drilling. For Professor Latham, both industry and government need to reassess and change practices in order to minimize risks.
In closing, Professor Latham suggested a few changes that may help regulate the technology in deep water drilling:
First, eliminate the $75 million liability cap even in the absence of gross negligence – instead, negotiate liability based on the extent of damage and the response costs. Where there is gross negligence, Congress should take a page from CERCLA, allowing the government to seek treble damages from the liable party.
Second, take a hard look at the technology in place. In the wake of Deepwater Horizon this is being done by both government and industry. Professor Latham suggested a permanent national committee comprised of both government and industry representatives. The committee would focus on pressure control fundamentals, emergency pressure control technology, and appropriate response actions.
Finally, there is a broader lesson in terms of technology. With respect to technological marvels such as deep water drilling rigs, regulators and the interested public need to understand them as much as possible to make sure they are being adequately regulated, and to contemplate unintended consequences of using such impressive technology. This lesson is applicable beyond deep water drilling, and is relevant as we contemplate all types technology, including proposals for addressing climate change.