Oil and Gas Management:

Interior's Reorganization Complete, but Challenges Remain in Implementing New Requirements

GAO-12-423: Published: Jul 30, 2012. Publicly Released: Aug 29, 2012.

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Franklin W. Rusco
(202) 512-3841
ruscof@gao.gov

 

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What GAO Found

On October 1, 2011, the Department of the Interior (Interior) officially established two new bureaus, separating offshore resource management oversight activities, such as reviewing oil and gas exploration and development plans, from safety and environmental oversight activities, such as reviewing drilling permits and inspecting drilling rigs. Because the responsibilities of these bureaus are closely interconnected and will depend on effective coordination, Interior developed memoranda and standard operating procedures to define roles and responsibilities and facilitate and formalize coordination.

New safety and environmental requirements and policy changes designed to mitigate the risk of a well blowout or spill initially required Interior to devote additional resources and time to reviewing certain oil and gas exploration and development plans and drilling permits for oil and gas activities in the Gulf of Mexico. Specifically, these policy changes affected Interior’s (1) environmental analyses, (2) reviews of oil and gas exploration and development plans, and (3) reviews of oil and gas drilling permits.

Interior’s inspections of offshore Gulf of Mexico oil and gas drilling rigs and production platforms from January 1, 2000, through September 30, 2011, routinely identified violations. However, Interior’s database is missing data on when violations were identified as well as violation correction dates for about half of the violations issued. As a result, Interior does not know on a real-time basis whether or when all violations were identified and corrected, potentially allowing unsafe conditions to continue for extended periods. During this same period, Interior issued approximately $18 million in civil penalty assessments. Recently, Interior began implementing a number of policy changes to improve both its inspection and civil penalty programs. However, Interior has not assessed how these changes would affect its ability to conduct monthly drilling rig inspections.

Federal government stakeholders told GAO that they generally provided most of their input on Interior’s oil and gas development program early in the planning process and typically did not review or comment on oil and gas exploration and development plans or drilling permits. Federal and state stakeholders stated that Interior was generally responsive to their input on proposed offshore oil and gas activities in the Gulf of Mexico from 2002 through January 2012, but nongovernmental stakeholders—including industry and conservation groups—stated that Interior was, at times, less responsive.

Interior continues to face challenges following its reorganization that may affect its ability to oversee oil and gas activities in the Gulf of Mexico. Specifically, Interior’s capacity to identify and evaluate risk remains limited, raising questions about the effectiveness with which it allocates its oversight resources. Interior also continues to experience difficulties in implementing effective information technology systems, such as those that aid exploration and development plan reviews. It also continues to face workforce planning challenges, including hiring, retaining, and training staff. Moreover, Interior does not have current strategic plans to guide its information technology or workforce planning efforts.

Why GAO Did This Study

On April 20, 2010, the Deepwater Horizon drilling rig exploded in the Gulf of Mexico resulting in 11 deaths, serious injuries, and the largest marine oil spill in U.S. history. Interior, which oversees offshore oil and gas activities, initiated a number of reforms following the incident to improve its oversight. This report assesses (1) Interior’s reorganization of its oversight of offshore oil and gas activities; (2) how key policy changes Interior has implemented since this incident have affected Interior’s environmental analyses, plan reviews, and drilling permit reviews; (3) the extent to which Interior’s inspections of drilling rigs and production platforms in the Gulf identify violations or result in civil penalty assessments; (4) when stakeholders provided input to Interior on proposed oil and gas activities, and the extent which they believe Interior considered their concerns; and (5) key challenges, if any, Interior faces in overseeing offshore oil and gas activities in the Gulf. GAO analyzed data and documents and interviewed officials from Interior and the Department of Commerce’s National Oceanic and Atmospheric Administration, Gulf of Mexico states, environmental groups, and industry.

What GAO Recommends

GAO recommends, among other things, that Interior improve the effectiveness of its inspections through timely input of violation correction data, its capacity for categorizing oil and gas activities according to risk, and its strategic planning for information technology and workforce efforts. In commenting on a draft of this report, Interior generally agreed with GAO’s findings and recommendations.

For more information, contact Frank Rusco at (202) 512-3841 or ruscof@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: To improve Interior's oversight of offshore oil and gas activities in the Gulf of Mexico, the Secretary of the Interior should institute controls to help ensure that Interior's environmental National Environmental Policy Act of 1969 (NEPA) analyses are based on the most current, relevant information, such as in amendments to operator-submitted exploration and development plans that would need to be considered as part of such an analysis.

    Agency Affected: Department of the Interior

  2. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: To improve Interior's oversight of offshore oil and gas activities in the Gulf of Mexico, the Secretary of the Interior should continue to evaluate ePlans and develop edit checks to improve the accuracy and completeness of operators' exploration and development plan submissions.

