IS IT SAFER TO WORK OFFSHORE, ONSHORE OR THE FRACKING OIL AND GAS FIELDS IN 2014?

is it safer to work offshore, onshore or the fracking OIL & GAS FIELDS in 2014?

We do not know the answer to that.  There is a lot of emphasis on safety, but this is most of the time “lip service” than real emphasis on safety.  Taking a million of safety courses will not improve the safety habits of companies or individuals.  Looking at the number of accidents, near misses, serious accidents and deadly accidents, we see that people are injured at a very decent rate in 2014.  We have seen lots of fires and explosions, and dropped tools and falls and corroded pipes and electric fires and so on.  But the biggest culprit of all are all the deadly and serious accidents caused by driving to/from work and during work (at the job site).  

Traffic accidents are true killers and we do not seem to want to stop them.  We still allow drivers working over 12 hours; tired brains will do mistakes and will apply short-cuts to safety.  That is a death wish, especially when handling flammable and/or explosive chemicals.

Another problem is that most of the accidents are associated with young and/or inexperienced workers.  We find that they are ill-prepared, ill-trained and not well-assimilated in the drilling or production team.  This has led to many-many injuries and deaths in 2014.  Many other accidents happen during maintenance work.  The over-worked and overstressed equipment are maintained by people (contractors) unfamiliar with the condition of the equipment and many explosions, releases and injuries have been caused as a result.

Perhaps the upcoming slowdown in the development and exploration of the oilfields will also slowdown the injury and property damage rate.  This happened during the great recession and should also happen now.

On the two year anniversary of the WD 32 deadly platform explosion, we provide the BSEE report against Black Elk Energy and its contractors.  That report indicated the numerous safety violations of Black Elk and its contractors and its numerous safety violations over the years.  They played with "fire" and they caused explosion and death and property damage.  All that because of taking short-cuts to safety.

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BSEE: Black Elk ENERGY, Contractors to Blame for WD 32 E DEADLY Platform Explosion

The Bureau of Safety and Environmental Enforcement (BSEE) today released the panel investigation report into the November 16, 2012 explosion and fire that occurred on a platform operated by Black Elk Energy Offshore Operations.

The explosion and fire resulted in the tragic deaths of Ellroy Corporal, Jerome Malagapo, and Avelino Tajonera, serious injuries to others, and the discharge of pollutants into the Gulf of Mexico.

The investigation panel, comprised of professionals from BSEE and the United States Coast Guard, found these deaths were caused by a number of decisions, actions, and failures by Black Elk and contractors retained by Black Elk while conducting construction operations. “These failures reflect a disregard for the safety of workers on the platform and are the antithesis of the type of safety culture that should guide decision-making in all offshore oil and gas operations,” said BSEE Director Brian Salerno. The report concludes that BSEE safety regulations were not followed, and accordingly BSEE will proceed with appropriate enforcement actions.

Cause of Explosion/Fire

Black Elk retained a number of contractors to complete work on the WD 32 complex, including: Compass Engineering Consultants, L.L.C. (Compass), for management and oversight of the construction work; Grand Isle Shipyard (GIS), for the provision of workers for the various construction projects (GIS subcontracted with DNR Offshore and Crewing Services, Inc. (DNR)); Wood Group Production Services Network (WGPSN), for the management of the production equipment and performance of production-related operations; Shamrock, for mechanical services; and Enviro-Tech Systems, for the removal and replacement of a flotation cell (equipment used to separate oil and water during production).  Each of these contractors was also responsible for conducting safe operations in compliance with all applicable regulations. At the time of the explosion, no Black Elk personnel were present at the WD 32 complex. An investigation panel comprised of professionals from BSEE and the United States Coast Guard (the Panel) conducted an extensive investigation of the incident and identified a number of causes of the explosion and fire. The Panel found that the explosion and fire occurred when hydrocarbon vapors ignited while a GIS/DNR worker was welding on the incoming pipe segment to the wet oil tank located in the Lease Automatic Custody Transfer (LACT unit) area.

