Summary of Expert Forum On the Use of Performance-Based Regulatory Models in the U.S. Oil and Gas Industry, Offshore and Onshore

After a series of incidents such as the 2005 Texas City Explosion and the 2010 Deepwater Horizon oil spill incident, recommendations have been made to adopt thorough performance-based regulatory regimes and develop a proactive and risk- and performance-based approach. However, before making any immediate changes, we must analyze this issue and its impact from every aspect.

To obtain input from all stakeholders on this important issue, multiple agencies including OSHA, EPA, BSEE, USCG, and PHMSA invited interested parties to participate in a stakeholder meeting, and to submit comments on the use and implementation of performance-based regulatory models for enhanced safety and environmental performance in the United States oil and gas industry. The agencies proposed specific topics about different aspects of performance-based regulatory regime, which should address: 1) advantages and disadvantages of performance-based and prescriptive regulatory approaches; 2) whether these methods could create synergies between multiple agencies; 3) what types of models or combinations could result in long-term economic benefits; 4) ways to advance performance-based regulations and standards in oil and gas industry; and 5) effective oversight of performance-based regulatory models. The Mary Kay O’Connor Process Safety Center (MKOPSC) was invited to provide input on this important discussion as well. This paper summarizes the discussions at this unique gathering and concludes with a recommendation for the best path forward.

The MKOPSC presentation included a thorough analysis for all the various combinations of agencies and regulatory programs.  One of the main conclusions of the MKOPSC presentation is that appropriate performance data should be collected adequately and uniformly under consistent incident reporting system to assess the success or failure of any program or regulatory regime.  Otherwise, biased data collection will always lead to incorrect conclusions. Before we consider further changes in the regulatory framework, we should determine how to improve our existing programs instead of changing the whole system.  It is also not clear if we have had enough time for existing regulations (e.g., PSM) to be implemented properly.  It is important that we should increase training and reinforce regulatory compliance, gradually add regulatory reforms and efficiencies to the existing system, and implement overall quantitative risk assessments for plants.  We should put in place a well-planned national incident database system to collect appropriate and statistically significant data on incidents to be able to evaluate the performance of regulatory agencies as well as the regulated entities.