Hornbeck Offshore Services, L.L.C. v. Salazar et al

Filing 158

Supplemental Memorandum by Michael Bromwich, Bureau of Ocean Energy Management, Regulation, and Enforcement, Kenneth Lee Salazar, United States Department of the Interior in Response to Court's Orders Dated August 11 and 17, 2010 (Attachments: # 1 Declaration of Jamie L. Burley, # 2 Declaration of Neal Kemkar, # 3 Declaration of Raya Bakalov)(Montero, Guillermo) (Additional attachment(s) added on 8/25/2010: # 4 Notice of Manual Attachment) (caa, ).

Hornbeck Offshore Services, L.L.C. v. Salazar et al

Doc. 158 Att. 3

Dockets.Justia.com

Exhibit 1

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Key Assertions from the Secretary's Decision Memorandum of July 12, 2010: Considered for Both May & July Directives Considered for July Directive Only

1. "Recent events also have made clear that there are systemic problems that apply across different types of deepwater drilling, including, but not limited to, problems with BOPs, a lack of viable deepwater wild well intervention and blowout containment strategies and capabilities, and inadequacies in oil spill response plans and resources, particularly in light of the ongoing response to the BP Oil Spill." p. 2. DOI-WDC-B02-00007-0005: Bob Bea, Failures of the Deepwater Horizon Semisubmersible Drilling Unit. DOI-WDC-B05-00001-0019: Memorandum entitled "Safety and Response Issues" (stating that the DWH incident highlighted problems with ROV intervention with the BOP stack, backup or secondary control systems for the BOP stack, and BOP operating procedures during unplanned emergency events and stressing the need for new BOP equipment requirements). DOI-WDC-B31-00001-0041: Memorandum from Marcia McNutt (discussing need to develop better containment strategies). DOI-WDC-B22-00001-0036: Email from David Trocquet entitled "Relief Well BOP Testing Summary" (summarizing Stump and On-Bottom testing of the two relief wells and highlighting that current regulations only require pressure testing of the BOP components with no secondary controls required). Daily Reports Re: Well Containment and Spill Response (DOI-WDC-B11-000010001 ­ DOI-WDC-B12-00001-0315).

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2. "References to the track record for the deepwater drilling industry are of limited relevance, given that deepwater drilling is a relatively young and still-evolving enterprise (having only begun in earnest in the late 1990s)." p.3. DOI-WDC-B02-00011-0018: 30-Day Safety Report (explaining that the risk profile of deepwater drilling is different from that of shallow water). DOI-WDC-B44-00001-0001: July 10, 2010 Memorandum Re: Options Regarding the Suspension of Certain Offshore Permitting and Drilling activities on the Outer Continental Shelf. DOI-WDC-B5-00001-0016: June 21, 2010 Presentation to the Secretary of the Interior. These documents show that the risk profile of deepwater drilling is different from that of shallow water. Therefore, the shallow water safety record cannot be used to draw conclusions about deepwater safety. 3. Findings that BOP performance problems are unlikely to be isolated to the BOP at issue in the BP Oil Spill: "With regard to the performance of blowout prevention equipment, for example, it is noteworthy that there are only a small number of major manufacturers of the BOPs that are used by drilling contractors." P.4. "Testing that has been required for the BOPs on the new relief wells has identified unexpected performance problems with those BOPs. This evidence suggests that the problems that lie at the heart of the BP Oil Spill are not unique to the Deepwater Horizon and Macondo well." P.4. "It is clear that the apparent performance problem with the Deepwater Horizon's BOP is not an isolated incident." P.9. DOI-WDC­B48-00001-0016: Memorandum from Walter Cruickshank entitled "Similarity of Subsea BOPs" (stating that, "the number of manufacturers are limited, so there are similarly built BOPs throughout the OCS"). DOI-WDC-B31-00001-0041: Memorandum from Marcia McNutt at 5 (noting that "if EVERY BOP had to go through the same exhaustive check-out procedure that the two BOPs for the relief
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wells have gone through, ... there probably wouldn't be another BOP failure. It is worth noting that the testing of the dead man switch (until these relief wells) had NEVER been done at sea, because it involves turning off all power to the rig and leaving it essentially defenseless during the testing."). DOI-WDC-B22-00001-0036: Email from David Trocquet entitled "Relief Well BOP Testing Summary" (summarizing Stump and On-Bottom testing of the two relief wells and highlighting that current regulations only require pressure testing of the BOP components with no secondary controls required). DOI-WDC-B05-00001-0019: Memorandum entitled "Safety and Response Issues" (stating that all deepwater drilling rigs use an ROV as secondary control for the subsea BOP stack and that the functionality of the ROV varies between drilling rigs and contractors). DOI-WDC-B05-00001-0026: July 2, 2010 Memorandum from Walter Cruickshank to Mike Bromwich, entitled "Summary of Macondo Well Intervention and Containment Efforts and Testing and Performance Issues with BOPs for Relief Wells" at 6 (discussing BOP testing of the two relief wells and performance issues identified). DOI-WDC-B08-00001-0003: Enhanced Subsea BOP Stack Testing for Dynamically Positioned Rigs (discussing current testing practices and identifying areas of enhancement).