The ignition started a chain reaction that caused the wet oil tank and two connected dry oil tanks to explode. These explosions caused the three tanks to separate at their bases, launching the wet oil tank and the first dry oil tank into the Gulf of Mexico and blowing the second dry oil tank into the air. The second dry oil tank then struck the platform crane and landed back on the WD 32 E platform. The hydrocarbons in all three of the tanks were released onto the platform and into the Gulf of Mexico. The hydrocarbons on the platform subsequently ignited, starting a fire on the platform.

The failure to properly secure the oil tanks, purge their pipelines, and follow established hot work procedures allowed the flammable vapors to reach a hot work area. The flammable vapors originating from these oil tanks reached the area where the GIS/DNR workers were tack welding a flange. Once the vapors were ignited by the welding work, the flame traveled from tank to tank due to the tanks’ piping configuration. Due to the headspace in each tank, a combustible atmosphere inside each tank was created.  Once this combustible atmosphere ignited, the increased pressures created inside each of the tanks could not be released fast enough through the vent system. These increased pressure levels exceeded the structural strength of the tanks and caused the tanks to fail at their base welds. This increased pressure and failure at the base welds resulted in two of the

tanks breaking away from their base and launching off of the WD 32 E platform, eventually landing in the GOM. The third tank also broke away at its base weld and launched from the platform, however this tank struck the platform crane and landed back on the WD 32 E platform. The liquid contents of all three tanks were released from the bottom of each tank onto the platform and into the GOM. The flames that traveled through the tanks also ignited these hydrocarbons as they were released onto the platform and into the GOM.

Safety stand down

Based on the findings and recommendations of the panel that operators conduct a “safety stand down,” Director Salerno strongly requests that all operators with personnel at manned offshore facilities take this opportunity before the end of the year to discuss the events that led to this explosion and to ensure their operations are safe. A safety stand down uses real world examples to illustrate the potentially tragic consequences that can result from the failure to consider safety.

In addition to the safety stand down, Director Salerno has requested that the American Petroleum Institute assist BSEE in improving safety by issuing standards for “hot work” that are consistent with the industry’s best practices. This would help to ensure that there is consistency across the offshore community while increasing communication within industry on this important topic.

 Read the full report here

Houston’s Black Elk Energy had history of violations before fatal fire

Before last week’s fatal fire at one of Black Elk Energy’s oil production platforms, the five-year-old firm had racked up more than 300 documented mistakes and violations offshore, according to federal regulators who cracked down on the Houston-based company Wednesday.

Federal regulators threatened to bar Black Elk from working in the Gulf of Mexico if it doesn’t take immediate steps to improve safety. 

The Bureau of Safety and Environmental Enforcement ordered Black Elk Energy to develop a plan for boosting the safety of its operations by Dec. 15 and told it to immediately halt burning, welding and other activities that could ignite fires at its 98 production facilities in the Gulf of Mexico. Regulators also are barring the firm from launching operations at facilities that are currently offline.

“Black Elk has repeatedly failed to operate in a manner that is consistent with federal regulations,” said James Watson, director of the Bureau of Safety and Environmental Enforcement that oversees offshore oil operations.

“BSEE has taken a number of enforcement actions, including issuing numerous incidents of non compliance, levying civil penalties and calling in the company’s senior leadership to review their performance and the ramifications of failing to improve,” Watson added. Wednesday’s action “is an appropriate and necessary step as we continue to investigate the explosion and fire that resulted in the tragic loss of life and injuries last week.”

The Nov. 16 explosion on board Black Elk’s platform roughly 18 miles off the Louisiana coast killed one worker, critically injured others and left one still missing.

In a statement, Black Elk spokesman Leslie Hoffman stressed the company’s commitment to safety.

“We appreciate the perspective of the Bureau of Safety and Environmental Enforcement,” Hoffman said. “Safety is a high priority for Black Elk Energy, and we will continue to work cooperatively with local and national federal agencies to understand exactly what happened with the incident at our rig in the Gulf of Mexico.”

Black Elk’s long history of violations offshore has been documented in 315 “incidents of non-compliance” issued by the safety bureau since 2010. On 12 separate occasions, the agency ordered the company to shut in its facilities because the violations were considered so severe or life threatening that work could not safely continue.

