Prescriptive and Risk-Based Approaches to Regulation: The Case of FPSOs in Deepwater Gulf of Mexico

Abstract

Abstract This paper analyzes the articulation between traditional prescriptive approaches to regulation and risk-based approaches. The debate as to which approach is the most appropriate one has become one of great interest to the offshore community for at least three reasons: first, the application of risk analysis techniques is now mature in the industry and research in that field is more active than ever; second, the possibility of installing a FPSO system in deepwater Gulf of Mexico is becoming more and more probable; third and finally, this perspective poses a certain number of questions, as it would entail the use of technologies which may or may not be covered by current regulations. These gaps in the regulatory framework are the ones where choices will have to be made between developing new prescriptive rules, allowing the substitution of risk-based rules, or choosing a pure goal-setting approach. This paper examines a set of criteria which could be used to delineate the boundaries of these approaches and proposes a rational process to address the issue of whether a compliancebased system of regulation should be used or rather a riskbased, goal-setting system should prevail. More specifically, we suggest guidelines which could be used by the regulatory authorities to establish their regulations or by an operator facing the choice between complying with existing prescriptive rules or performing a risk analysis to establish that its installation is safe. Introduction The use of risk analysis techniques now seems to be mature in the offshore industry, both for qualitative and quantitative studies. Although many methodological and practical issues still surround these studies, it is widely accepted that risk analysis can prove to be worthy of the investment in time and money required, in that it not only enables an operator to get a better idea of potential hazardous situations and therefore to address them appropriately, but also in that it can enable the operator to manage risks in a cost-effective manner. Beyond this "private" use of risk analysis, which basically serves the interest of the operator, another practice of risk analysis is emerging on the regulators' side, in cooperation with the industry. From a regulatory viewpoint, three different perspectives can be distinguished: Regulators commission studies on the risks associated with certain novel concepts, in order to determine whether they should accept their use. The most recent examples of these in the Gulf of Mexico area are probably the Environmental Impact Statement1 and the Comparative Risk Analysis for Deepwater Production Systems2, both of which were commissioned by Minerals Management Service. Conversely, the industry has also engaged in projects to prove to the regulators that the new technologies they wish to implement remain at an acceptable risk level. The "Total Risk Assessment of a FPSO in the Gulf of Mexico" Joint Industry Project3,4,5, which was coordinated by Bechtel and completed in 1999, is a good example of this approach.