New Off-Shore Oil and Gas Industry Oversight?

In a post entitled “Who Will Guarantee the Safety of Off-shore Oil and Gas Facilities?” on Larry Susskind‘s blog, the Consensus Building Approach, he suggests the need for an off-shore oil and gas industry risk management system akin to the Institute for Nuclear Power Operations (INPO) created after the 1979 accident at Three Mile Island. Although licensing and a variety of other aspects of nuclear power plant operations are managed by federal and state agencies, the INPO is:

a not-for-profit organization supported by the nuclear industry, but with an accountable board of directors. INPO conducts evaluations of all nuclear power plants every 18 – 24 months. Each evaluation generates a rating of 1 – 5. Any plant with 4 or 5 ratings has a relatively short time to make the necessary safety improvements, or it stands its liability insurance (without which it would have to shut down). INPO trains and accredits the managers of all licensed nuclear facilities in the United States. It undertakes independent evaluations of any “events” and makes sure that its findings are circulated quickly throughout the industry so that the same mistakes are not made again. INPO provides assistance to individual plant operators when they are not sure how to handle particular problems. An adverse INPO finding usually leads to a rapid turnover in corporate leadership.

Susskind argues a similar risk management system would benefit the off-shore oil and gas industry:

An INPO-like system for Off-shore Oil and Gas would make sure that appropriate[ly] trained people were managing each site, tough safety and risk management standards reflecting best practices were in place, constant surveillance of all facilities was always underway, complete transparency at site was assured, and serious penalties were in place that the whole industry rather than individual operators were obliged to enforce. A new risk management system like this would not infringe on the role of regulatory agencies that must still take the lead in licensing.

According to Susskind, the implementation of such a system may also eliminate some of the political pressure placed upon federal regulators in states like Texas that depend on oil and gas revenue.

The entire blog post may be viewed here.

What do you think? What mechanisms would prevent another off-shore oil and gas disaster?

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