During that same two-year time frame, the safety bureau ordered Black Elk to shut off specific equipment 145 times because it was too risky to continue operating. The agency also issued 158 warnings to the company, ordering it to correct violations identified during inspections of Black Elk’s facilities.

In one case two years ago, regulators ordered Black Elk to pay a $307,000 fine after the safety bureau determined the company had not tested a safety valve every six months as mandated. When it finally was tested, the valve was found to be leaking excessively — and then it took another 117 days to be repaired or replaced.

In a letter to the company Wednesday, BSEE said it had documented “numerous troubling safety incidents involving Black Elk facilities,” including last week’s fatal platform fire. According to the safety bureau, Black Elk also:

·         was hit with 45 incidents of non-compliance for violations at nine of its facilities in the South Marsh Island area of the Gulf of Mexico in October.

·         showed “disregard for the safety of personnel” in a series of incidents, including an Oct. 20 accident that sent six workers to the hospital because improper precautions were taken while an acid-based chemical was used to treat one of Black Elk’s wells. 

Wednesday’s move was decried by some as too little, too late, and it raised fresh questions about the effectiveness of safety changes imposed after the 2010 Gulf oil spill.

Bob Dean, an associate director at the Natural Resources Defense Council, likened the government’s approach to “locking the gate after the horse has bolted the barn.”

“This is the right thing to do,” Dean said. “Unfortunately it comes too late for the killed or injured workers and their families.”

Marilyn Heimann, with the Pew Environment Group, said Wednesday’s disclosures show “there is still more to do on prevention and safety,” two years after the explosion of the Deepwater Horizon rig claimed 11 lives and launched the nation’s worst oil spill. “We commend BSEE for their strong response to this incident, but they still need more resources and support to prevent these problems.”

Dean stressed that robust inspections and “decisive action” are needed to discourage companies from cutting corners.

“There’s a difference between issuing citations and protecting our workers, waters and wildlife,” he said. In the case of Black Elk, he said, “that’s 300 warnings, 300 red flags, 300 opportunities for authorities to step in and demand better. Why did it take a tragic disaster for enforcers to step in and connect the dots?”

Although Black Elk was first formed in 2007, it has only been operating facilities in the Gulf of Mexico since 2010. In the past year, safety bureau officials have inspected Black Elk platforms 214 times and well operations on two dozen occasions. The agency appeared to step up those inspections in recent months.

Some lawmakers on Capitol Hill have unsuccessfully pushed legislation that would make it easier to block companies with repeated violations from buying offshore drilling leases or working on the outer continental shelf altogether.

While federal regulators already have some latitude, current law limits their powers. The Interior Department can disapprove or revoke a company’s status as an operator, but only after determining that the firm’s “operating performance is unacceptable.” The safety bureau stopped short of issuing a notice of unacceptable performance on Wednesday.

And while incidents of non-compliance can kick off a lengthy civil penalty process, fines are capped at $40,000 per incident per day. Any significant hike in the maximum fine would be up to Congress; otherwise, current law limits the safety bureau to making periodic adjustments for inflation. 

After the Deepwater Horizon disaster, the Bureau of Safety and Environmental Enforcement issued incidents of non-compliance to BP, the London-based company that operated the failed Macondo well in the Gulf. But the safety bureau did not deem BP’s overall performance “unacceptable” or move to bar the company from operating offshore. 

BSEE does not routinely disclose the number of violations logged by oil and gas companies working offshore or the fines imposed on those firms. 

That can foster a false sense of security about what’s happening offshore, said Jacqueline Savitz, a senior campaigns director with Oceana. 

“You want to think everything is going smoothly, but the fact of the matter is, when you scratch the surface, you see there are a lot of problems,” Savitz said.

Following last week’s platform fire, a Coast Guard search was suspended late Sunday. Black Elk called off additional searches Tuesday evening, after one body was found.

Inspectors with the safety bureau have been at the platform securing potential evidence, ensuring the site is safe and overseeing a cleanup of residual oil that could spill into the Gulf of Mexico. The Chemical Safety Board, an independent federal agency that has investigated more than 50 industrial accidents, also has subpoenaed Black Elk Energy and Grand Isle Shipyard, the contractor working on the platform at the time of the fire, seeking combustible gas testing results, hot work permits, safety assessments and other documents.

