Opinion: Black marks for Black Elk – Too little too late?

Loren Steffy
Loren Steffy
Loren Steffy
Opinion by Loren Steffy

In Texas, there’s an expression for action that comes too late: it’s like closing the barn door after the horses have run away.

I found myself thinking of the term as I read the recent indictment of Black Elk Energy Offshore Operations. In this case, the barn is the Gulf of Mexico, where Black Elk operated for years despite regulators’ repeated warnings about safety violations by the company.

The horses are Black Elk executives who left the company a year ago and sold off Black Elk’s shallow water operations long before the indictment came down. None of the executives were named in it.

The indictment stems from a Nov. 16, 2013 explosion at a Black Elk rig in the shallow waters of the Gulf of Mexico. Three workers died and several others were severely burned, including Renato Dominguez, a maintenance worker assigned to the rig.

Dominquez and other workers are now suing Black Elk and its contractors – including Wood Group PSN of Aberdeen and Compass Engineering Consultants – for negligence. A civil trial is set for next year.

“It was a real failure in process is what led to this,” says Jason Itkin, the Houston attorney representing Dominguez.

Black Elk’s West Delta 32 platform, about 20 miles off the coast of Port Fourchon, Louisiana, was shut down for maintenance on the day of the 2012 accident. Workers who were welding a flange onto a pipe ignited flammable vapors inside, touching off a series of explosions. One oil tank on the platform was blown into the Gulf, and another was knocked off its base, destroying a crane on the platform.

About 480 barrels of oil spilled into the water, and oil rained down on the platform’s lower decks, where other workers were doing maintenance procedures, sparking additional fires.

The indictment claims Black Elk didn’t have the proper written authorization in place to document that the pipes had been purged of flammable gas and were safe for welding. Prosecutors claim the company also failed to properly inspect work areas and violated other safety regulations.

In addition, the indictment accuses Black Elk of violating the Clean Water Act for the oil release.

The Black Elk accident wasn’t just an example of poor safety procedures by an offshore operator. It underscores the regulatory failures that have allowed operators such as Black Elk to continue their operations with impunity.

In the two years leading up to the accident, Black Elk’s operations were cited 315 times for rules violations and risky procedures, yet the company was allowed to continue operating. After the explosion, the Bureau of Safety and Environmental Enforcement, the offshore regulator set up after BP’s Macondo disaster, ladled on another 41 citations to Black Elk’s extensive penalty card.

Its biggest fine was $307,500 for failing to fix a gas lead on another platform for 117 days. Yet none of these was enough to change Black Elk’s culture of cutting corners.

BSEE’s actions largely amounted to wagging its finger at a bad operator and telling it to do better. The fact the BSEE referred the case for criminal prosecution, and the Justice Department brought the indictment, is a step in the right direction, but the indictment comes three years too late to save the workers on the platform.

More important, the executives who oversaw Black Elk’s operations and who allowed it operate under a culture of persistent safety lapses, are long gone. They’ve now set up a company to pursue conventional oil and gas projects onshore in the U.S.

“This is a horrific explosion that resulted from a breakdown in the processes that are there to protect people,” Itkin says.

It shouldn’t take three deaths and other serious injuries to force the government to act. In fact, rather than stand as a symbol of stricter regulation, the Black Elk indictment underscores how little has changed in the Gulf more than five years after Macondo.

With oil prices depressed and margins stretched, companies like Black Elk face mounting financial pressure to cut corners. The need for vigilance is greater than ever.

“Guys are getting hurt every day because companies aren’t following the safety procedures,” Itkin says. “There’s still not enough enforcement out there. If people were following procedures right, I wouldn’t be getting a bunch of phone calls.”

For far too long, U.S. regulators – both BSEE and its predecessor, the Mineral Management Service – have been unwilling to consider an operator’s track record in granting operating licenses in the Gulf.

The indictment of Black Elk shows why that policy must change. Indictments and fines may be appropriate, but if procedures are going to improve, we need regulations that will close the barn door before the horses run out.

Loren Steffy is a managing director with the communications firm 30 Point Strategies. He is a writer at large for Texas Monthly and the author of Drowning in Oil: BP and the Reckless Pursuit of Profit and The Man Who Thought Like a Ship. Follow him on Twitter: @lsteffy; on Facebook or at lorensteffy.com.

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