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4. Findings of industry-wide inadequacy regarding blowout and wild well containment capability: "Although industry has begun to organize efforts to address strategies and options for subsea well control and blowout containment, much work remains to be done to develop effective containment and response options as well as to achieve an appropriate level of preparedness in the event of another deepwater wild well." P.4. "the BP Oil Spill response has demonstrated that water depth, pressure, and temperature are major factors affecting the ability of well control crews to bring deepwater blowouts under control. Complications associated with responding to a deepwater blowout include inaccessibility of the well, methane hydrate formation at lower seafloor water temperatures, longer times needed to move ROVs and equipment from the surface to the work zone, and the need to work with larger and less available support equipment due to the greater water pressure." P. 10. "industry executives have admitted that industry is unprepared to effectively stop deepwater oil well blowouts, and that many of the containment methods attempted with respect to the Macondo blowout have been improvised and were untested." P. 13. DOI-WDC-B02-00011-0001: May 24, 2010 Washington Briefing on BP Deepwater Horizon Interim Incident Investigation (identifying areas of ongoing BP investigative work, including loss of well integrity, BOP and emergency systems, etc., that could inform future DOI safety decisions). DOI-WDC-B02-00001-0002: April 30, 2010 email entitled "Deepwater Horizon Incident ­ Reply from Apache Corporation to Secretary Salazar's request" (identifying and discussing feasibility of potential new containment and recovery technologies). DOI-WDC-B37-00001-0035: Email from Steve Black attaching JITF Subsea Well Control and Oil Spill Response and Enhanced Industry Capability for Offshore Operations (Recognizing need for enhanced capabilities for the offshore industry to prevent, respond to, and clean up a potential deepwater well control incident and outlining industry's preliminary proposals and task forces). DOI-WDC-B13-00001-0003: June 15, 2010 Hearing Transcript (including testimony of Mr. Tillerson that industry is not wellequipped to handle worst-case scenarios). DOI-WDC-B05-00001-0019: Memorandum entitled "Safety and Response Issues" (identifying problems with using ROVs as secondary control of BOP stacks and the need for new BOP equipment requirements). Daily Reports Re: Well Containment and Spill Response (DOI-WDC-B11-000010001 ­ DOI-WDC-B12-00001-0315).

