regulatory failure in the offshore oil industry: from
TRANSCRIPT
Regulatory Failure in the Offshore Oil Industry: From Piper
Alpha to Deepwater Horizon
Charles Woolfson
Vulnerable Workers and Precarious Work in a Changing World
London Middlesex University 10-11 September 2012
Gulf of Mexico The Gulf of Mexico covers around 600,000 square miles of water. The outer continental shelf of the United States is
offshore oil. Production of offshore oil began during the 1940s and today accounts for about one third of the US total supply. 13.9 billion cubic feet of natural gas and 1.3 million barrels of oil are removed from the outer continental shelf each day.
Fear of reprisals A report on safety conditions aboard the Deepwater Horizon points to widespread fear of reprisal for reporting employee mistakes. "Only 46.3 percent of participants felt that, if their actions led to a potentially risky situation (e.g., forgetting to do something, damaging equipment, dropping an object from height), they could report it without any fear of
The study also found some Transocean employees entered fake data to try to circumvent a safety system
President Obama
regulators and the oil industry "It's pretty clear that the system failed and it failed badly." "I did not appreciate what I considered to be a ridiculous spectacle during the congressional hearings into this matter. You had executives of BP and Transocean and Halliburton falling over each other to point the finger of blame at somebody else," the president said. "The American people could not have been impressed with that display, and I certainly wasn't."
National Commission
Overarching Management Failures by Industry Whatever irreducible uncertainty may persist regarding the precise contribution to the blowout of each of several potentially immediate causes, no such
. 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. Rather, the root causes are systemic and, in the absence of significant reform in both industry practices and government policies, might well recur. Rooted in systemic failures by industry management (extending beyond BP to contractors that serve many in the industry), and also by failures of government to provide effective regulatory oversight of offshore drilling.
Decision-‐making processes at Macondo did not adequately ensure that personnel fully considered the risks created by time-‐ and money-‐saving decisions.
Transocean made that increased the risk of the Macondo blowout clearly saved those companies significant time (and money).
Macondo team, there appears to have been no formal system for ensuring that alternative procedures were in fact
subject to a comprehensive and systematic risk-‐analysis, peer-‐review, or management of change process.
A flawed regulatory agency
Secretary, James Watt, created the Minerals Management Service (MMS) in support of his goal:-‐ to open unprecedented reaches of U.S. territorial waters to oil and gas exploration.
MMS had a conflicting mandate:-‐ to both regulate offshore energy leases and collect the revenue they generated
National Commission -‐ Regulatory Failure Government failed to provide the oversight
management by private industry. MMS regulations were inadequate to address the risks of deepwater drilling. Many critical aspects of drilling operations were left to industry to decide without agency review. The root cause can be better found by considering how efforts to expand regulatory oversight, tighten safety requirements, and provide funding to equip regulators with the resources, personnel, and training needed to be effective were either overtly resisted or not supported by industry, members of Congress, and several administrations.
Wednesday 5 September 2012 -‐ US Department of Justice charged BP in District Court of Louisiana
-‐ -‐ The behavior, words, and actions of these BP executives would not be tolerated in a middling size company manufacturing dry goods for sale in a suburban mall. Yet they were condoned in a corporation engaged in an activity that no less a witness than Tony Hayward himself described as comparable to exploring outer space.
Previously unpublished emails between BP engineering management
operation that (Well Site Leaders offshore) have finally come to their wits end. The quote
The price of corporate safety failure
BP facing future civil fines of $21 billion and potential criminal penalties ranging between $5 billion and $10 billion and a total bill of around $69 billion. BP shares are still about a third below their pre-‐spill levels Company forced into new more risky provinces Corporate probation, disbarment, corporate homicide?