Oil and Gas Management: Interior's Reorganization Complete, but Challenges Remain in Implementing New Requirements
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.
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.
Recommendations for Executive Action
|Department of the Interior||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.||
In March 2014, Interior reported that it had added controls to its IT system to allow users to identify the most current, relevant information related to its NEPA analyses for exploration and development plans. According to Interior officials, ensuring that staff have the most up-to-date information currently employs a standard operating procedure whereby plan coordinators notify reviewers of updated information. Reviews and associated information requests and amendments are recorded in its IT system The latest information is displayed and reviewers may scroll to prior information for a plan. Application of this IT function provides consistent workflow process and thus facilitates BOEM's review of plans.
|Department of the Interior||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.||
In February 2016, officials stated that BOEM had made progress in evaluating ePlans, including developing specifications to include edits checks to improve the accuracy and completeness of plan submissions. However in May 2018, officials stated that in early 2018, BOEM had agreed to a no-cost cancellation of the ePlans contract. Officials stated that although the contract was terminated, BOEM had demonstrated significant progress to improve the accuracy and completeness of exploration and development plan submissions in the Gulf of Mexico Region. According to BOEM data, for fiscal years 2011 through 2017, BOEM made 30 percent fewer requests to operators for additional information due to the improved accuracy of the plan data operators submitted. According to officials, the decrease in the number of requests for additional information reflects BOEM's efforts to improve operator outreach. Specifically, officials stated that BOEM holds quarterly meetings with the Offshore Operators' Committee and routinely conducts meetings with companies to discuss upcoming projects and answer questions from operators on plan requirements. BOEM's actions to improve plan submissions meets the intent of our recommendation.
|Department of the Interior||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.||
In March 2014, Interior reported that it had modified its IT system, TIMS, to capture data on whether plan amendments were initiated at the request of Interior or the operator. The modifications also allow Interior to categorize the reasons for the modifications. In fiscal year 2014, of the 695 amendments, 633 were initiated by Interior while 62 were initiated by the operator. Additionally, the most frequent reason for the amendment was "other," which encompasses several items including insufficient general plan information or a request for a complete, corrected copy of the plan.
|Department of the Interior||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.||
In October 2014, Interior reported that it had completed an internal review of its Gulf of Mexico drilling inspection goal. Among its findings were that Interior had gained a net 37 inspectors since the Deepwater Horizon incident, travel times to drilling rigs has increased a small amount since 2011, and district offices have generally met their goals for conducting monthly drilling rig inspections. The review included 4 recommendations, including that it (1) continue to track average flight time to offshore operations and analyze data annually, (2) convene headquarters and regional leadership to increase information technology support to district offices, (3) reconsider the requirement for monthly inspections for some types of drilling operations, and (4) explore options to implement, fully or partially, the risk-based inspection strategy developed by an outside contractor. In June, 2016, BSEE officials stated that in light of BSEE successfully meeting its monthly drilling and well operations inspection goals since completion of the internal review, it had decided not to remove the requirement for monthly inspections for some types of drilling operations. BSEE officials stated that this decision was further supported by concerns among bureau leadership and subject matter experts that more, as opposed to less, oversight is necessary currently because of recent market conditions during which operators may be faced with economic challenges that may provide incentives to defer facility maintenance. Pending full recovery of the oil and gas industry, BSEE officials stated that they may decide to reconsider this monthly inspection requirement in the future, as part of continuing efforts to evaluate inspection verification strategies to better enhance its oversight responsibilities.
|Department of the Interior||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.||
In October 2014, Interior reported that it had developed the Incident of Non-Compliance Response System, which serves as the central repository for all issued violations in the Gulf of Mexico region. According to Interior documents, the new system is to trace numerous data elements related to violations, including, among others, date issued, regulatory authority cited, area location, type of facility, water depth, date corrected, date rescinded, and whether it was recommended for civil penalty review. According to Interior officials, as of September 2014, the system included 104,126 violations, of which, approximately 99 percent have either an associated correction or recission date, suggesting follow-up and closure of the violation.