Scrutiny has focused on the possibility that a torch ignited flammable materials on the site. Black Elk CEO John Hoffman said the explosion occurred during maintenance work at the site, when workers were cutting a water line. He said workers may have used a cutting torch instead of a saw, igniting flammable vapors in the line and subsequently triggering an explosion in connected oil tanks.

Activities that involve burning, welding or other operations capable of starting fires or explosions — called “hot work” in industry parlance — have been blamed for more than 60 deaths in the United States over the past two decades. Hot work has been a major factor in so many industrial accidents that the federal Chemical Safety Board has warned companies to monitor the amount of flammable gas in the atmosphere constantly before using burning, welding or other sparking tools.

Founded in 2007 by Hoffman, a former BP and Amoco executive, Black Elk holds interests in 854 wells connected to 155 platforms spanning the Gulf of Mexico. It is the main operator on 98 platforms, according to federal records. 

The company has adopted an aggressive acquisition plan that is focused on buying older wells and facilities. The wells linked to the platform involved in Friday’s accident date back decades to the 1950s and 1960s. 

Those decades-old facilities come with big maintenance needs, increasing the need for construction work on the sites and possibly boosting the chance of accidents.

Black Elk’s acquisition strategy _ along with the platform fire _ appears to have driven rating agency Standard & Poor’s decision Wednesday to warn investors about the company’s credit risk. 

“The ratings on Black Elk reflect our view of its ‘vulnerable’ business risk and ‘highly-leveraged’ financial risk, incorporating the company’s small reserve and production base, high operating costs, and acquisitive growth strategy,” the agency said Wednesday. “While we do not expect (Friday’s accident) to materially affect oil and gas production or cash flow, Black Elk has very limited liquidity and we believe little capacity to absorb unexpected expenses or incurred liabilities.”

The Bureau of Safety and Environmental Enforcement (BSEE) Issues Report and Enforcement Actions Concerning November 16, 2012 West Delta Block 32 Fire

Just under a year after the November 16, 2012 rig fire that left three workers dead, a joint investigative panel of BSEE and the United States Coast Guard has issued a report regarding the causes of the incident and recommending various enforcement actions/regulatory responses in the wake of the incident (“the Report”). 

http://www.bsee.gov/uploadedFiles/BSEE/Enforcement/ Accidents_and_Incidents/Panel_Investigation_Reports/Final%20BSEE%20Black%20Elk%20report.pdf. This Report and the ensuing Incidents of Non-Compliance (INCs) issued by BSEE are yet another reinforcement of BSEE’s controversial, unprecedented, and arguably ultra vires extension of its regulatory enforcement jurisdiction to offshore contractors in addition to its historic and statutorily supported jurisdiction over OCS operators and lessees.

The explosion and fire occurred around 9:00 AM on November 16, 2012 during welding operations on piping connecting two dry oil tanks and one wet oil tank on Black Elk’s West Delta Block 32 complex, which included three platforms (A, D, and E). Platform D consisted of crew quarters; Platform A had previously handled production from 9 wells that had been plugged and abandoned; and Platform E, where the explosion and fire occurred, handled production from 6 other producing wells. At the time of the incident, however, the Platform E wells had been shut in since August of 2012 due to hurricane damage at a nearby Energy XXI platform, which received all production from Platform E. Black Elk decided to perform certain upgrade/ maintenance construction work during the shut-in period, and the welding that led to the incident was part of this work.

The Report concludes that the explosion was caused by sparks from the welding work igniting residual hydrocarbon vapors in the wet oil tank, which started a chain reaction explosion in the other two dry tanks and likewise causes ignition of hydrocarbons elsewhere on the platform. The Report likewise notes the following violations/safety breakdowns that led to the explosion and fire:

·         improper issuance of/adherence to hot work permits;

·         failure to use gas detection equipment prior to hot work;

·         failure to have properly functioning/maintained gas detection equipment available;

·         failure to inspect work area prior to hot work;

·         lack of proper project supervision by Black Elk over its contractors/subcontractors;

·         inadequate project planning/coordination among Black Elk and its contractors, including inadequate training and communication, and failure by Black Elk as operator to enforce its Safety and Environmental Management System(SEMS) during the project, and/or to ensure its contractors’ compliance with its SEMS program;

·         failure of personnel to invoke “stop work” authority.

