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This report is dedicated to the 11 men who lost their lives on the Deepwater Horizon rig on April 20, 2010 and to their families, in hope that this report will help minimize the chance of another such disaster ever happening again.

Jason Anderson

Aaron Dale Burkeen

Donald Clark

Stephen Curtis

Gordon Jones

Roy Wyatt Kemp

Karl Dale Kleppinger, Jr.

Blair Manuel

Dewey Revette Shane Roshto

Adam Weise

Dedication

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Acknowledgements We wish to acknowledge the many individuals and organizations, government officials and agencies alike that offered their views and insights to the Commission. We would especially like to express our gratitude to the Coast Guard’s Incident Specific Preparedness Review (ISPR) for allowing Commission staff to participate in its interviews and discussions, which was invaluable to the preparation of this report. (A copy of the Coast Guard’s ISPR report can be found at the Commission’s website at www.oilspillcommission. gov). We would also like to thank Chevron for performing the cement tests that proved so critical to our investigation into the Macondo well blowout.

We also thank the Department of Energy, which served as our supporting agency, and all of the Department employees whose assistance was so essential to the success and functioning of the Commission. In particular, we would like to thank Christopher Smith, Deputy Assistant Secretary for Oil and Natural Gas, who acted as the Commission’s Designated Federal Officer, as well as Elena Melchert, Petroleum Engineer in the Office of Oil and Gas Resource Conservation, who served as the Committee Manager.

But most importantly, we are deeply grateful to the citizens of the Gulf who shared their personal experiences as Commissioners traveled in the region, providing a critical human dimension to the disaster and to our undertaking, as well as the many people who testified at the Commission’s hearings, provided public comments, and submitted statements to our website. Together, these contributions greatly informed our work and led to a better report. Thank you one and all.

Copyright, Restrictions, and Permissions Notice Except as noted herein, materials contained in this report are in the public domain. Public domain information may be freely distributed and copied. However, this report contains illustrations, photographs, and other information contributed by or licensed from private individuals, companies, or organizations that may be protected by U.S. and/or foreign copyright laws. Transmission or reproduction of items protected by copyright may require the written permission of the copyright owner.

When using material or images from this report we ask that you credit this report, as well as the source of the material as indicated in this report.] Permission to use materials copyrighted by other individuals, companies or organizations must be obtained directly from those sources.

This report contains links to many Web sites. Once you access another site through a link that we provide, you are subject to the use, copyright and licensing restrictions of that site. Neither the Government nor the National Commission on the BP/Deepwater Horizon Oil Spill and Offshore Drilling (Commission) endorses any of the organizations or views represented by the linked sites unless expressly stated in the report. The Government and the Commission take no responsibility for, and exercise no control over, the content, accuracy or accessibility of the material contained on the linked sites.

Cover Photo: © Steadfast TV ISBN: 978-0-16-087371-3

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Deep Water The Gulf Oil Disaster and the Future of Offshore Drilling

Report to the President

National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling

January 2011

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Commission Members

Bob Graham, Co-Chair

Cherry A. Murray

Donald F. Boesch

Fran Ulmer

Frances Beinecke

William K. Reilly, Co-Chair

Terry D. Garcia

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Table of Contents Foreword

PART I: The Path to Tragedy Chapter 1 “Everyone involved with the job…was completely satisfied….” The Deepwater Horizon, the Macondo Well, and Sudden Death on the Gulf of Mexico Chapter 2 “Each oil well has its own personality” The History of Offshore Oil and Gas in the United States

Chapter 3 “It was like pulling teeth.” Oversight—and Oversights—in Regulating Deepwater Energy Exploration and Production in the Gulf of Mexico

PART II: Explosion and Aftermath: The Causes and Consequences of the Disaster Chapter 4 “But, who cares, it’s done, end of story, [we] will probably be fine and we’ll get a good cement job.” The Macondo Well and the Blowout

Chapter 5 “You’re in it now, up to your neck!” Response and Containment Chapter 6 “The worst environmental disaster America has ever faced.” Oiling a Rich Environment: Impacts and Assessment Chapter 7 “People have plan fatigue . . . they’ve been planned to death” Recovery and Restoration

PART III: Lessons Learned: Industry, Government, Energy Policy Chapter 8 “Safety is not proprietary.” Changing Business as Usual Chapter 9 “Develop options for guarding against, and mitigating the impact of, oil spills associated with offshore drilling.” Investing in Safety, Investing in Response, Investing in the Gulf Chapter 10 American Energy Policy and the Future of Offshore Drilling

Endnotes

Appendices Appendix A: Commission Members Appendix B: List of Acronyms Appendix C: Executive Order Appendix D: Commission Staff and Consultants Appendix E: List of Commission Meetings Appendix F: List of Staff Working Papers

Index

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xiii 1

21

55

87 89

129

173

197

215 217

249

293

307

356 358 359 362 365 366

368

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Photo: Susan Walsh, Associated Press

Foreword The explosion that tore through the Deepwater Horizon drilling rig last April 20, as the rig’s crew completed drilling the exploratory Macondo well deep under the waters of the Gulf of Mexico, began a human, economic, and environmental disaster.

