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       Energy and Environment 31/01/2011
 
New safety organisation for deep-water drilling?

A plan to create a safety organisation for deep-water drilling is being drawn up by leading oil companies and could be launched within weeks, in an attempt to restore public confidence in the industry after last year's BP oil spill in the Gulf of Mexico.

Discussions about the nature of the body are not concluded yet. The new organisation could be either part of the American Petroleum Institute (created in 1924), the industry group that was strongly criticised by the official National Commission inquiry into the Deepwater Horizon disaster, or be fully independent.

The API has a dual role, both setting technical standards for the industry and lobbying for oil companies' interests in Washington, which critics say creates a conflict of interest.

The proposal that the industry should create an entity to set standards and police compliance in deep-water drilling was first put forward by oil executives last year, and was then picked up by the National Commission appointed by Mr Obama in its report earlier this month.

A working party of executives and advisers, chaired by a senior manager from Royal Dutch Shell, Europe's largest oil company by market capitalisation, has been debating the details, and is said by people familiar with its work to be close to agreeing a plan.

It is becoming increasingly urgent for the industry to restore confidence so it can restart deep-water drilling. Although the moratorium imposed in the Gulf of Mexico after the BP spill has formally been lifted, permits for new wells have been held up, and the API warned last week that the delays could cost 125,000 jobs.

The API, which represents about 400 oil and gas companies, has been a strong critic of Mr Obama's administration, for example over the EPA's plans to regulate carbon dioxide emissions.

Creating a separate body for safety could mean a radical change in the status of the API, which is responsible for technical standards that are used in the US and around the world.

Shell and other companies playing a central role in the talks, including Chevron, the second-largest US oil group after ExxonMobil, have not taken a public position, but believe the institute could be made to work either outside or inside the API.

 
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