As a result of these findings, the BSEE-USCG panel recommended issuance of multiple BSEE INCs to both Black Elk and three of its contractors (Wood Group Production Service Network, a production services contractor; Grand Isle Shipyard, which provided the welders for the work; and Compass Engineering Consultants, which provided project management services for the construction work). These INCs include violation of broad based general safety regulations (i.e. failure to conduct operations in a safe and workmanlike manner and to adequately protect personnel, 30 C.F.R. §250.1070, as well as task-specific regulations (i.e. failure to ensure removal of hydrocarbons prior to welding work, 30 C.F.R. §250.113). In total, the Report recommended 11 INCs each against Black Elk and Wood Group, and 9 each against Grand Isle and Compass, but also notes that “[f]urther evidence may reveal additional violations. Under BSEE regulations, the maximum civil penalty of $40,000.00 per violation per day. 30 C.F.R. §250.1403. It also bears noting that Black Elk previously issued its own expert report, which placed blame for the incident squarely on Grand Isle. http://www.blackelkenergy.com/news/67-explosion-and-fire-on-gulf-platform-occurred-during-welding-contractors-failed-to-follow-standard-safety-practices.html

Following the Report, on November 13, BSEE formally issued 41 INCs to/among Black Elk, Grand Isle, Wood Group and Compass. http://www.bsee.gov/Inspection-and-Enforcement/Enforcement-Programs/Incidents-of-Non-Compliance.aspx

\The Report and the resulting slew of INCs is thus another emphatic wake-up call that BSEE’s self-proclaimed jurisdiction over offshore contractors – whether legally valid or not – is a stark reality. That said, BSEE’s intent to issue INCs to Black Elk’s contractors – in addition to perpetuating the fundamental question of whether BSEE even has jurisdiction to do so – raises additional problems.

First, the Report’s discussion of Black Elk’s SEMS breakdowns – with specific reference to how its contractors’ failed to follow the SEMS program – begs the question of whether BSEE’s SEMS regulations (including the time-consuming and expensive process of creating of comprehensive SEMS program subject to periodic audit) may apply directly to offshore contractors. This currently unanswered question may soon be emphatically resolved: in its Final Rule promulgating the SEMS regulations, BSEE stated (in response to a comment) that it “is evaluating the possibility of requiring contractors to have a SEMS program while performing operations on the OCS,” and “may address this concept through future rulemaking.” 78 Fed. Reg. 20423, 20426 (Apr. 5, 2013). In other words, contractors may soon be directly required by BSEE to have their own comprehensive SEMS programs. This, in turn, begs the question of whether and to what extent multiple contractors’ independent SEMS programs may have to be coordinated, along with the SEMS program of the operator/lessee, to ensure consistency. The potential for confusion in this area is enormous.

Second, there is a question of whether any BSEE INCs may be appropriate for the West Delta Block 32 incident because no well operations were taking place when the incident occurred. By way of precedent, BSEE previously issued an INC to a lessee on June 22, 2012 related to a trip-and-fall incident in which a third-party contractor fell aboard a jackup rig; however, BSEE later rescinded the INC (on written request of the lessee) on the basis that the rig “was jacked-up on [the lessee’s] lease performing only construction and maintenance activities,” not well operations. BSEE Accident Investigation Report Re: June 22, 2012 INC issued to Tarpon Operating and Development, L.L.C. (Aug. 9, 20122) available at http://www.bsee.gov/uploadedFiles/BSEE/Enforcement/Accidents_and_Incidents/20Jun2012TarponSM50.pdf. Based on the Report, it appears that the work being performed at the time of the West Delta Block 32 incident – which the Report itself describes as “welding work that was being conducted as part of construction operations” during a long shut-in period – was similarly “only construction and maintenance activities” just as in the prior case in which the INC was rescinded.

The Report thus highlights the bewildering – not to mention frustratingly inefficient and expensive – state of regulatory enforcement on the OCS in the wake of BSEE’s self-ordained jurisdiction over OCS contractors.

