The National Commission looking into the BP oil spill will present its final report on Tuesday at 3pm GMT (you can watch it live here). So what can we expect it to find?
As far as blame goes, we know most of that thanks to the release of one of the chapters last week. The commission will spread the blame among BP, Transocean, Halliburton, and to an extent, regulators. The news came as a relief to BP investors, who have sent the stock over six per cent higher since the news broke.
So what we will hear today is some indication of the longer-term effect of the spill on policy and regulations.
Politico has some of the key details this morning. Its reporter Darren Goode says the commission will recommend:
- An unspecified increase to the current $75m liability cap
- More time for federal regulators to review drilling permits
- The creation of an independent entity to draw up industry-wide safety standards and help facilitate best practices among companies
- No new major Arctic drilling should be allowed until the industry and government regulators can prove that drilling can be done safely there and that oil companies are prepared to respond quickly to a major accident
- Eighty per cent of the Clean Water Act fines tied to the BP spill should be used to help rebuild the Gulf Coast ecosystem
- Significantly more funding and manpower for the Bureau of Ocean Energy Management, Regulation and Enforcement.
The panel’s co-chairman, Bob Graham, gives some flavour of the findings today in an op-ed for the St Petersburg Times (that’s St Petersburg, Florida). Graham writes:
Our commission is urging the offshore oil and gas industry to follow in the path of other high-risk industries such as nuclear power and chemical, which have established industry organizations to assure the highest standards of safety and complement effective governmental regulation.
But he adds:
It’s unclear, however, whether the new Congress — many of them elected on a pledge to reduce the size and influence of the federal government — will support urgently needed safety reforms in the practices and regulation of the offshore industry.
The industry doesn’t appear to expect any major surprises from this report, and perhaps Graham’s last point gives a clue as to why.
As Moody’s said in a report yesterday:
In the near- to intermediate-term, regulation and higher costs should have only a minimal impact on the majors’ production and financial performances.
The Obama administration said in early January that it would allow 16 projects that were approved and under way before the Macondo accident to resume drilling activity. The projects would need to comply with new safety regulations, but in most cases would not be subject to new environmental reviews. This could allow some deepwater drilling to start in a matter of weeks.
But it added:
Over time, regulation of these areas will become tighter and more uncertain, while the costs of exploration and development will rise; these effects will probably spread to other deepwater basins.
So it seems, it may only be after a number of years — once the government and industry have come to some kind of agreed settlement — that we will see the real cost of Macondo to oil explorers.