Gulf Oil Spill: The three causes of BP's oil disaster
We now know with pretty high confidence the three main, interrelated, underlying causes of the BP’s oil disaster: Hubris, recklessness, and arrogance. So the metaphor is as much Goldman Sachs as that other great maritime disaster — the Titanic. And if BP turns out to be guilty of malfeasance, too — violating its federal permit — as the NYT suggested — then you’d have the Four Horseman of Oilpocalypse. Reporting over the weekend has also given us a pretty good idea of the proximate cause, which, as we’ll see, appears intimately tied to the underlying causes.
[NOTE: If you think I've missed anything really important post a comment.]
First, the arrogance is the entire industry’s relentlessly successful effort to achieve voluntary, ‘trust us’, self-regulation. That effort blocked mandates for better technology and better oversight that might well have prevented this disaster. I discuss that here, Dr. Beamish elaborates on it here, and the St. Petersburg Times provides yet more detail here: "It's becoming increasingly evident that self-regulation has not worked." Finally, on Friday, the WSJ, had a very good piece, “Oil Regulator Ceded Oversight to Drillers.”
That lack of oversight is a key reason, “the safety record of U.S. offshore drilling compares unfavorably, in terms of deaths and serious accidents, to other major oil-producing countries. Over the past five years, an offshore oil worker in the U.S. was more than four times as likely to be killed than a worker in European waters.” And blowouts are much more common in the Gulf than anywhere else.
Second, we have BP’s general recklessness. I detailed its spotty safety record here. What wasn’t clear until now, at least to me, was that BP was worse than the rest of Big Oil. But the NYT has an excellent piece, “BP Has a History of Blasts and Oil Spills,” which notes “BP continues to lag other oil companies when it comes to safety, according to federal officials and industry analysts.”
Indeed, OSHA says BP has “systemic safety” problems. BP tries to wave this off as all due to their previous CEO, but that is BS from BP: The current CEO, Hayward, became "Chief Executive of exploration and production in January 2003." He created whatever safety culture the explorers and producers have today.
Third, we have BP’s hubris (see Goldman Sachs of Big Oil? CEO Hayward says to fellow executives: "What the hell did we do to deserve this?"). It simply couldn’t imagine or envision this disaster (see “BP calls blowout disaster 'inconceivable,' 'unprecedented,' and unforeseeable“). Of course hubris leads to recklessness and arrogance — and poor planning. If BP or any other major had thought this type of disaster was conceivable, it would have pre-built and pre-positioned one of those 100-ton domes in the Gulf years ago, rather than waiting until after the disaster to build it. And it would also have put far more into prevention technology.
Here’s the clearest evidence of BP’s hubris. It has now come out that, when the rig blew, “BP executives were in the next room, celebrating the rig's safety record.”
But if BP actually knew the first thing about rig accidents, then it never would have had this celebration right after the cementing! A 2007 Minerals Management Service service report found “cementing problems were associated with 18 of 39 blowouts between 1992 and 2006″ as the Houston Chronicle reported two weeks ago:
At the time of the accident, crews were “cementing” or installing casing to secure the walls of the well….
Nearly all the blowouts examined occurred in the Gulf of Mexico.
“During the current period (1992 to 2006), the percentage of blowouts associated with cementing operations increased significantly from the previous period,” said the study
So who in their right mind would have a safety party for a rig right when you’re finishing the cementing process? This is Titanic-like hubris and recklessness combined.
The emerging details of the proximate cause underscore the importance of the underlying causes. CNN offered this damning but cryptic report
Thursday: Companies involved in the sinking of the offshore drilling rig Deepwater Horizon made “some very major mistakes,” Interior Secretary Ken Salazar said Thursday after meeting with executives from the oil company BP. Salazar would not elaborate, telling reporters in Houston, Texas, that the cause remains under investigation. But he said the failure of the rig’s blowout preventer — a critical piece of equipment designed to shut off the flow of oil in an emergency — was “a huge malfunction” that has left oil gushing into the Gulf of Mexico.
What were these “major mistakes”? Since Salazar won’t say, the best we have to go on is two amazing stories over the weekend. The first was a Saturday AP story, “Bubble of methane triggered rig blast“:
The deadly blowout of an oil rig in the Gulf of Mexico was triggered by a bubble of methane gas that escaped from the well and shot up the drill column, expanding quickly as it burst through several seals and barriers before exploding, according to interviews with rig workers conducted during BP’s internal investigation….
