Our view: Offshore drilling

Spill panel co-chair offers observations, no conclusions yet

September 11, 2010 

Bill Reilly, former head of the Environmental Protection Agency and current co-chair of the president's Gulf oil spill commission, spent much of last week in Alaska meeting with oil industry, environmental and government reps, along with members of the general public.

Reilly has long experience in government and private business and was tapped by President Obama to be a leader in the investigation of the Deepwater Horizon disaster in the Gulf of Mexico. The commission's brief goes beyond the Gulf, however, and Reilly described an intense Alaska tutorial about the issue of drilling in the Chukchi and Beaufort seas.

The commission will report to the president in January. Aside from a detailed, blow-by-blow account of what happened on the Deepwater Horizon, the panel expects to offer recommendations on new statutes, regulatory regimes, habitat restoration and the future of offshore drilling -- including off Alaska's shores.

Reilly didn't want to speak out of school about any conclusions, because the panel's work is still in progress and its members -- including UAA Chancellor Fran Ulmer -- haven't settled on final conclusions yet.

Reilly did offer some thoughtful observations.

• On exploration and drilling in the Arctic: "The preparations that Shell has made are very impressive," he said. "It didn't strike me that one could ask much more of an oil company." At the same time, he pointed out that the Coast Guard, by its own admission, could be of little help in the event of a spill. "They do have a major role in response and it doesn't look like they could play it."

That's because the nearest major Coast Guard installation is about 1,000 miles away in Kodiak. That's one of the problems environmentalists and other critics point out in their opposition to Arctic drilling. The environment is harsh, response is hard and support is far away. Reilly noted that environmentalists stressed spill response, while Shell stressed spill prevention.

He added that a pipeline to connect offshore production with the trans-Alaska pipeline at Prudhoe Bay, the need to keep the pipeline functional with a sufficient volume of oil (not to mention the nation's need for oil and the Alaska treasury's need for revenue) and the challenges of Arctic offshore production "make for extraordinarily complex combinations."

• On regulation: Too often, he said, "the regulator was no match for the industry."

Inherent conflicts at the Minerals Management Service are well documented, and boiled down to the contradiction in an agency responsible for both filling the federal treasury with oil revenue and enforcing safe and sound operations on offshore rigs.

Reilly said the regulators were dealing with engineers and other industry employees who were probably much better paid than those regulating them -- and much more knowledgeable.

"The industry will surround regulators with experts," he said. At best, the regulator is outgunned. At worst, the regulator can be snowed.

That's not a formula for effective regulation. As Ulmer said, the old Reagan axiom of "Trust but verify" applies here. But you can't verify unless you have the knowledge to know what you're dealing with and how it works.

Reilly offered a possible solution from his experience in the nuclear power industry, where he said inspectors are well paid, top-notch inspection grades are eagerly sought and the standard is not compliance, but best practices. Instead of regulators leaving for industry, safe operation might be better served if industry experts found a calling in regulation that came with the prestige of thorough knowledge, high standards and a pay grade to match.

We're going to keep drilling offshore, in waters both shallow and deep. And despite the current delay in the Arctic, exploration is likely there too. May the spill commissioners help drive safer, sounder production -- where best practices are the rule, not the exception. The need to do it right has never been clearer.

BOTTOM LINE: Spill commission leader lays out the challenges of balancing risk, reward and regulation.

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