Moreover, the apparent discrepancy between the result in the Tarpon INC – which involved a relatively minor incident – and the result in the West Delta Block 32 INC – which involved three fatalities – underscores the inherent vagueness and subjectivity with which BSEE is applying its newly minted jurisdiction over offshore contractors. Specifically, BSEE has stated that it will consider four factors in determining whether a contractor’s conduct was so “egregious” as to merit BSEE enforcement action: (1) whether the violation implicated health, safety, or environmental concerns; (2) resulting harm or potential harm from violation with respect to health, safety, and the environment; (3) foreseeability of such harm; and (4) extent of the contractor’s involvement in the violation. http://www.bsee.gov/uploadedFiles/Issuance %20of%20an%20Incident%20of%20Non%20Compliance%20to%20Contractors.pdf. This amorphous and subjective “egregiousness” standard actually creates even more confusion than would a simple blanket assertion of contractor jurisdiction. As is apparent from the Tarpon/West Delta Block 32 INCs, the same type of activity may or may not give rise to an INC depending on the outcome of an incident. In other words, BSEE’s jurisdiction over contractors appears to be result-driven; a violation that results in a minor incident may be ignored while the same violation resulting in a major incident may lead to a myriad of INCs. This 20/20 hindsight, result-driven approach leaves industry with no practical, commercial means of predicting if, how, and by whom they will be regulated.

It remains to be seen whether and how any of the three contractors in this case will challenge the INCs issued against them by BSEE.

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Black Elk Energy had more than 300 violations before fatal fire

Before last week's fatal fire at one of Black Elk Energy's oil production platforms, the five-year-old firm had racked up more than 300 documented mistakes and violations offshore, according to federal regulators who cracked down on the Houston-based firm Wednesday.

The federal government ordered the company to immediately cease burning, welding and other activities that could ignite fires at all of its 98 oil and gas production facilities in the Gulf of Mexico. Regulators also are insisting on a third-party audit of Black Elk's safety management systems and are barring the company from launching work at facilities that are currently offline.

"Black Elk has repeatedly failed to operate in a manner that is consistent with federal regulations," said James Watson, director of the Bureau of Safety and Environmental Enforcement that oversees offshore oil operations.

The move came as federal investigators deepened their probe of what caused an explosion on Black Elk's West Delta 32 production platform last Friday, killing a worker, critically injuring others and leaving one still missing.

Black Elk's long history of violations offshore has been documented in 315 of what regulators call "incidents of non-compliance" issued by the safety bureau since 2010. On 12 separate occasions, it ordered the company to shut in its facilities because the violations were considered so severe or life threatening that work could not safely continue.

During that same two-year time frame, the safety bureau ordered Black Elk to shut off specific equipment 145 times because it was too risky to continue operating. The agency also issued 158 warnings to the company, ordering it to correct violations identified during inspections of Black Elk's facilities.

In one case two years ago, regulators ordered Black Elk to pay a $307,000 fine for violating testing requirements after the safety bureau determined the company had not tested a safety valve every six months as mandated. When it finally was tested, the valve was found to be leaking excessively - and then it took another 117 days to be repaired or replaced.

Although Black Elk was first formed in 2007, it has only been operating facilities in the Gulf of Mexico since 2010. In the past year, safety bureau officials have inspected Black Elk platforms 214 times and well operations on two dozen occasions.

"BSEE has taken a number of enforcement actions, including issuing numerous incidents of non compliance, levying civil penalties and calling in the company's senior leadership to review their performance and the ramifications of failing to improve," BSEE's Watson said. Wednesday's action "is an appropriate and necessary step as we continue to investigate the explosion and fire that resulted in the tragic loss of life and injuries last week."

Incidents of non-compliance can kick off a lengthy civil penalty process that can result in fines of up to $40,000 per incident per day.

BSEE detailed its requirements to Black Elk in a letter to the company Wednesday. It ordered the firm to submit a performance improvement plan detailing the steps it will take to ensure compliance in its operations. The agency threatened that if it doesn't see evidence of improved performance, the company could be barred from operating facilities on the outer continental shelf.

The safety bureau also asked Black Elk to prove how it had changed procedures and equipment in response to previous violations to prevent similar incidents on other facilities.