Portions of the interviews, two written and one taped, were described in detail to an Associated Press reporter by Robert Bea, a University of California Berkeley engineering professor who serves on a National Academy of Engineering panel on oil pipeline safety and worked for BP PLC as a risk assessment consultant during the 1990s. He received them from industry friends seeking his expert opinion.
A group of BP executives were on board the Deepwater Horizon rig celebrating the project’s safety record, according to the transcripts. Meanwhile, far below, the rig was being converted from an exploration well to a production well.Based on the interviews, Bea believes that the workers set and then tested a cement seal at the bottom of the well. Then they reduced the pressure in the drill column and attempted to set a second seal below the sea floor. A chemical reaction caused by the setting cement created heat and a gas bubble which destroyed the seal.
Prof. Bea went further in a Bloomberg Businessweek piece Saturday evening, “Methane Breached Faulty Seal, Caused Rig Blast, Professor Says.” Bea essentially accuses the companies involved of outright recklessness and negligence, driven by greed:
Bubbles of methane gas burst through a cement seal that was probably faulty, leading to the fatal explosion aboard the Deepwater Horizon rig and subsequent oil spill in the Gulf of Mexico, said a California professor who reviewed transcripts of interviews with blast witnesses.
Workers, who did basic pressure testing on the seal, didn't perform a second and more expensive test to ensure that BP Plc's Macondo well was properly plugged, said Robert Bea, a University of California Berkeley engineering professor.
Bea, who held engineering jobs at Royal Dutch Shell Plc in the 1960s and 1970s and later consulted for BP, said the seal was one of several breakdowns that contributed to the Deepwater Horizon explosion. The April 20 blast killed 11 workers and set off a leak that continues to spew an estimated 5,000 barrels of oil a day into the Gulf. The Deepwater Horizon, which London- based BP rented from Transocean Ltd., sank two days later.
The additional seal test would have taken more time, Bea said. He said Shell typically did that test during his years at The Hague-based company.
If this account is accurate, then it will be interesting to see which companies actually get blamed. Halliburton was doing the cementing, after all. But it would clearly be the overall hubris, recklessness, and arrogance of the industry that were the underlying reasons.
BP clearly had become a ruthless cost- and corner-cutter. Indeed, the UK’s Times Online ran a November 2009 story, with this amazing headline:
Tony Hayward makes his mark on BP. Ruthless cuts by the new boss have produced results in higher than expected profits More than 6,500 jobs have been eliminated and overheads have fallen by a third….Having already cut $3 billion from costs, he predicted that another $1 billion will be eliminated by the year end. Yes, BP has apparently slashed $4 billion in costs, ruthlessly. But that could never impact safety, could it? The story ends with yet another uber-ironic quote from Hayward: "My whole focus has been to recognise that at its heart we're an operating enterprise. The question is how do we create a BP that 10 years from now doesn't end up back in the ditch."
My suggestion: Fire Hayward.
Finally, we have one more strong allegation from a front-page NYT story last week that deserves mentioning again:
At least one worker who was on the oil rig at the time of the explosion on April 20, and who handled company records for BP, said the rig had been drilling deeper than 22,000 feet, even though the company's federal permit allowed it to go only 18,000 to 20,000 feet deep, the lawyers said.
Truthout goes further in a piece last week that quoted “Louisiana lawyer Daniel Becnel Jr.” who “represents oil workers on those platforms”:
Becnel tells me that one of the platform workers has informed him that the BP well was apparently deeper than the 18,000 feet depth reported. BP failed to communicate that additional depth to Halliburton crews, who, therefore, poured in too small a cement cap for the additional pressure caused by the extra depth. So, it blew.Why didn’t Halliburton check? “Gross negligence on everyone’s part,” said Becnel. Negligence driven by penny-pinching, bottom-line squeezing. BP says its worker is lying. Someone’s lying here, man on the platform or the company that has practiced prevarication from Alaska to Louisiana.
I think the full truth of the proximate causes probably will come out in this case — especially if we get an independent commission to investigate the BP disaster. But think we need an independent commission to tell us what the underlying causes are or who is to blame.