A wakeup call from Chapter 4

Russell
Russell Wangersky
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Late Wednesday, a presidential commission released Chapter 4 of its final report into its investigation of the massive oilfield blowout in the Gulf of Mexico last year that killed 11 oilfield workers.

As a province where offshore deepwater drilling is taking place, the chapter should be recommended reading. (By all means, read the whole thing at http://www.oilspillcommission.gov/ in the section “Advance Chapter on BP Well Blowout Investigation Released.” It’s an eye-opener.)

What’s really interesting about the report can be summed up in a few lines: the blowout was avoidable, and was the result of bad decisions by companies whose first interest was the bottom line. Not only that, the chapter suggests that, left to self-regulate their operations, oil firms will cost-regulate instead.

 

Interesting choices

Some of the decisions made on the ill-fated rig were fascinating. One of the things the company chose, for example, was to circulate an untested and untried water-based mud material through the well so that it could be dumped at sea, rather than having to bring the material ashore and treat it as hazardous waste. Once circulated in such a fashion, environmental regulations would allow the at-sea dumping. Can you imagine that kind of decision being made here? Absolutely.

Here’s a little of what Chapter 4 says.

“Notwithstanding these inherent risks, the accident of April 20 was avoidable,” the panel wrote. “It resulted from clear mistakes made in the first instance by BP, Halliburton and Transocean, and by government officials who, relying too much on industry’s assertions of the safety of their operations, failed to create and apply a program of regulatory oversight that would have properly minimized the risk of deepwater drilling.”

The chapter even lists a series of nine things done by the companies to save time and money when less risky alternatives were possible. Four of the most serious were not installing enough devices to stabilize the well, not waiting for the results of tests on the concrete foam used to seal the well, removing drilling fluid from the well system before a cement plug had been set and ignoring the results of a failed pressure test. Seven of the cost-saving decisions were made onshore, by company officials far from the rig floor.

“The blowout was not the product of a series of aberrational decisions made by rogue industry or government officials that could not have been anticipated or expected to occur again. Rather, the root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur. The missteps were rooted in systemic failures by industry management (extending beyond BP to contractors that serve many in the industry), and also by failures of government to provide effective regulatory oversight of offshore drilling.”

At the root of it all, money — or more to the point, saving money.

“Whether purposeful or not, many of the decisions that BP, Halliburton and Transocean made that increased the risk of the Macondo blowout clearly saved those companies significant time (and money). There is nothing inherently wrong with choosing a less-costly or less-time-consuming alternative — as long as it is proven to be equally safe. The problem is that, at least in regard to BP’s Macondo team, there appears to have been no formal system for ensuring that alternative procedures were in fact equally safe. None of BP’s (or the other companies’) decisions … appear to have been subject to a comprehensive and systematic risk-analysis, peer-review, or management of change process. The evidence now available does not show that the BP team members (or other companies’ personnel) responsible for these decisions conducted any sort of formal analysis to assess the relative riskiness of available alternatives.

“Corporations understandably encourage cost-saving and efficiency. But given the dangers of deepwater drilling, companies involved must have in place strict policies requiring rigorous analysis and proof that less-costly alternatives are in fact equally safe. If BP had any such policies in place, it does not appear that its Macondo team adhered to them. Unless companies create and enforce such policies, there is simply too great a risk that financial pressures will systematically bias decision making in favor of time and cost savings. It is also critical that companies implement and maintain a pervasive top-down safety culture (such as the ones described by the ExxonMobil and Shell CEOs at the Commission’s hearing on Nov. 9, 2010) that reward employees and contractors who take action when there is a safety concern even though such action costs the company time and money.”

Oil companies operate in different places, and under different regulations. It may well be that tighter regulation exists here. Just as simply, when governments focus on their own bottom lines, they lose the time, personnel and expertise to do their jobs right.

Just look at the federal Department of Fisheries and Oceans, and its limited ability to do the scientific work it’s supposed to handle — is other federal oversight in better shape? Who knows?

When that happens, as the commission points out, oversight (in the Gulf, by the U.S. Minerals Management Service) fails.

“Neither the regulations nor the regulators were asking the tough questions or requiring the demonstration of preparedness that could have avoided the Macondo disaster. But even if Minerals Management Service had the resources and political support needed to promulgate the kinds of regulations necessary to reduce risk, it would still have lacked personnel with the kinds of expertise and training needed to enforce those regulations effectively.”

We can sit in our happy bubble, thinking we’re better off here, as oil companies work away far from shore and far from sight.

Or we can take the wake-up call.

 

Russell Wangersky is The Telegram’s editorial page editor. He can be reached by email at rwanger@thetelegram.com.

Organizations: BP, Halliburton, U.S. Minerals Management Service ExxonMobil Shell CEOs Department of Fisheries and Oceans

Geographic location: Gulf of Mexico

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  • Grisha
    January 10, 2011 - 12:13

    The only thing more laughable than "industry witl regulate itself" is "more government oversight/regulation will cure the problem". I work with a goodly number of government folks and find many of them to be less than up to the job and pretty much caring only about accrued vacation, quitting time and more money (like any one else but with union protection). The best solution is imposition of penalties on upper management/executives (who seem to be insulated from any downside from failure) through the employment of motivated, hard working and honest regulators(good luck with that one!!) not simply more money and people or any sort..

  • Welder
    January 09, 2011 - 20:03

    Excellent column. More reason to set up a separate safety regulator for the offshore. The CNLOPB doesn't even require Transocean to flag their rigs in Canada. They are flagged out of Panama as to avoid stricter safety regs from Transport Canada. Transocean is a company with no soul. Money is the only thing they care about. I know this first hand. These yanks running these rigs are straight out of the Ocean Ranger era.