Six years after Deepwater Horizon, an industry in turmoil

The sixth anniversary of the Deepwater Horizon disaster on April 20 brought with it renewed focus on an industry in turmoil. Memories of the largest oil spill in U.S. history mingled with industry unrest over a prolonged downturn in the Gulf of Mexico, a trend that oil stakeholders say will be exacerbated by the Obama administration’s new safety rules for drilling, blowout preventers and monitoring.

The blowout and fire at BP‘s Macondo well killed 11 workers and gushed oil for 87 days, surpassing the 1989 Exxon Valdez grounding as the nation’s worst oil spill. Earlier this month, it made more history, when U.S. District Judge Carl Barbier approved a $20.8 billion settlement with BP. The company will pay out the money over 15 years as a civil penalty for the court’s finding of gross negligence in the spill. The largest such settlement in U.S. history could become a legacy for restoring the Gulf coast and southern Louisiana, depending on how the funds are spent. Whenever the oil market rebounds, and deepwater exploration begins again in earnest, there will be another legacy of safety consciousness.

Following the spill in 2010, a Gulf-wide shutdown ordered by the government cost offshore service companies virtually all their contracts within weeks – and then the tide turned again, as BP hired every vessel it could find for the cleanup. OSV operators saw day rates jump 50%.

When the moratorium was lifted Oct. 12, 2010, world oil prices were stabilizing around $100/bbl., but it would be five months before the government would grant a new deepwater permit.

The Offshore Marine Service Association (OMSA) called that period a virtual “permitorium” to protest the delays, and marked the deep divide the industry feels from the Obama administration to this day.

“The administration has determined that they are going to strangle domestic energy production in the Gulf of Mexico,” OMSA president Jim Adams said in early 2011. “Until they change that political goal, we are not going to see the kind of clarity that is necessary to restore the vibrancy that we saw in the Gulf in the first quarter 2010.”

Yet day rates returned to pre-disaster prices by December 2010. Offshore service operators said a new emphasis on safety and risk management on the platforms also became a necessity for vessel crews as customers insisted on high standards.

In April 2015, the Center for Offshore Safety, organized by industry after the Macondo disaster, issued its annual report including a first compilation of shared safety reporting from its member companies. Analysis of those 2013 reports showed 42 million work hours completed in the deepwater Gulf of Mexico without a fatality or loss of well control.

About the author

Ashley Herriman

Ashley Herriman is WorkBoat's online editor.

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