Black Elk's history of repeated violations - coming after the 2010 Deepwater Horizon disaster sparked major changes in the government's regulation of offshore drilling - raises fresh questions about the adequacy of the federal oversight. Some lawmakers on Capitol Hill have unsuccessfully pushed legislation that would bar companies with repeated violations from buying offshore drilling leases or working on the outer continental shelf altogether.

Federal regulators have some discretion to take action against companies operating offshore already, under the terms of the leases they hold with the government.

Black Elk's history and the platform fire appear certain to revive calls for stiffer punishments, but any big hike in the maximum fine or other new penalties would be up to Congress; otherwise, regulators can only raise the fine periodically to adjust for inflation.

Black Elk officials did not immediately respond to a request for comment.

According to safety bureau records, Black Elk was cited for an incident last Aug. 5 that sent two workers plunging 60 feet into the Gulf of Mexico while a crane was attempting to lower them in a personnel basket onto a boat. They weren't injured.

Regulators also investigated a fire on a Black Elk platform in February 2011 that was later traced to an improperly enclosed rechargeable battery.

Following last week's platform fire, a Coast Guard search was suspended late Sunday. Black Elk called off additional searches Tuesday evening, after one body was found.

Inspectors with the Bureau of Safety and Environmental Enforcement have been at the platform securing potential evidence, ensuring the site is safe and overseeing a cleanup of residual oil that could spill into the Gulf of Mexico.

The Chemical Safety Board, an independent federal agency that has investigated more than 50 industrial accidents, also has subpoenaed Black Elk Energy and Grand Isle Shipyard, the contractor working on the platform at the time of the fire, seeking combustible gas testing results, hot work permits, safety assessments and other documents.

Scrutiny has focused on the possibility that a torch ignited flammable materials on the site. Black Elk CEO John Hoffman said the explosion occurred during maintenance work at the site, when workers were cutting a water line. He said workers may have used a cutting torch instead of a saw, igniting flammable vapors in the line and subsequently triggering an explosion in connected oil tanks.

Activities that involve burning, welding or other operations capable of starting fires or explosions - called "hot work" in industry parlance - have been blamed for more than 60 deaths in the United States over the past two decades. Hot work has been a major factor in so many industrial accidents that the federal Chemical Safety Board has warned companies to monitor the amount of flammable gas in the atmosphere constantly before using burning, welding or other sparking tools.

Founded in 2007 by Hoffman, a former BP and Amoco executive, Black Elk holds interests in 854 wells connected to 155 platforms spanning the Gulf of Mexico. It is the main operator on 98 platforms, according to federal records.

As of 2011, Black Elk recorded estimated total proved oil and natural gas reserves of 45.2 million barrels of oil equivalent, mostly concentrated in the shallow waters of the Gulf.

Although the platform where the blaze ignited last week was not producing at the time, the company has estimated it is capable of producing about 600,000 barrels of oil equivalent per day.

The wells linked to the platform involved in Friday's accident date back decades to the 1950s and 1960s. Federal records indicate the company took over as operator at the offshore oil lease from Energy XXI GOM in 2011.

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PRESS RELEASES FROM BLACK ELK

Explosion and fire on Gulf platform occurred during welding; Contractors failed to follow standard safety practices

Created: 21 August 2013

FOR IMMEDIATE RELEASE
Media Contact:
Dan McGinn
703-312-0140 dan@mcginnandcompany.com

Leslie Hoffman - Black Elk Energy Offshore Operations, LLC
281-598-8660 lhoffman@blackelkenergy.com

Houston, TX - 21 August 2013 - An explosion and fire during a construction project last November on a Gulf of Mexico oil production platform operated by Black Elk Energy Offshore Operations, LLC occurred after contractors failed to follow standard safety practices, a third-party investigator has concluded. The platform is located at West Delta 32 Block in the Gulf of Mexico, 17 miles south east of Grand Isle, La.

After a thorough eight-month investigation, ABSG Consulting found that, while production was shut in, workers welded on piping that was connected to a tank containing crude oil and flammable oil vapors without following Black Elk Energy's safety practices.

