Oil rigs’ safety net questioned as governments rely on private inspections

To ensure that oil rigs, tankers and other commercial ships are in safe operating condition, governments around the world, including the U.S. government, often rely on inspections by private firms that are hired and paid by the vessels’ owners.

But how much confidence should the world have in the maritime watchdogs?

The Deepwater Horizon catastrophe, which claimed 11 lives and fouled the Gulf of Mexico, has revealed that the mobile oil rig leased by BP had a host of maintenance problems.

Case in point: In April, the company that owned the rig gave parts of two cranes its worst rating, indicating that they did not work or should be removed from service.

That assessment was for the company’s internal use.

Less than two months earlier, one of the main inspection firms upon which governments depend declared that the same cranes were in satisfactory condition.

Although there is no reason to think the cranes had anything to do with the explosion that destroyed the rig on April 20, records of the Deepwater Horizon’s maintenance and inspection history — including the crane assessments — open a window on possible weaknesses in the little-known industry that oversees the world’s commercial fleets.

The business traces its roots to the 1700s, when insurers in London created a system to assess the ships they might insure.

Today, owners of vessels flagged in the United States generally have a choice. To fulfill federal requirements, they can let the Coast Guard conduct primary inspections, or they can enlist one of several private firms authorized to do the work in place of the Coast Guard.

When it comes to vessels flagged by other nations — such as the Deepwater Horizon, which is registered in the Marshall Islands — the Coast Guard depends largely on the oversight of foreign governments, which might essentially outsource the job to the same firms.

The fact that the inspection firms, known as “classification societies,” are hired and paid by the vessels’ owners appears to present “a built-in conflict,” said Steve Gordon, a Houston maritime lawyer at the firm Gordon, Elias & Seely. Its clients include eight surviving members of the Deepwater Horizon crew.

“It’s almost like the fox watching the henhouse,” said Lee Kincaid, a former shipping captain who has represented a labor union for marine engineers at the International Maritime Organization, an agency of the United Nations.

The arrangement puts inspection firms in a difficult spot, Kincaid said: If they are too strict in their inspections, ship owners may switch inspection firms.

Such “class hopping” became a cause of concern in the 1990s with ship owners “trying to avoid doing repairs,” said Colin Wright, an officer at the International Association of Classification Societies.

The group addressed the problem through a two-pronged policy. When owners switch inspection firms for ships less than 15 years old, the firm losing the assignment must notify the firm gaining the assignment of any needed repairs. For older ships, the new firm cannot approve the vessel until the old firm certifies that all overdue maintenance has been completed. But the IACS includes only 11 of the world’s many inspection firms.

“Certain owners, of course, will put pressure on surveyors because the owner is the customer,” Wright said. “But the surveyors . . . have to stand up to such pressure and not succumb to it.”

Differing assessments

The Deepwater Horizon was inspected by the Houston-based American Bureau of Shipping, or ABS, one of the biggest inspection firms.

ABS certified in a Feb. 22 report focusing exclusively on the four cranes that they “were thoroughly examined by a competent person and that no defects affecting . . . their safe working condition were found.”

Less than two months later, a different assessment commissioned for internal use by Transocean concluded that some of the cranes “were in bad condition.”

The April assessment by a firm called ModuSpec USA said various parts of the port-side deck crane were “in bad condition and severely corroded . . . severely corroded . . . cracked due to age . . . in bad condition . . . worn severely . . . . worn and in need of being replaced.”

The starboard-side deck crane was found to be in similar condition and “has had major issues for some time now,” the ModuSpec report said, citing interviews with crew members.

Transocean commissioned the ModuSpec report as a routine part of its maintenance program, Transocean spokesman Brian J. Kennedy said.

Using ModuSpec’s work, Transocean compiled an April 12 rig assessment that listed 10 features of the cranes as being both “critical items that may lead to loss of life, a serious injury or environmental damage” and in “Level 1” condition — the worst of four categories. The Level 1 rating indicated that the item “is not working or should be removed from service until deficiencies are rectified,” according to Transocean’s definition and the company spokesman.

The ModuSpec report “is designed specifically to identify as much as possible,” Transocean’s Kennedy said. “Very clearly, the rig-condition assessment that was done by ModuSpec gets much more granular.”

An attorney for Transocean, Edward F. Kohnke IV, said that rig inspections are subjective, and that what one person describes as minor rusting, another might consider severe corrosion.

Stewart H. Wade, ABS’s vice president for external affairs, declined to comment on the April Deepwater Horizon assessments. “Without access to those documents, it’s very difficult to come up with any valid explanation of any alleged discrepancies,” he said.

“The fact that more than 130 governments around the world rely on the services provided by ABS . . . is an indication of the value of the services that we provide and the professionalism that we bring to the responsibilities with which we’re entrusted,” Wade said.

The Coast Guard delegated authority to ABS under a 1995 agreement. The Coast Guard commandant who signed the agreement, Adm. Robert E. Kramek, went on to become a top executive at ABS. That agreement led to the Coast Guard’s “Alternate Compliance Program” under which primary inspections can be outsourced.

The program was “one of the most significant regulatory reinvention programs of the 1990s,” a Coast Guard Web site says. The purpose, the site says, was “to reduce the regulatory burden on the maritime industry while maintaining existing levels of safety.”

The performance of ABS and other inspectors has been challenged in lawsuits over past maritime disasters. The government of Spain sued ABS for more than $1 billion after the Prestige, a tanker certified by ABS, sank in 2002 and released millions of gallons of oil off the Spanish coast. In a sworn statement, a former captain of the Prestige said he resigned because the ship was in such disrepair “that it was doomed to fail in a catastrophic manner.”

ABS denied responsibility. A federal judge in New York dismissed the suit on Aug. 3, saying that, even if classification societies employed by ship owners certify ships recklessly, they cannot be held liable for coastal damage.

The Transocean spokesman rejected the notion that the Deepwater Horizon was poorly maintained, saying it was “a jewel of the fleet.”

Gordon, the Houston lawyer, said two of the Deepwater Horizon crew members he represents told him that people on the rig knew when inspectors were coming. Gordon said the clients recalled being instructed by a Transocean supervisor to clean up hydraulic leaks on two cranes and not use the cranes until the inspection was over, all to make it appear that the leaks were fixed.

Transocean spokesman Kennedy said the company “would be surprised if the employees . . . engaged in such questionable conduct.”

‘Well maintained’

ABS’s last annual inspection report on the Deepwater Horizon, dated Dec. 17, commented favorably on aspects of the rig that the ModuSpec report later criticized.

Where the inspection form asked for observations about the drinking water, ABS noted only: “Drinking water cooler on all decks.” ModuSpec reported that the freshwater piping “was in bad condition” and “corroded . . . throughout the rig.” The watermakers that converted saltwater to freshwater were meeting only about half of the rig’s needs, ModuSpec reported.

ABS said the sanitary facilities were “Clean and well maintained.” ModuSpec said the sewage treatment plant was “in poor condition,” mainly because of a corroded tank. An April 12 Transocean assessment said the sewage treatment plant, like aspects of the cranes, was a “Level 1” problem.

Based on the ABS report, the Marshall Islands declared on Dec. 22 that the Deepwater Horizon completed its annual inspection with no deficiencies.