Eleven crew members died, and others were seriously injured, as fire engulfed and ultimately destroyed the rig. And, although the nation would not know the full scope of the disaster for weeks, the first of more than four million barrels of oil began gushing uncontrolled into the Gulf—threatening livelihoods, precious habitats, and even a unique way of life. A treasured American landscape, already battered and degraded from years of mismanagement, faced yet another blow as the oil spread and washed ashore. Five years after Hurricane Katrina, the nation was again transfixed, seemingly helpless, as this new tragedy unfolded in the Gulf. The costs from this one industrial accident are not yet fully counted, but it is already clear that the impacts on the region’s natural systems and people were enormous, and that economic losses total tens of billions of dollars.

On May 22, 2010, President Barack Obama announced the creation of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling: an independent, nonpartisan entity, directed to provide a thorough analysis and impartial judgment. The President charged the Commission to determine the causes of the disaster, and to improve the country’s ability to respond to spills, and to recommend reforms to make offshore energy production safer. And the President said we were to follow the facts wherever they led.

This report is the result of an intense six-month effort to fulfill the President’s charge.

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From the outset, the Commissioners have been determined to learn the essential lessons so expensively revealed in the tragic loss of life at the Deepwater Horizon and the severe damages that ensued. The Commission’s aim has been to provide the President, policymakers, industry, and the American people a clear, accessible, accurate, and fair account of the largest oil spill in U.S history: the context for the well itself, how the explosion and spill happened, and how industry and government scrambled to respond to an unprecedented emergency. This was our first obligation: determine what happened, why it happened, and explain it to Americans everywhere.

As a result of our investigation, we conclude:

• The explosive loss of the Macondo well could have been prevented.

• The immediate causes of the Macondo well blowout can be traced to a series of identifiable mistakes made by BP, Halliburton, and Transocean that reveal such systematic failures in risk management that they place in doubt the safety culture of the entire industry.

• Deepwater energy exploration and production, particularly at the frontiers of experience, involve risks for which neither industry nor government has been adequately prepared, but for which they can and must be prepared in the future.

• To assure human safety and environmental protection, regulatory oversight of leasing, energy exploration, and production require reforms even beyond those significant reforms already initiated since the Deepwater Horizon disaster. Fundamental reform will be needed in both the structure of those in charge of regulatory oversight and their internal decisionmaking process to ensure their political autonomy, technical expertise, and their full consideration of environmental protection concerns.

• Because regulatory oversight alone will not be sufficient to ensure adequate safety, the oil and gas industry will need to take its own, unilateral steps to increase dramatically safety throughout the industry, including self-policing mechanisms that supplement governmental enforcement.

• The technology, laws and regulations, and practices for containing, responding to, and cleaning up spills lag behind the real risks associated with deepwater drilling into large, high-pressure reservoirs of oil and gas located far offshore and thousands of feet below the ocean’s surface. Government must close the existing gap and industry must support rather than resist that effort.

• Scientific understanding of environmental conditions in sensitive environments in deep Gulf waters, along the region’s coastal habitats, and in areas proposed for more drilling, such as the Arctic, is inadequate. The same is true of the human and natural impacts of oil spills.

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We reach these conclusions, and make necessary recommendations, in a constructive spirit: we aim to promote changes that will make American offshore energy exploration and production far safer, today and in the future.

More broadly, the disaster in the Gulf undermined public faith in the energy industry, government regulators, and even our own capability as a nation to respond to crises. It is our hope that a thorough and rigorous accounting, along with focused suggestions for reform, can begin the process of restoring confidence. There is much at stake, not only for the people directly affected in the Gulf region, but for the American people at large. The tremendous resources that exist within our outer continental shelf belong to the nation as a whole. The federal government’s authority over the shelf is accordingly plenary, based on its power as both the owner of the resources and in its regulatory capacity as sovereign to protect public health, safety, and welfare. To be allowed to drill on the outer continental shelf is a privilege to be earned, not a private right to be exercised.

“Complex Systems Almost Always Fail in Complex Ways” As the Board that investigated the loss of the Columbia space shuttle noted, “complex systems almost always fail in complex ways.” Though it is tempting to single out one crucial misstep or point the finger at one bad actor as the cause of the Deepwater Horizon explosion, any such explanation provides a dangerously incomplete picture of what happened—encouraging the very kind of complacency that led to the accident in the first place. Consistent with the President’s request, this report takes an expansive view.