A global leader in safety and risk management, ABSG was retained by Black Elk Energy to investigate the November 16, 2012 incident that resulted in the deaths of three workers and injuries to others. ABSG performed an extensive investigation to determine the causes of the accident, coordinated its investigation with the U.S. Bureau of Safety and Environmental Enforcement (BSEE), and provided recommendations to prevent a similar incident in the future.

"The victims of this tragic accident last November are always in our thoughts and prayers," said John Hoffman, Black Elk's President and CEO. "We owe it to them and their families to understand how this accident happened. With this ABSG report, I am confident we now know the causes of this tragedy and how to prevent such an accident from ever happening again."

ABSG found that:

On the day of the incident, workers were welding a flange on open piping leading to an oil tank that contained flammable vapors. The piping leading to the tank had not been isolated and made safe for welding activities as required by Black Elk Energy safe work practices.

Flammable vapors in the piping ignited and within seconds reached the first oil tank and then two connected tanks.

Black Elk Energy contracted with Grand Isle Shipyard to perform the construction work. Although Grand Isle committed in its contract to not use subcontractors on Black Elk Energy projects, all of the workers performing the welding involved in the incident were employed by DNR Offshore and Crewing Services, a subcontractor of Grand Isle. ABSG determined that use of the DNR Offshore subcontractor without notifying Black Elk Energy was one of several causes of the incident. ABSG also determined other causes were that Grand Isle and DNR Offshore employees failed to adequately follow safe work practices for performing welding and failed to stop work when unsafe conditions existed. The workers involved in the incident were from the Philippines. "Filipino offshore oil workers have a deserved reputation for competence and professionalism," Hoffman said. "A serious issue in this case was Grand Isle's apparent failure to provide proper safety training and appropriate supervision."

In conducting its investigation, ABSG reviewed thousands of pages of documents and records; collected and preserved physical evidence from the platform; performed fire and explosion modeling of the incident; and utilized industry-accepted causal analysis methodologies to determine the causes of the incident.

"Over the past eight months we have worked to provide support for the victims and their families and cooperated with government officials to analyze the causes of the incident and to implement policy and procedural improvements to minimize the risk of similar incidents in the future," Hoffman said.

ABSG Consulting issued its report to BSEE and Black Elk Energy; it is available here.

About Black Elk Energy Offshore Operations, LLC

Black Elk Energy Offshore Operations, LLC (www.blackelkenergy.com) is an independent oil and gas company headquartered in Houston, Texas. Our team of professionals is dedicated to performing to the highest industry safety standards, operating within and beyond the requirements of the regulations, and maintaining its stance as a good corporate citizen. The Company's seasoned industry executives have extensive oil exploitation experience and knowledge with a unique demonstrated track record of increasing reserves and production.

Safe Harbor Statement

This press release may contain certain "forward-looking statements" relating to the business of Black Elk Energy Offshore Operations, LLC ("Black Elk Energy") and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, and involve known and unknown risks and uncertainties. Although Black Elk Energy believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Black Elk Energy's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Black Elk Energy's periodic reports that are filed with the Securities and Exchange Commission and available on its website at www.sec.gov. All forward-looking statements attributable to Black Elk Energy or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, Black Elk Energy does not assume a duty to update these forward-looking statements.

Fact Sheet

In response to BSEE's directive by letter of November 21, 2012, Black Elk Energy:

Implemented a Performance Improvement Plan,

Retained a third party to audit its SEMS, and

Periodically updates BSEE on its progress.

Black Elk Energy's Performance Improvement Plan consists of the following:

Enhanced work oversight

Staff all drilling, major well work and construction projects with Onsite Safety Coordinators.

Specific, trained personnel must be present at any work area.

Project Execution Plans are required prior to mobilization.

Refresher training on hazard recognition, job safety analysis and hot work

Improved contractor management

Measures to reduce the number of INCs

An incentive program for use of Stop Work Authority

Monetary incentives for improved production operations performance

Black Elk Energy's SEMS audit:

Resulted in BSEE finding that Black Elk's SEMS meets intent of BSEE regulations and policies, provided Black Elk implements its corrective action plan

Black Elk Energy has achieved 60% implementation of its plan

Black Elk Energy updates BSEE monthly on implementation

ABSG Consulting issued its report to BSEE and Black Elk Energy; it is available here.