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DOI-WDC-B31-00001-0041: Memorandum from Marcia McNutt at 2 (noting inability to predict where oil and associated dispersants will go); id. at 4 (noting that the great ocean depth made containment procedures more difficult and discussing "the crushing pressures at these depths on the seafloor, the high temperatures and pressures of the oil and gas emanating from the well"). DOI-WDC-B10-00001-0032: Written Statement of Lamar McKay. DOI-WDC-B05-00001-0002: Notes from June 28, 2010 meeting with industry representatives (containing statement by Neil Duffin of ExxonMobil that, "certainly, we don't have capacity to deal with additional spills right now." 5. Findings of inadequacy regarding industry-wide oil spill response capability: "the massive BP Oil Spill raises serious legal and practical questions about whether other deepwater operators would be able to employ adequate quantities of skimmers, boom, and other oil spill response resources to address another spill if it occurs." P.4. "BP was not the only operator drilling with inadequate [oil spill response] plans. The House Subcommittee on Energy and Environment reviewed the preparedness plans of five major oil companies and concluded that they were no better prepared to deal with a major oil spill than BP, and if a major blowout had occurred at another operator's well, they would not have been any more prepared to respond." P. 14. "As late as March 2010, BP had submitted its report on cleanup capacity projecting the capacity to skim and remove 491,721 barrels of oil per day. As of July 5, 2010, their skimming operations have averaged less than 900 barrels per day equivalent." P.15. "The USCG has determined that the number of oil spill response vessels currently skimming oil is inadequate to recover the oil released from the BP Oil Spill" p. 15. DOI-WDC-B05-00001-0004: Coast Guard Watson Memorandum (stating that, "an adequate number of oil spill response vessels ... cannot be employed in a timely manner to recover the oil released from the BP Deepwater Horizon spill.... There are simply not enough U.S. OSRVs capable of skimming
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oil available to keep up with the pace at which oil flows from the well"). DOI-WDC-B48-00001-0018: USCG-EPA Emergency Temporary Interim Rule (suspending oil spill response time requirements and certain identification and location requirements for vessels responding to the DWH oil spill to assist in "urgently needed immediate relocation of national resources"). DOI-WDC-B22-00001-0071: June 30, 2010 Email from Michael French to Tommy Beaudreau et. al. ("In current response plans, many, if not all, of the same resources will be identified as available to respond to a worst case discharge for multiple wells."). DOI-WDC-B01-00001-0011: June 7, 2010 Briefing by Admiral Thad Allen (stating that no response plan accounted for the breadth and complexity of the oil spill). DOI-WDC-B01-00001-0007: June 25 Briefing by Admiral Thad Allen (stating that the U.S. Navy released all their strategic stockpiles of boom and skimming equipment for the Deepwater Horizon response efforts). DOI-WDC-B13-00001-0003: June 15, 2010 House Subcommittee on Energy and Environment Hearing (including testimony by Mr. McKay and Mr. Tillerson that all their companies' resources (booms, vessels, etc.) are being used in the DWH response effort); (further including testimony by Mr. Tillerson that "the industry has relied upon sharing of resources, boats, booms, skimmer equipment"). DOI-WDC-B01-00001-0010: June 4, 2010 Briefing by Admiral Thad Allen (stating that as the spill spreads into South-Central Louisiana and Pensacola, FL, this will "significantly stress not only boom production capability of the country, but the
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ability of skimmers"). DOI-WDC-B10-00001-0030: Written Statement of Jane Lubchenco, Under Secretary of Commerce for Oceans and Atmosphere and NOAA Administrator ("NOAA's Office of Response and Restoration is fully engaged in responding to the Deepwater Horizon spill. Although unlikely, if another large spill was to occur simultaneously in another location across the United States, NOAA would have difficulty responding to its complete ability."). DOI-WDC-B05-00001-0017: Reuters Article entitled "BP clean-up leaves U.S. vulnerable to another spill" ("[T]he vast majority of skimming capacity listed in `worst case scenario' plans to combat major Gulf spills is already deployed to clean up BP's leak, according to copies of the plans made public by Congress and lists of vessels active in the cleanup that were obtained by Reuters."). DOI-WDC-B31-00001-0041: Memorandum from Marcia McNutt at 7 ("[I]f the Macondo blowout had happened anywhere else but in the Gulf of Mexico ... the difficulty of stopping the well, and responding to the oil spill, would have been much worse. The response would have been an order of magnitude slower, and an order of magnitude less."). DOI-WDC-B01-00001-0006: June 18 Briefing by Admiral Thad Allen. DOI-WDC-B07-00001-0016: Opening Statement of Rep. Henry A. Waxman, Subcommittee on Energy and Environment, Drilling Down on America's Energy Future: Safety, Security and Clean Energy (June 15, 2010). DOI-WDC-B07-00001-0002: Opening Statement of Rep. Edward J. Markey,
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Subcommittee on Energy and Environment, Drilling Down on America's Energy Future: Safety, Security and Clean Energy (June 15, 2010). DOI-WDC-B07-00001-0008: Opening Statement of Rep. Bart Stupak, Subcommittee on Energy and Environment, Drilling Down on America's Energy Future: Safety, Security and Clean Energy, (June 15, 2010). DOI-WDC-B05-00001-0003: BP Press Release, dated July 5, 2010, entitled "Update on Gulf of Mexico Oil Spill," 6. Findings of risk associated with drilling in a deepwater environment using subsea BOPs. "[E]quipment and drilling conditions undertaken in the deepwater environment carry heightened risks of producing an event such as the BP Oil Spill." P.7. "The control system for subsea BOPs is much more complex than the control system for a surface BOP, and subsea BOPs require regular testing to ensure that they will respond properly on demand. Also significant is the fact that subsea BOPs are less accessible to intervention, requiring the use of remotely operated vehicles (ROVs) to intervene, and that they are difficult to repair while attached to the wellhead." P.8. DOI-WDC-B02-00011-0011: Bill White, Understanding the BP Blowout and Its Implications: ("Deep water exploration has posed a number of technical challenges, and has required some of the most sophisticated technology ever designed by human beings. Perhaps the most difficult challenge is simply designing drilling rigs and production platforms which are not firmly attached to the ocean floor. These vessels must be able to withstand a variety of extraordinary forces generated by the winds and waves and currents in the ocean. All equipment must be able to operate, above and below the ocean surface, under enormous pressures and stress."). DOIWDCB02000110012: Letter from Liz Birnbaum to Marvin Odum at 2 (distinguishing Shell's proposed drilling in the shallow water of Alaska from deepwater GOM drilling in terms of water depth and pressure).
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DOI-WDC-B05-00001-0006: Memorandum from Walter Cruickshank entitled "Drilling Activities Rated by Relative Risk" at 2 (discussing heightened risk factors correlated to water depth). DOI-WDC-B05-00001-0006: Memorandum from Walter Cruickshank entitled, "Drilling Activities Rated by Relative Risk" ("The main variable in the safety equipment is control system differences between surface blowout preventer (BOP) stacks and subsea BOP stacks. The control system for subsea BOPs is much more complex than for a surface BOP control system."). DOI-WDC-B48-00001-0016 Memorandum from Walter Cruickshank entitled "Similarity of Subsea BOPs" (identifying similar features among all subsea BOPs).

