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December 2010

Vol. 15, No. 50 Week of December 12, 2010

Ulmer previews Gulf disaster findings

Presidential commission finds complacency, a failure of risk management system and a resulting series of errors let to catastrophe

Alan Bailey

Petroleum News

President Obama’s National Commission on the BP Deepwater Horizon Oil Spill is not scheduled to deliver its report until early January, but on Nov. 6 at Law Seminar International’s Energy in Alaska conference in Anchorage, Alaska, Fran Ulmer, chancellor of the University of Alaska Anchorage and a member of the commission, provided a flavor of what the president can expect to read when that report reaches his desk in the White House.

Rather than being in some way unique, or the result of a rogue operator, or perhaps some freak “black swan” event, the blowout of BP’s Macondo well in the Gulf of Mexico and the explosion that destroyed the Deepwater Horizon rig could have been prevented, Ulmer said.

“Having looked at what happened there and how business is done in the Gulf and in deepwater drilling, it is quite clear that the cause of the blowout was a series of mistakes; not just one technical failure, but numerous things; decisions made by BP, by Halliburton and by Transocean; mistakes, miscalculations, miscommunications that suggest a systematic failure in risk management. It was a cascade of decisions and failures, not a single one,” Ulmer said

Missed opportunities

There were missed opportunities to share information and perhaps underestimates of how any individual decision or individual failure might contribute to the catastrophic failure that occurred.

“I have become convinced, and I believe most of my fellow commissioners also, that this is a result of a growing culture of complacency both in the industry and in the regulatory regimes that govern offshore oil and gas drilling,” Ulmer said. “We had come to believe that systems were in place, both industry systems and government systems, that would keep something like this from happening, and clearly this has illustrated quite the contrary conclusion.”

From a management perspective, individual risk factors must not be viewed in isolation as they were on the doomed rig.

“Missed opportunities to actually see the consequences that could come from these individual decisions were quite staggering,” Ulmer said.

Series of mistakes

Preliminary findings include the identification of a series of mistakes, such as the use of cement that didn’t work because it was contaminated or displaced by other materials; the use of cement evaluation tools and pretesting that was ignored; and the reliance on the success of a fourth well pressure test when three previous pressure tests done in a different way had failed, Ulmer said. BP had changed the temporary well abandonment plan three times within the previous week and a rigorous, robust process safety system could have signaled the imminent danger of an explosion, she said.

At the same time as the oil industry is operating in increasingly challenging situations, such as the deepwater Gulf of Mexico and the remote waters of the Arctic, drilling operations involve the use of multiple subcontractors rather than a single, vertically integrated company, Ulmer said. If these various companies all come to the drilling rig with different procedures, different safety cultures and different ways of doing business in a very high-risk deepwater drilling operation, it becomes very difficult to achieve the highest quality of safety management, she said.

Risks increasing

“The risk is not getting smaller,” Ulmer said. “The risks are getting larger based on the nature of the places where oil and gas exists and the technologies that will have to be employed to get at them. Knowing that the risks are increasing, not diminishing, what is it appropriate for government and the private sector to do, to anticipate those risks and build safety systems that will accommodate, to the extent we humanly can, those low-frequency, but actually high probability with high consequence, events?”

Faced with these challenges, regulatory agencies need to take a completely new approach to regulation, moving away from business as usual and a “check the box” approach to regulatory procedures, moving also from a culture of “trust” to a culture of “trust and verify.” At the same time industry needs to establish mechanisms to ensure that all companies implement high levels of safety, Ulmer said, citing the safety culture of the nuclear industry as an example of what can be achieved.

“We are recommending something very similar for the oil and gas industry, so that there can be high standards set and … an industry culture that promotes the kind of best practices and high safety records that our country needs and expects,” Ulmer said.

Improved regulation

From the perspective of regulation by the Department of the Interior, the commission is recommending a three-way split of what used to be the U.S. Minerals Management Service into revenue collection, lease management and regulatory divisions, much along the lines of the organizational changes that Interior is currently implementing, to draw a clear line between oil and gas leasing functions and those functions involved in the oversight of safety and environmental protection. And regulators need to be appropriately trained, with the appropriate experience and knowledge to interact with an industry that has extraordinary technical capacity, Ulmer said.

The commission also endorses the requirement for a drilling operation to have a safety and environmental management system, as has been mandated for offshore drilling in new Department of the Interior regulations. These new regulations represent a step in the right direction, to ensure the implementation of the type of process safety management system that was sorely missing on the Deepwater Horizon rig — complex systems of the type in operation on that rig tend to fail in complex ways, Ulmer said.

“A tragedy like the Deepwater Horizon spill, the Macondo well, is a double tragedy only if we fail to learn from the mistakes that were made,” Ulmer said. It will be a double tragedy if we fail to change business practices, and if we don’t expect of both government and industry an appropriate safety culture, she said.






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