Bob Cavnar: BP’s Close Relationship with the Government Caused Poor Risk Management

Posted on Monday, August 23rd, 2010 at 2:00 pm by admin

Yesterday, Joel Achenbach of the Washington Post published what I consider one of the most revealing stories of the entire BP odyssey since their Mississippi Canyon Block 252 well blew out on April 20th.  

My regular readers know that I have been critical of both BP and the government in their management of this catastrophe, and that I have been often baffled about some decisions that are made.  There have been surprise, last minute decisions, such as the “well integrity test”, and the unexplainable delays in the real solution here, the relief wells.  The erratic decision making, lack of consistent direction, and unclear chain of command has confused the media and the public, and caused this story to drag on far longer than it should have.  I believed then, and continue to believe, that if they had simply kept the first relief well working, this story would have been over a month ago.  But it’s not.  The relief well, again, the only solution to killing the blowout well, has been delayed for the capping stack procedure, then the “well integrity test”, the “static kill” and cement job, the “near ambient test, the “ambient test”, now the fishing job to get drill pipe extracted before actually trying to change out the BOP, which I believe is unwise.

Each of these procedures, plus the ill fated “top kill” procedure in May, have been high risk, threatened the integrity of the well and could have easily caused severe damage allowing uncontrolled flow into the Gulf, making containment even more difficult than it already was.  As you know, I have asked several times during all this bobbing and weaving, “What the hell are they doing?”  I have believed from the first minute that these decisions were pushed by BP to avoid measurement of the flow from the well to minimize their liability.  I believed their silence on key issues such as flow rate and causes were simply their lawyers trying to keep the veil pulled over these key details.  With the lack of industry experience on the government side, I naturally assumed that BP was bullying the government into agreeing to these steps, but was always confused about why they were slowing down the relief well, which has never made any sense.  Well, now we apparently have the answers to at least some of these questions.

It seems that Steve Chu, the Nobel Prizing-winning Secretary of Energy and his staff of advisors have been making these calls, exercising what I consider to be questionable risk management, and making decisions based on advice from those who, it appears, have little oil well crisis management experience.  We know that the government and BP have formed an Odd Couple kind of marriage, one that was cemented after BP agreed on June 16 to pony up $20 billion for damages from its blowout.  It was in the government’s best interest, after all, to keep BP viable, and in the company’s best interest to shift as much blame as possible to the government if something went wrong, so a mutually beneficial arrangement was formed.  Since that time, the relationship between BP and government advisors has been an  strange alliance, with retired Coast Guard Admiral Thad Allen as the prime spokesman with the occasional appearances by company representatives to explain technical procedures.  As you’ve heard from me before, often those explanations actually created more questions than they answered, and served to keep everyone confused.

Achenbach discovered that the real decision makers here have actually been Chu and his science team, which explains a lot.  His primary advisors, Dr. Tom Hunter, Director of Sandia Labs, Dr. George Cooper, a retired professor from Berkeley, Dr. Richard Lawrence Garvey, a physicist, and Dr. Alexander Slocum, a mechanical engineering professor from MIT, are researchers or teachers, primarily in nuclear physics or mechanical engineering.  None of the team has direct oil industry background.  The DOE Deepwater Response website that names this team also says it has over 200 other advisors, but fails to list anyone who’s actually done any work in oil and gas.  Hopefully some have, but it’s clear by some of the decisions being made that, if there are industry folks on the team, they haven’t had much influence.

Since taking office, the Obama administration has done its best to distance itself from anyone who is tainted with the smell of oil including his own supporters.  From very early on, Obama’s team showed little interest in engaging the industry about the difficult issues of converting from a mostly hydrocarbon-based economy to one more diversified, and, based on the industry’s track record and opposition to any improvement in carbon emissions, tax reform, or safety regulations, that’s understandable; but to shut out all advice seems a bit extreme.  The Obama team’s contempt for the oil industry is palpable, and his picks for his cabinet and other advisors demonstrated that in spades.  Indeed, even the commission he established to determine the causes of the blowout has not one member with any direct oil and gas experience, but instead consists of environmentalists and academics.  Certainly, the commission should include these important voices in an inquiry of this nature, but to include no one with actual industry experience pre-ordains that the panel’s conclusions will be condemned as biased.  In fact that very criticism started days after the panel was named.  The DOE website goes to great lengths to document its contributions to this crisis and touts a long list of accomplishments, essentially asserting that it was Chu’s team that prevented BP from doing a lot of stupid things.  That may be true, but the list seems a bit over-wrought.

The DOE takes credit for the containment systems designed, but never completed, and Chu says it was his idea to shut in the capping stack installed on July 13th and 14th rather than produce the well to containment.  After the top kill failed, everyone, including me, was very concerned about well integrity, and assumed that, after the capping stack was set, BP would continue to safely produce the well to ships on the surface while rushing to complete the relief well; however, Chu said no.  As Achenbach described Chu’s recollection, he said,

“‘No, I don’t think so, there’s another scenario,’ The well, he said, might have integrity after all.’ That opened the possibility, he said, for the ‘integrity test.’ They could close the well and see what happened.”

See what happened?  That’s like saying, “Let’s take a car and drive it into a wall at 80 miles an hour to see what happens.”  Some, mostly industry outsiders, have said “you can’t argue with success”, and that shutting in the well worked.  Maybe, but my answer to that assertion is, but, was that good risk management?  Most experienced people would say no, it was the more risky alternative.  I would liken this decision, again using a car analogy, like driving from Houston to Dallas without your seatbelt on and not having a wreck or getting killed.  Was it successful? Yes. Was it poor risk management?  Absolutely.  It’s the same with this decision, it may have worked, but carried serious risks that were not mitigated.  After the stack was set was when we found out that it was inadequately designed only able to produce all the flow from the well or to shut it in completely.  We were told that the well must either be shut in or flowing into the Gulf.  This stack, designed and engineered for 2 months before installation, could not contain part of the flow and produce the rest to whatever capacity was available at the surface, another factor that never made much sense.

Much of what has gone on this last month has been confusing to every industry insider I’ve talked to.  Delaying the relief well, especially with John Wright, the best relief well driller on the planet, in charge, is unconscionable.  Had Wright been left alone, this would have been over weeks ago, in my view.  And safely.  With the revelation of the US government active management of this crisis, much of my confusion is now cleared up.  The reasons for all course changing, halting press briefings, completely opaque and lukewarm “technical briefings” are now explained.  It looks like BP has been happy to take the backseat to the government.  The reasons are simple;  BP was off the hook from the moment the government actually took over, and would be more than happy to point the finger at the government if the whole thing blew up.

The only way to assure this well is dead is the relief well.  Since the BP/US government team has now blinded themselves from being able to see what’s going on with all this business from the top of the well, it is now most assuredly so.  Now their attempt to fish the drill pipe, which is likely held in place by collapsed casing, the casing hanger, or the BOP (maybe all three), is ill advised and risky.  Likewise, pulling the BOP stack right now is risky.  Their concern for components on the stack is about 5 weeks too late after already putting far more pressure than for which it was designed, something I don’t believe BP made clear to Chu’s team when they decided to shut it in.  The static kill/cement job made killing this well harder, putting into question the weaknesses of the very BOP stack components we pointed to over a month ago.

Now they’re in a jam, but at least I now understand why.  Come on, relief well.

This article originally appeared on The Huffington Post.

Bob Cavnar’s book, the first to be published on the Gulf Oil Disaster, is coming out this October. For more information on Disaster on the Horizon, go to our bookstore.

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