NAVIGATION
In the last few weeks (57 days) an overwhelming amount of information has been pouring into the media with regard to British Petroleum’s deep water rig explosion. As a Quality Systems professional, whose job it is to assure the control of processes and the eventual outcome of them, I wanted to do my own research into the cause of this catastrophic failure.
The more I researched, the more apparent it became to me, that the system failures included non-existent Risk Management, inefficient Change Management, and ineffective regulatory oversight.
I began by researching the documented evidence of milestones on the path to this event, and organized them by date for my own understanding, just as I, and any Quality professional would have done in a routine problem investigation.
As I do not have access to British Petroleum’s standard operating procedures, or any records following them may have produced, my research was limited to documents currently available to the public.
The following is a list of relevant findings.
1995: The Outer Continental Shelf Deepwater Royalty Relief Act
Signed into law by President Clinton, this act exempted oil wells drilled in deep water from the mandated royalty payments averaging at the time to amounts between 12% and 16% of revenues. Beyond a predictable effect, this Act was intended to incentivize drilling in deep waters in the Gulf of Mexico.
Predictably, deepwater oil production in the Gulf increased rapidly; annually 42 million barrels in 1996 to 348 million in 2004 (6% of total United States oil consumption and 15% of domestic production). Over the same period, natural gas production from deep water Gulf drilling increased tenfold.
The Deepwater Horizon, drilling since 2001 and currently leaking uncontrollably in the Gulf was one of those created as a result of this governmental action.
The legislation was heavily supported by Congressional Republicans and Democrats in Congress, particularly those representing the Gulf States.
Incentivizing deep water drilling was designed to reduce America’s dependence on foreign oil. Many politicians, economists and industrialists continue to agree, that deep water domestic drilling was and remains fundamentally critical to maintaining a healthy economy, and bridging the gap between short and long term energy plans.
Risk Management Regulations
By this time, Risk Mitigation programs were already required components of almost all regulated industries, including pharma and energy. These industrial policies and strategies are critical steps in Quality Change Management. In every industry, regulated or not, some level of Risk Management is employed, if for no other reason, than to optimize the chances of planned success and reduce the impact of unintended consequences of change.
In almost every federally regulated environment, Risk Management is not only practiced, but required, and presumably, the resultant mitigation plans are scrutinized by regulators. Shockingly, that does not appear to have been the case with deep water drilling.
It is clear at this point, that the Clinton Administration – and the Bush and Obama Administrations that followed failed to either consider risk, or require evidence of Risk Management activities within the industry, prior to monetarily incentivizing large scale change.
This stands in stark contrast to the licensing of nuclear power plants. When dealing with the production of nuclear energy, enormous amounts of time and money have been spent studying and identifying potential failure modes and developing appropriate fail safe systems.
It appears in this case, that there were no failure mode effect studies performed, as the technology in place was incapable of preventing an explosion, or stoping the flow of oil, or preventing the oil from reaching the shores, should the explosion occur. Generally, failure mode effect analysis (FMEA) takes into account the magnitude of severity and the likelihood of occurrence when rating risk. In a case of such an enormous and obvious severity, most modern industrialists would have expected a mitigation plan with several layers of redundancy.
2000: Report Regarding a Shell Oil Offshore Drilling Plan Submitted for Approval to the Interior Department’s Minerals Management Service
Skip forward five years (a decade ago), as noted in a report responding to a drilling plan for Shell Oil, Federal regulators warned that “a major deep water oil spill could start with a fire on a drilling rig, prove hard to stop and cause extensive damage to fish eggs and wetlands because there are few good ways to capture oil underwater.”
The author of the document was the Interior Department’s Minerals Management Service (MMS), the regulatory agency that has come under criticism in the wake of today’s reality in the Gulf of Mexico.
According to experts and former MMS officials (as reported by McClatchy Newspapers) the 2000 warning indicated that Federal regulators were well aware of the potential hazards of deep water oil production in its early years.
The Shell plan (which Greenwire, an environmental news service, first reported last week) described a worst-case scenario for a deep water blowout that reads like a real time description of what has happened since the deep water Horizon rig exploded.
While noting a major blowout was very unlikely, the report to the Shell plan said, “Regaining well control in deep water may be a problem since it could require the operator to cap and control well flow at the seabed in greater water depths … and could require simultaneous firefighting efforts at the surface.”
The 2000 Shell plan also cautioned that an oil gusher wouldn’t behave the same way in deep water as one would in shallow water, where most drilling to that point had been done. “I think the industry was certainly overwhelmed by the excitement of all the oil and gas that was starting to show up in the seismic studies and the technical excitement of how to drill these reservoirs,” said Rick Steiner, a veteran environmental scientist who reviewed the document for McClatchy News.
“I think that had a way of subduing the real concern about the risk of these things.”
