Offshore drilling regulator calls agency 'powerhouse' enforcer

The head federal offshore drilling regulator said his agency’s handling of BP’s 2010 Gulf of Mexico disaster shows it is “becoming a powerhouse” with which industry must reckon.

“I think we’ve taken on some tough cases. Certainly we’ve taken on BP. These are actions you don’t do unless you feel you’re going toe to toe with these companies,” James Watson, director of the Interior Department’s Bureau of Safety and Environmental Enforcement (BSEE), said in an interview with the Houston Chronicle published Tuesday.

Watson said he believed the U.S. record $4.5 billion-settlement that BP and the federal government agreed to in November for the 2010 incident served as a “huge deterrent to high-risk, high-consequence type of incidents.”

The explosion on BP’s Deepwater Horizon drilling rig killed 11 workers. The rig’s blowout preventer failed to contain BP’s Macondo well, allowing an estimated 4.9 million barrels of oil to spill into the Gulf.

Without being specific, Watson said oil firms are looking at “some challenging areas to do new exploration” and that BSEE will be forthright in those regions.

“These are things that we take very seriously. They’re not just normal everyday compliance reviews. There is an amazing capacity in BSEE that we’re going to bring to bear on those,” he said.

Watson said Interior’s offshore enforcement arm has sorted through a good deal of its growing pains and is ready for a more assertive role.

The agency formed in the wake of the Minerals Management Service, the ill-equipped regulator in place during BP’s explosion.

Interior scrapped the old regulator after the BP fiasco, installing the Bureau of Ocean Energy Management, Regulation and Enforcement.

That department later split into BSEE and the Bureau of Ocean Energy Management, which manages offshore oil-and-gas and renewable energy leases.

Watson said BSEE now has "an amazing capacity" for compliance enforcement.

In that vein, Watson said that while he feels the limits on civil fines are too low — they are currently capped at $40,000 per incident per day — he might look into levying more of them.

“I would be a proponent of increasing the amount of penalties, but I’m also the proponent of a fair system, so to the extent that you can improve the appeals process and still keep it fair, I would be a proponent of that,” he said.