In Decline, Offshore Drillers Find a Champion in the Trump Administration

In Decline, Offshore Drillers Find a Champion in the Trump Administration

Energy XXI, which emerged from Chapter 11 bankruptcy at the end of 2016, was found to have 207 safety violations during 337 inspections. Conditions were so serious that inspectors moved nine times to shut down entire oil platforms, not simply broken components they found.

Last year, the company paid more than $1.1 million in fines for four different episodes. In one case, it abandoned two offshore wells without ensuring that they had been properly plugged, allowing natural gas to bubble up from the ocean floor.

In 2017, the Interior Department conducted four separate investigations into accidents on Energy XXI platforms (out of 46 conducted across the entire Gulf). One of the inquiries looked at a fire that broke out in October just six miles off the coast, in 49 feet of water, when a gas compressor built in 1979 ruptured and melted.

The most serious offenses involved Black Elk Energy Offshore Operations, which was convicted in August of eight felony violations related to a platform explosion that killed three workers and injured several others. It has since gone out of business, one of at least 19 oil and gas companies that have operated in the Gulf to go bankrupt since 2015.

Representatives from Energy XXI declined repeated requests for comment.

A spokesman for Renaissance said the company had already moved to improve its compliance record this year. “As a company we not only adhere to industry best practices but look to exceed on them in every way,” Renaissance said in a written statement.

Ridgelake Energy, a small company operating in shallow waters, also had a large number of reported violations last year. Its owner, William M. Hines, blamed the run-down condition of equipment he acquired from one of the Gulf’s many bankrupt operators.

“There is a lot of broken stuff out there,” he said. “We are working to get all this back into shape.”

Concern among enforcement officers has been growing because some of the independent companies are looking to extend operations toward the Gulf’s deep waters, where the risks are even greater.

On the same day in February that it filed for bankruptcy, Fieldwood announced that it was going to acquire $700 million in oil wells from Noble Energy, which is leaving the offshore area to focus on shale drilling on land. With that purchase, Fieldwood hopes to start major explorations in deep water, even as it faces scrutiny for violations on the shelf.

A spokesman for Fieldwood said the company was already operating in deep water and would be “be much stronger financially when we come out of this restructuring.”

Lars Herbst, the Gulf director for the Bureau of Safety and Environmental Enforcement, warned offshore operators at a briefing last year that certain kinds of shutdown had doubled. He attributed the spike in such orders, which involve an “unsafe situation” that “poses an immediate danger to the entire facility or personnel,” to a large number of “financially at-risk companies.” Those businesses, he said, operated 449 of the 2,104 active facilities in the Gulf.

More recently, the agency conducted a two-day inspection blitz involving gas leaks on offshore platforms, many of them owned by independent operators in shallow waters. Inspectors found that 17 percent of the 36 platforms and well operations they visited had “oil and gas accumulations,” industry lingo for leaks that can lead to fires, agency records show. Eight facilities either lacked operating gas detectors or had other problems with their leak-detection systems.

“It was quite concerning,” said Jason Mathews, the agency’s chief for safety management in the Gulf.

A Native Son Leads the Charge

The Cajundome in Lafayette is well known as a venue for college basketball games, country music concerts and monster truck shows. But for Mr. Angelle, 56, it is associated with an enduring alliance he forged with the offshore oil and gas industry nearly eight years ago.


Scott Angelle, second from right, leads the Interior Department’s safety agency. He has long had ties to the oil and gas industry.

Ilana Panich-Linsman for The New York Times

In July 2010, just three months after the Deepwater Horizon accident, Mr. Angelle, then lieutenant governor, stood in the arena before more than 10,000 locals, offshore workers and industry executives. He promised to pressure the Obama administration to end the moratorium on new offshore drilling, which had deeply angered communities that depended on it. The ban was lifted that October.

“Enough is enough,” he said with a thick Cajun accent in a rousing speech laced with rhymes and applause lines. “And it’s time to quit punishing innocent American workers to achieve some unrealistic political agenda.”

One of nine children whose father owned a local Ford dealership before going into Louisiana politics himself, Mr. Angelle turned the arena on fire by ticking off the names of local families.

“This moratorium is not hurting the stockholders of BP, or Exxon or Chevron,” he declared. “This moratorium is hurting the Cheramies, and the Calaises, and the Dupuises, and the Robins, and the Boudreauxs and the Thibodeauxs!”

Mr. Angelle knew his audience well: After graduating from the University of Louisiana at Lafayette, he started his career by scouting for onshore drilling sites. He eventually went on to lead the state agency charged with regulating the oil and gas industry, and made a series of appeals to Interior Department officials — some at the safety agency he now runs — to press the federal government to soften its response to the Deepwater Horizon accident.

His ties to the industry are also financial. Mr. Angelle was paid $1 million to serve for four years on the board of directors at Sunoco Logistics, a pipeline company. And when he ran unsuccessfully for governor in 2015, he benefited from large contributions from the industry. One of these was a $1.25 million donation to Louisiana Rising, a political action committee that backed him, from a top executive at an oil and gas company that then had hundreds of Gulf platforms. Mr. Angelle promised voters that he was “fighting for Louisiana’s energy industry” in one advertisement.

After being appointed to his current post, Mr. Angelle made a return visit to the Cajundome last September as part of his outreach to oil and gas executives. Mr. Angelle, agency officials note, has sold off any industry stock assets to comply with federal conflict-of-interest rules.

His job was new, but his message was familiar: How can I help your companies thrive? In addition to safety enforcement, he made it clear that he viewed his role as helping the industry grow.

“One of the things that we want to do is help unlock the next wave of investment into the Gulf of Mexico,” he said at the time. “That is what we want to do.”

The next day, at a meeting with executives in Houston, Mr. Angelle acknowledged that efforts to assist the industry could be hampered if safety problems persisted.

“At the end, we are only as strong as the weakest link,” he said. “And if we have someone who is a bad actor, you owe it to yourselves, you owe it to your families, you owe it to the industry, you owe it to America, to call them out.”

Even before this gathering, the Trump administration had signed off on the first rollback of industry regulations, including the one pertaining to the removal of unproductive offshore platforms. The lobbying effort on that rule was funded in part by companies, like Renaissance and Energy XXI, that were plagued by safety violations. It involved both Mr. Lott and his partner, John Breaux, a Democrat and former senator from Louisiana, according to a disclosure report.

The rule had taken effect late in the Obama administration after government auditors estimated that it would cost nearly $40 billion to remove the old wells, but determined that oil companies had issued just $2.9 billion worth of bonds to cover the expense.

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