Platts: Change Merits Consideration for MMS

Randall Luthi, former director of the Minerals Management Service, said Sunday that "some kind of change has to be contemplated" at the agency in the wake of the Deepwater Horizon disaster in the Gulf of Mexico.

"It's reached the point where it becomes difficult for the MMS to operate under the perception that they might not be doing something correctly," Luthi, who is currently president of the National Ocean Industries Association (NOIA), said on Platts Energy Week.

NOIA represents the offshore service industry, including Transocean which owned and operated the Deepwater Horizon platform. Interior Secretary Ken Salazar last week said MMS inspections and enforcement activities will be spilt from its revenue collection operations.

Luthi said there is a "perception that MMS has its inspectors out there looking at the rigs and picking up the royalty checks. That just isn’t the case. They are currently two very separate parts of the agency."

However, "You want to make sure there is no question on the inspection and enforcement side," Luthi said. "Salazar has requested $29 million for enforcement. That really becomes a key."

Luthi also said proposals that industry pay for the inspections may undermine the credibility of enforcement efforts. "Before you do that you also want to look at the perception," he said. "If companies are directly paying for inspection, what does it look like?"

He rejected allegations that the MMS is too "cozy" with industry. "I don’t think it's too close a relationship," Luthi said. "Once again it's a question of perception, particularly in deep water fields where there are very new, challenging technologies. Any regulatory agency wants to understand the cutting edge of technology industry can provide this [understanding]."

Asked about MMS's "blame" for the Deepwater Horizon accident and oil leak, Luthi said, "MMS is in the heat of the fire. Without a doubt, anytime you have a disastrous event like this, warts become the size of boils. So everybody is getting a close look, both industry and the regulatory agency that works with industry."