Lessons from the Deepwater Horizon Incident
On January the 3rd of 2006 the US Authorities released the investigation report of the M/T Bow Mariner investigation. It was a shocking thing to read throughout the report and realize that many items were found to be out of order. Let aside the key finding : Root cause of the incident was the failure of the operator to properly implement SMS.
Five years later, same day the US Authorities released the preliminary report of the findings of the investigation of the Deepwater Horizon Incident. The investigating panel assigned by President Obama last May with finding the root causes of the accident, consisted by a seven-member team, led by Bob Graham, a former Florida senator, and William K. Reilly, a former administrator of the USA Environmental Protection Agency. It is one of several bodies investigating the blowout. The Justice Department is conducting civil and criminal investigations and has sued BP and others, and there is extensive private litigation against the companies as well.
The investigating panel concluded that “The Deepwater Horizon blowout and oil spill in the Gulf of Mexico was an avoidable accident caused by a series of failures and blunders by the companies involved in drilling the well and the government regulators assigned to police them”
In accordance with the investigating panel, the companies – BP, Transocean and Halliburton, and several subcontractors working for them – took a series of hazardous and time-saving steps without adequate consideration of the risks involved. Does this rings a bell ? Certainly does since the marine industry is due to fully implement risk management in line with latest ISM Code requirements, effective July 1st 2010.
The investigating panel also found that company officials had failed to consult with one another on critical decisions and that senior management had paid insufficient attention to the troubled well, which was being drilled a mile under the gulf’s surface.
The panel warned that without major changes, another such accident was likely, stating that “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,” it concluded. “Rather, the root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur.”
BP’s Macondo well erupted on April 20, causing an explosion aboard the drilling rig that killed 11 men and led to the spill of nearly five million barrels of oil, some of which still befouls the gulf shoreline. The incident is considered a key oil spill that will have significant regulatory impact not only to the offshore industry but to other side industries, like marine, as well.
On the aftermath of this initial release there is an increasing amount of statement form all involved parties to minimise negligence by finger pointing all the others. Statements like “”Even prior to the conclusion of the commission’s investigation, BP instituted significant changes designed to further strengthen safety and risk management,” from BP or “Based on the limited information made available to them, the Transocean crew took appropriate actions to gain control of the well,” or “They were well trained and considered to be among the best in the business.” from Transocean are not adding fresh air to the case.
The findings will come as no surprise to the companies or to federal regulators, who say they have already taken steps to address the problems identified by the commission. Furthermore the investigating panel did not try to assign specific blame for a catalog of mistakes and shortcuts taken by the companies and their employees, but it is clear from the report that the major players engaged in highly risky behavior that neither senior management nor government regulators properly oversaw.
One of the very interesting issues when it comes to Risk Management is that the chapter released includes a chart listing nine actions taken by the companies that saved time and money when less risky alternatives were available. The report did not pin the accident on any one of these shortcuts or mistakes, but rather attributed it to a broader breakdown of communication and a lack of a culture of safety at the companies involved.
“The most significant failure at Macondo – and the clear root cause of the blowout – was a failure of industry management,” the study concluded. “Better management of decision-making processes within BP and other companies, better communication within and between BP and its contractors and effective training of key engineering and rig personnel would have prevented the Macondo incident.”
The panel referred to “compartmentalization” of information within and between companies, like the failure of onshore BP and Halliburton officials to report to rig workers known past problems. A similar tendency to hoard critical information was a crucial shortcoming identified by a similar commission named to look into the causes of the Sept. 11, 2001, terrorist attacks, which found that federal intelligence and law enforcement agencies failed to share data that might have identified the attackers.
Furthermore the panel also identified the inadequate performance of the regulators (namely the Interior Department’s Minerals Management Service that recently renamed the Bureau of Ocean Energy Management, Regulation and Enforcement) that lacked the personnel, training and muscle to do its job and had essentially been captured by the industry it was meant to police.
The key issue however is that the panel concluded that despite the risky nature of the operation “the accident of April 20 was avoidable” that ” 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.”
It is clear that we share a lot of common things as an industry, certainly there are several lessons to be learned within the wider range of Risk Management and proper integration in the decision making. Are we doing enough ? We have to wait and see. Certainly we have a lot more to expect out of the impact of the Deepwater Horizon Incident. Recent history indicates that there is always a major regulatory push out of a US Incident of that scale. It was called OPA 90 twenty years ago and Ship Security tens years ago. Most probably it will be named Risk Management Oversight this time.