Why was a corporation drilling for oil in mile-deep water 49 miles off the Louisiana coast? To begin, Americans today consume vast amounts of petroleum products—some 18.7 million barrels per day—to fuel our economy. Unlike many other oil-producing countries, the United States relies on private industry—not a state-owned or -controlled enterprise—to supply oil, natural gas, and indeed all of our energy resources. This basic trait of our private-enterprise system has major implications for how the U.S. government oversees and regulates offshore drilling. It also has advantages in fostering a vigorous and competitive industry, which has led worldwide in advancing the technology of finding and extracting oil and gas.

Even as land-based oil production extended as far as the northern Alaska frontier, the oil and gas industry began to move offshore. The industry first moved into shallow water and eventually into deepwater, where technological advances have opened up vast new reserves of oil and gas in remote areas—in recent decades, much deeper under the water’s surface and farther offshore than ever before. The Deepwater Horizon was drilling the Macondo well under 5,000 feet of Gulf water, and then over 13,000 feet under the sea floor to the hydrocarbon reservoir below. It is a complex, even dazzling, enterprise. The remarkable advances that have propelled the move to deepwater drilling merit comparison with exploring outer space. The Commission is respectful and admiring of the industry’s technological capability.

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But drilling in deepwater brings new risks, not yet completely addressed by the reviews of where it is safe to drill, what could go wrong, and how to respond if something does go awry. The drilling rigs themselves bristle with potentially dangerous machinery. The deepwater environment is cold, dark, distant, and under high pressures—and the oil and gas reservoirs, when found, exist at even higher pressures (thousands of pounds per square inch), compounding the risks if a well gets out of control. The Deepwater Horizon and Macondo well vividly illustrated all of those very real risks. When a failure happens at such depths, regaining control is a formidable engineering challenge—and the costs of failure, we now know, can be catastrophically high. In the years before the Macondo blowout, neither industry nor government adequately addressed these risks. Investments in safety, containment, and response equipment and practices failed to keep pace with the rapid move into deepwater drilling. Absent major crises, and given the remarkable financial returns available from deepwater reserves, the business culture succumbed to a false sense of security. The Deepwater Horizon disaster exhibits the costs of a culture of complacency.

The Commission examined in great detail what went wrong on the rig itself. Our investigative staff uncovered a wealth of specific information that greatly enhances our understanding of the factors that led to the explosion. The separately published report of the chief counsel (a summary of the findings is presented in Chapter 4) offers the fullest account yet of what happened on the rig and why. There are recurring themes of missed warning signals, failure to share information, and a general lack of appreciation for the risks involved. In the view of the Commission, these findings highlight the importance of organizational culture and a consistent commitment to safety by industry, from the highest management levels on down.*

But that complacency affected government as well as industry. The Commission has documented the weaknesses and the inadequacies of the federal regulation and oversight, and made important recommendations for changes in legal authority, regulations, investments in expertise, and management.

The Commission also looked at the effectiveness of the response to the spill. There were remarkable instances of dedication and heroism by individuals involved in the rescue and cleanup. Much was done well—and thanks to a combination of good luck and hard work, the worst-case scenarios did not all come to pass. But it is impossible to argue that the industry or the country was prepared for a disaster of the magnitude of the Deepwater Horizon oil spill. Twenty years after the Exxon Valdez spill in Alaska, the same blunt response technologies—booms, dispersants, and skimmers—were used, to limited effect. On-the-ground shortcomings in the joint public-private response to an overwhelming spill like that resulting from the blowout of the Macondo well are now evident, and demand public and private investment. So do the weaknesses in local, state, and federal coordination revealed by the emergency. Both government and industry failed to anticipate and prevent this catastrophe, and failed again to be prepared to respond to it.

*The chief counsel’s investigation was no doubt complicated by the lack of subpoena power. Nonetheless, Chief Counsel Bartlit did an extraordinary job building the record and interpreting what he learned. He used his considerable powers of persuasion along with other tools at his disposal to engage the involved companies in constructive and informative exchanges.

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If we are to make future deepwater drilling safer and more environmentally responsible, we will need to address all these deficiencies together; a piecemeal approach will surely leave us vulnerable to future crises in the communities and natural environments most exposed to offshore energy exploration and production.

The Deepwater Drilling Prospect The damage from the spill and the impact on the people of the Gulf has guided our work from the very beginning. Our first action as a Commission was to visit the Gulf region, to learn directly from those most affected. We heard deeply moving accounts from oystermen witnessing multi-generation family businesses slipping away, fishermen and tourism proprietors bearing the brunt of an ill-founded stigma affecting everything related to the Gulf, and oil-rig workers dealing with mounting bills and threatened home foreclosures, their means of support temporarily derailed by a blanket drilling moratorium, shutting down all deepwater drilling rigs, including those not implicated in the BP spill.