DOI-WDC-B08-00001-0003: Enhanced Subsea BOP Stack Testing for Dynamically Positioned Rigs (discussing current testing practices and identifying areas of enhancement). DOI-WDC-B02-00011-0018: 30-Day Safety Report. * DOI-WDC-B16-00001-0013: Shallow Water Energy Coalition Presentation. * DOI-WDC-B02-00011-0022: API Joint Industry Task Force White Paper: Recommendations for Improving Offshore Safety (submitted to DOI May 17, 2010). DOI-WDC-B02-00001-0013: April 30, 2010 Letter from Statoil USA to Liz Birnbaum (describing potential technologies to mitigate the risk of BOP failure). * DOI-WDC-B02-00010-0001: Technical Summary of MMS Engineering and Research Study No. 319 entitled "Reliability of Subsea BOP Systems for Deepwater Applications." * DOI-WDC-B02-00010-0002: Technical Summary of MMS Engineering and Research Study No. 431 entitled "Evaluation of Secondary Intervention Methods in Well Control." * DOI-WDC-B02-00010-0003: Technical Summary of MMS Engineering and Research Study No. 455 entitled "Mini Shear Study." * DOI-WDC-B02-00010-0002: Technical Summary of MMS Engineering and Research Study No. 463 entitled "Shear Ram Capabilities Study."

DOI-WDC-B5-00001-0016: June 21, 2010 Presentation to the Secretary of the Interior (acknowledging the risks of deepwater exploratory drilling). DOI-WDC-B31-00001-0041: Memorandum from Marcia McNutt. Daily Reports Re: Well Containment and Spill Response (DOI-WDC-B11-000010001 ­ DOI-WDC-B12-00001-0315).

