Calling on the industry to “answer the call to arms” as the Macondo spill continues to play out in the Gulf of Mexico, IADC chairman Louis Raspino emphasized the importance of partnership among operators, drilling contractors and service companies at this critical turning point for the industry. “It’s important that we lock arms now and address the challenges that we all face together,” he said during opening remarks at the IADC World Drilling 2010 Conference in Budapest on 16 June. “What happens to one of us, happens to all of us… We need to make sure we perform as an industry at the highest level.”
Mr Raspino, president, CEO and director of Pride International, called on the industry to refocus on three priorities that are more critical than ever before. First is the importance of a constantly improving safety culture, he said, urging the industry to strive toward a culture of excellence on all levels that targets zero incidents.
Second is the personnel shortage crisis, which the industry had already been undergoing but which has been magnified several times over by the blowout and spill. “In my opinion, the event is going to accelerate departures and decelerate entries to our industry, which is going to put even more stress on the personnel situation that we’re all facing,” Mr Raspino said.
Employees who are close to retirement but had planned on staying on rigs for another two or three years – “now they’re questioning whether they want to put in those last two or three years,” he said.
The Gulf incident has also made it that much harder for oil and gas and drilling companies to attract employees from industries like automotive, airline or the military.
The third priority that the industry should focus on is improving the partnership among industry stakeholders. Mr Raspino believes that the Gulf incident could actually help to strengthen that relationship – but only if industry works together. “The relationship between an operator and a contractor will never be as strong as it will be in the future,” he commented.
It’s also become apparent that the Macondo incident will have far-reaching consequences beyond the Gulf of Mexico and beyond the US. “Yes, I do expect it to impact the way our business is done around the world,” Mr Raspino said. From Africa to Brazil, from offshore to land – “no one is exempt from the impacts of this incident,” he said.
Certainly there is now a heightened awareness around the world that the industry wasn’t ready for the rapid containment of a deepwater spill. “The focus by the world on ‘What if it happens again?’ is the most important step in our industry answering the calls of regulators to explain why we should be allowed to go back to work,” he said.
He added that there is already talk going around of pre-drilling relief wells as a rapid contingency plan on exploratory wells. Well risks have also been redefined, and Safety Cases will likely spread to the US and other areas of the world.
“The regulatory fallout from this is going to be immense. It’s being referred to as the Sarbanes-Oxley of offshore drilling,” he said, referring to the law enacted in 2002 on accounting reform and investor protection. Mr Raspino added: “I’ve heard comments that the offshore industry in the US is going to be working with the equivalent of the FAA in the airline industry – regulators on your rigs at all time, monitoring everything you do.”
The difference between Sarbanes-Oxley and the forthcoming drilling regulations is that the former went through years of debate and hearings before new regulations were adopted. For the drilling industry, new regulations won’t get the same level of discussion, “which means we’ll likely see some regulatory overkill,” he said.
Industry also will be called on to demonstrate the competency of its employees on a higher level, as well as to demonstrate more detailed maintenance procedures and records.
There’s even talk of requiring company certifications of CEOs, with criminal penalties, that his company is ready to operate its equipment, that its people have been trained and that its procedures have been adjusted to allow the lowest-acceptable level of risk. Mr Raspino believes this kind of certification will “push down throughout the organization the demand for excellence at all levels.”
A presidential commission is now in place that has six months, while drilling in water depths greater than 500 ft is under suspension, to draft findings and recommendations for the president on industry reforms. “It’s wishful thinking to think that one day they’re going to sign an executive order and put everybody back to work just like they were before,” Mr Raspino said. “I think the road map to return to work is going to be sprinkled with recommendations for equipment, independent testing, processes, people, competencies, certifications.”
Due to higher operating costs, prospects that were economical yesterday may become marginal or uneconomical in the future, he continued, and some rigs that could work in the Gulf of Mexico previously may not be able to afford to work there anymore.
Despite all of these challenges, however, Mr Raspino ended his remarks on a positive note: Industry can choose to see these challenges as opportunities rather than problems. “I challenge everyone in this audience, in their own way, in their own company, to take up the challenge, to rise to a higher standard of performance, to make sure your company does its part in holding up the industry, to make the investments needed in training and development, to bring safety culture to a zero-incident expectation.”
“We’re all in this together, and failure is not an option.”