|Department of the Interior||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.||
In October 2014, Interior notified GAO that both the Gulf of Mexico and Pacific Regions had issued policies addressing variances and departures. In September 2014, BSEE's Gulf of Mexico Region finalized a Standard Operating Procedure (SOP) entitled "Processing Variance Requests Not Previously Adopted," and its Pacific Region finalized an SOP entitled "Processing Departure Requests." Both policies outline procedures staff are to follow when processing operator requests for departures. Additionally, BSEE officials stated that in fiscal year 2014, BSEE implemented the Data Tracking System (DTS) and the Catalog and Review System (CARS) to record and track key bureau documents including departure requests.
|Department of the Interior||
Priority Rec.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.
Interior has taken multiple steps to identify and evaluate drilling risks which, according to officials, should improve its oversight of offshore oil and gas activities. To address the first part of the recommendation, Interior officials stated that they had established the SafeOCS program in August 2013 to develop and implement a reporting system that collects and analyzes data to advance safety in offshore oil and gas activities. Among the program's requirements is the requirement that companies submit data on equipment failures and near-miss events. As of March 2019, Interior is to review SafeOCS reports in a timely manner and take appropriate actions to mitigate risks. To address the second part of the recommendation, Interior officials stated that they have implemented new processes to analyze weekly well activity reports. Additionally, Interior now has the authority through the Well Control Rule to conduct real time monitoring of well operations when necessary. This provides Interior inspectors and engineers the capability to witness events at an operator's onshore facility. To address the third part of the recommendation, Interior officials stated that they had taken a number of actions. For example, in August 2020, Interior finalized a directive establishing procedures and guidance for conducting reviews of high risk wells in drilling operations. Interior officials stated that these and other actions have enhanced its oversight capabilities. We believe these combined agency actions meet the intent of this recommendation and are closing it as implemented.
|Department of the Interior||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.||
In June 2015, Interior officials stated that BSEE tracks the progress of implementing GAO and Office of the Inspector General (OIG) audit recommendations in an excel database. Interior officials also stated that BSEE's database tracks the progress of implementing recommendations included in eight other external reviews, including, for example, the National Oil Spill Commission Report and the National Academy of Engineering Macondo Well Deepwater Horizon Blowout Report. BSEE officials provided documentation indicating that BSEE had implemented (1) 72 percent of the recommendations from non-government oversight entities, such as the National Oil Spill Commission, (2) approximately 70 percent of GAO and OIG recommendations, and (3) has ongoing efforts to implement 64 BSEE/Interior recommendations.
|Department of the Interior||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.||
In September 2013, Interior reported that it had completed an IT Strategic Plan. According to Interior documents, BSEE and BOEM approved the Joint Information Technology Strategic Plan 2013-2017 in August 2013. This plan, according to Interior documents, is a roadmap that outlines a framework for deploying technology resources throughout the organizations in support of bureau missions, goals, and program priorities.
|Department of the Interior||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.||
In September 2013, Interior reported that BSEE had completed its human capital plan. Specifically, BSEE completed its Human Capital Management Strategic Plan 2013-2018 in August 2013. According to Interior documents, the plan establishes a framework for managing BSEE's human capital system through 2018. The plan provides an overview of BSEE's current workforce, identifies internal and external factors that shape human capital planning, and presents challenges to meeting workforce needs. The plan also defines the goals and strategies BSEE needs to implement in order to address its most immediate human capital priorities which are to recruit, hire, train, and deploy the people to accomplish the mission of the bureau. In September 2016, Interior reported that BOEM had completed its human capital plan. Specifically, BOEM completed its Strategic Human Capital Plan 2017-2022. According to Interior documents, the plan, which was put in place in September 2016, is to ensure that BOEM's workforce has the skills and competencies needed to excel and the managers have the information and resources they need. The human capital plan, according to Interior documents, sets measureable targets with dates to achieve them, and identifies officials responsible for achieving them. Through implementing the strategies outlined in its human capital plan, BOEM plans to meet its goal of strengthening its workforce.
|Department of the Interior||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.||
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.