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7. "Well operations from a floating platform with a surface BOP stack and a high pressure riser (through the water column) are higher risk operations than drilling from a jack-up rig or a fixed platform." P.8. DOI-WDC-B05-00001-0006: Memorandum from Walter Cruickshank entitled, "Drilling Activities Rated by Relative Risk" ("Drilling with a surface blowout preventer on floating vessels, however, can present other risks since the high pressure riser/casing from the seafloor to the rig can be exposed to dynamic stresses and the engineering for these stresses must be accounted for. Failure of a high pressure riser due to dynamic stresses on floating operations can lead to uncontrolled flow below the surface blowout preventer system."). 8. "problems have been uncovered during new testing requirements that were imposed on the relief wells after the BP Oil Spill, thus providing more evidence that prior testing requirements were inadequate." P.9. DOI-WDC-B48-00001-0002: Email from Bernard Looney to Steve Black (suggesting procedures for OEM inspection of the BOP stack). DOI-WDC-B48-00001-0003: Email from Erik Milito to Steve Black (providing comparison between existing BOP requirements and the JITF draft recommendations). DOI-WDC-B05-00001-0026: July 2, 2010 Memorandum from Walter Cruickshank to Michael Bromwich, entitled "Summary of Macondo Well Intervention and Containment Efforts and Testing and Performance Issues with BOPs for Relief Wells" at 6 (discussing BOP testing of the two relief wells and performance issues identified). DOI-WDC-B31-00001-0041: Marcia McNutt Memorandum at 5 (noting that the dead man switch had never been tested prior to the two relief wells). DOI-WDC-B08-00001-0003: Enhanced Subsea BOP Stack Testing for Dynamically Positioned Rigs (discussing current testing practices and identifying areas of enhancement). DOI-WDC-B22-00001-0036: Email from David Trocquet entitled "Relief Well BOP Testing Summary" (summarizing Stump and
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On-Bottom testing of the two relief wells and highlighting that current regulations only require pressure testing of the BOP components with no secondary controls required). 9. "substantial improvement in the industry's safety practices and procedures relating to offshore drilling, particularly with respect to deepwater drilling conducted from floating rigs and production facilities, is necessary." P. 11. DOI-WDC-B13-00001-0001: Transcript of May 12, 2010 Hearing of the U.S. House of Representatives. DOI-WDC-B37-00001-0035: Email from Steve Black attaching JITF Subsea Well Control and Oil Spill Response and Enhanced Industry Capability for Offshore Operations (recognizing need for enhanced capabilities for the offshore industry to prevent, respond to, and clean up a potential deepwater well control incident and outlining industry's preliminary proposals and task forces). 10. "[The] economic impact of a suspension...is outweighed by economic impact of another catastrophic event like the blowout at the Macondo well." p. 16. The Secretary weighed the economic impact of a six-month suspension of deepwater drilling against the economic impact of another potential oil spill. See July 12 Decision Memorandum and Options Memorandum discussion of impacts of the spill on fishing and tourism industries. DOIWDCB05000010007: June 10, 2010 Memorandum entitled, "Effects of Drilling Pause for 6 Months" (comparing estimates of drilling activity, production, and revenues that would have occurred without the 6-month drilling pause to estimates of the same with the pause). DOIWDCB05000010022: Summary of Economic Impacts of 6-Month pause (summarizing impact on jobs, spending, production, and government revenues). Congressional testimony reflects the devastating effects of the Deepwater horizon

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spill on entire industries and communities in the Gulf. These effects would only be exacerbated by a future spill: DOIWDCB07000010013: Testimony of Michael C. Voisin, Subcommittee on Insular Affairs, Oceans and Wildlife, Hearing on "Our Natural Resources At Risk: The Short And Long Term Impacts of the Deepwater Horizon Oil Spill" (June 10, 2010) (including detailed disussion of the short- and long-term impacts of the BP Oil Spill on the local economy) ("Fishermen, shrimpers and oystermen who harvest safe healthy seafood from the Gulf are being impacted by precautionary closures of State and Federal waters along parts of the coast like no one else in the region. We're not just talking about multiple habitats, multiple species--crabs, shrimp, oysters, fin fish--we're talking about multiple communities and multiple livelihoods.") DOIWDCB07000010006: Testimony of Dr. Moby Solangi, House Energy and Commerce Committee (June 7, 2010) ("The potential effects of the oil spill, including the large amount of dispersants used, will not only affect the ecosystem, but could also affect the livelihoods of commercial and recreational fishermen, and tourism. This in turn could have a domino effect on the regional and national economy."). DOIWDCB10000010047: Statement of Michael R. Taylor, Subcommittee on Health of the Committee on Energy and Commerce, Hearing on "Health

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Impacts of the Deepwater Horizon Oil Spill" (June 16, 2010) ("NOAA closed 3% of Gulf waters to fishing on May 2, 2010; as of June 14, the closed area had reached 32.3%."). DOIWDCB07000010014: Testimony of John Williams, Subcommittee on Insular Affairs, Oceans and Wildlife, Hearing on "Our Natural Resources At Risk: The Short And Long Term Impacts of the Deepwater Horizon Oil Spill" (June 10, 2010) ("Those that cannot shrimp now are unlikely to be able to return to their fishing grounds anytime in the near future and are unable to predict with accuracy now what the ultimate impact of the spill will be on their businesses."). DOIWDCB08000010016: Written Testimony of Brenda Dardar Robichaux, Subcommittee on Insular Affairs, Hearing on Oversight Hearing on "Our Natural Resources at Risk: The Short and Long Term Impacts of the Deepwater Horizon Oil Spill," (June 10, 2010) (The Principal Chief of the United Houma Nation of South Central Louisiana said that the effects of the spill "loom[] as a death threat to our culture as we know it.").

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