    Agency Affected: Department of the Interior

  3. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: To improve Interior's oversight of offshore oil and gas activities in the Gulf of Mexico, the Secretary of the Interior should track whether plan amendments were initiated at the request of Interior or the operator and, for amendments initiated at the request of Interior, the reasons for the amendments to provide Interior's managers with information needed to conduct targeted outreach with operators on how to improve plan submissions and reduce the use of amendments.

    Agency Affected: Department of the Interior

  4. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: To improve Interior's oversight of offshore oil and gas activities in the Gulf of Mexico, the Secretary of the Interior should enhance the effectiveness of Interior's inspection program by assessing how new inspection policy requirements, travel times to drilling rigs, and numbers of inspectors affect Interior's ability to conduct monthly drilling inspections and whether its monthly inspection goal is appropriate.

    Agency Affected: Department of the Interior

  5. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: To improve Interior's oversight of offshore oil and gas activities in the Gulf of Mexico, the Secretary of the Interior should enhance the effectiveness of Interior's inspection program by ensuring that both violations and correction dates are recorded in Interior's Technical Information Management System Information Technology (TIMS IT) system in a timely manner.

    Agency Affected: Department of the Interior

  6. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: To improve Interior's oversight of offshore oil and gas activities in the Gulf of Mexico, the Secretary of the Interior should ensure that operators' requests, approvals, and disapprovals for departure from regulations are recorded to provide Interior with information that would better allow it to identify when specific regulations should be considered for revision.

    Agency Affected: Department of the Interior

  7. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: To improve Interior's oversight of offshore oil and gas activities in the Gulf of Mexico, the Secretary of the Interior should enhance Interior's capacity for identifying and evaluating offshore oil and gas drilling operations according to risk, thereby allowing it to adjust and evaluate its oversight accordingly by (1) identifying and systematically collecting and maintaining reliable data on risk factors associated with drilling operations, (2) providing operators with clear definitions for significant events in the weekly well activity reports and developing a way to characterize and record these events systematically and reliably, and (3) using the risk factors and significant events data to develop a risk-based approach with clear criteria to prospectively evaluate and categorize drilling operations according to risk and retrospectively to evaluate the performance of oversight and risk mitigation activities in avoiding significant events.

    Agency Affected: Department of the Interior

  8. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: To improve Interior's oversight of offshore oil and gas activities in the Gulf of Mexico, the Secretary of the Interior should complete and maintain its database for tracking recommendations, so that Interior consistently tracks and responds to the results of all audits and other external reviews to ensure that findings are promptly addressed and appropriate actions are taken to respond to recommendations and improve oversight.

    Agency Affected: Department of the Interior

  9. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: To improve Interior's oversight of offshore oil and gas activities in the Gulf of Mexico, the Secretary of the Interior should direct the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE) to set milestones and a completion date for developing a comprehensive IT strategic plan, including results-oriented goals, strategies, milestones, performance measures, and an analysis of interdependencies among projects and activities, and use this plan to guide and coordinate their modernization goals.

    Agency Affected: Department of the Interior

  10. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: To improve Interior's oversight of offshore oil and gas activities in the Gulf of Mexico, the Secretary of the Interior should direct BOEM and BSEE to develop a strategic workforce plan that, among other actions, determines the critical skills and competencies that will be needed to achieve current and future programmatic results and develop strategies to address gaps and human capital conditions in critical skills and competencies that need attention.

    Agency Affected: Department of the Interior

  11. Status: Closed - Implemented

    Comments: In October 2013, Interior decided that it would not reinstate the Outer Continental Shelf (OCS) Policy Committee and that another Federal Advisory Committee would not be created. Rather, Interior opted to continue with what it describes as its enhanced outreach and dialog with stakeholders. In reaching this decision, Interior considered four possible options for soliciting input from stakeholders, which include coastal state governors, federal agencies, the business community, the environmental community, and other local constituencies. After considering the options, Interior officials decided to continue with the approach they had in place. In reaching this decision, Interior cited that its current approach was more effective than a federal advisory committee in achieving a meaningful dialog with its stakeholders.

    Recommendation: To improve Interior's oversight of offshore oil and gas activities in the Gulf of Mexico, the Secretary of the Interior should consider reinstating the Outer Continental Shelf (OCS) Policy Committee, on a regional and national basis, or adopt an equivalent alternative to allow increased opportunities for stakeholders to provide input as it relates to offshore oil and gas leasing activities to ensure Interior fulfills its obligations under the implementing regulations of the OCS Lands Act.

    Agency Affected: Department of the Interior

 

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