The Report continued, “Spills in deep water may be larger due to the high production rates associated with deep water wells and the length of time it could take to stop the source of pollution.”
This report was issued for a Shell site less than 140 miles southwest of the deep water Horizon, and included the following warnings:
• The chemical dispersants required to clean up a major spill would expose adult birds to a combination of oil and dispersant that could “reduce chick survival”.
• “Fish eggs and larvae within a potentially large area of the northern Gulf would be killed.”
• In certain weather and oceanographic conditions, a large blowout could have “severe adverse impacts” for wetland areas.
• Not all the spilled oil would rise to the surface, and “there are few practical spill response options for dealing with submerged oil.”
• Gas surging from a blowout could form hydrates and remain deep underwater (a likely cause of some toxic subsea oil plumes that scientists have identified in the BP spill).
Dennis Chew, a marine biologist who helped prepare the report but has since retired after 21 years with the MMS, studied it again this week and said, “Bottom line, [the BP] blowout was preventable.”
Chew and two other members of the team that prepared the Shell plan said MMS scientists analyzed the potential impact of deepwater blowouts as far back as the late 1990s. “10 or 15 years ago, there used to be 200-page [environmental impact statement] on nothing but spills,” Chew said. “It got to where people got tired of wading through them.”
The 2000s, however, ushered in an era of aggressive, government-backed offshore oil production.
2001: Executive Order Expediting Energy Product Permits
In May 2001, Bush, acting on recommendations from the oil industry, signed an executive order that required federal agencies to expedite permits for energy projects and paved the way for greater domestic oil exploration. The rush to drill in deep water swept aside warnings from MMS scientists and others, experts said.
Blame, Industry or Government?
“It’s the fault of both the industry and the government,” Steiner said. “If they had taken it seriously, they would have been ramping up production of safer blowout preventers and emergency procedures on board. They would have said, ‘There’s a 0.01% chance of this, but that’s enough for us because this would be catastrophic.’”
Criticism of the agency that manages offshore drilling on the outer continental shelf includes obvious claims of conflict of interest as the agency generates revenue from active drilling leases. Since the BP explosion, the agency director, Elizabeth Birnbaum, has resigned and Obama administration officials have said the agency will be divided into three branches to avoid future conflicts of interest.
In the recent past, the MMS under the Obama administration had approved dozens of new deepwater exploration plans the administration has since ordered oil companies to resubmit the plans with additional safety information before the government would allow them to drill new wells.
Public Employees for Environmental Responsibility, a watchdog group, reported last month that BP’s spill response plan erroneously listed seals and walruses as “sensitive biological resources” in the Gulf—suggesting that portions of BP’s plan were cut and pasted from Arctic exploratory documents. The plan also cited a Japanese home shopping website as one of its primary equipment providers.
Steiner found flaws in the 2000 Shell plan, too. It offered optimistic projections of the possibility of a deep water blowout being bridged—or naturally sealed—by sliding rock on the seafloor. It also said a blowout from exploratory drilling would last only two days, supposedly due to bridging. “This plan, like all of them, underestimates risk and overestimates the effectiveness of the response,” Steiner said.
Summary
During my research for this blog entry, it became very clear that both the regulators and industry were aware of:
• the dangers of deep water drilling
• the value of the standard concepts of Risk Management and Change Management
• the lack of risk mitigation plans in the deep water environment
These are failures of modern Quality Systems.
Where does this leave us?
With an understanding that a free market does exactly what a free market was designed to do, respond to demand, as quickly, and as competitively as possible.
This is the free market.
The risk mitigation to a free market, in our system, was supposed to be oversight at the Federal level, whose single objective, and only mandate, is the protection of our environment, and our safety.
This is regulatory oversight.
It seems clear to me that somewhere along the way, the federal agency providing the oversight became tied to revenue generation, which in turn, made them a cog in the machinery that is the free market.
Everyone was focused on profit, no one was focused on safety, the result, was both predictable and avoidable.
The private sector, in competition for consumers, has a board of directors, executives and shareholders that will assure that processes are evaluated for the future, and they will correct in order to prevent. This is their future path to continued profit.
This is economics.
But who will insist that the oversight program is corrected, in order to prevent recurrence? Who will investigate that system failure, and make the results known to the voters? The only people that could identify and correct are those people seeking re-election and re-appointment. Evaluating the failure is not their path to future profit.
This is politics.
We may be removed from the detailed information, but we have the ability to examine the past and to draw conclusions on our own. We still have the power to voice our concern when we vote. We still have the power to be actively involved in the nature or our representatives.
This is democracy.
This is a mighty power.
Use it.
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Author:
Gina Guido-Redden
Chief Technical Officer
Coda Corp USA
(p) 716.751.6150
[email protected]
