No doubt the CEOs of various other Majors have sound reasons in their minds for suggesting that the Macondo disaster was a 'BP problem' - as though blowouts are new……
In fact, in 2005 an analysis of incidents in the Gulf of Mexico by researchers from Texas A & M University showed that offshore blowouts had continued at ‘a fairly stable rate’ since 1960 despite the use of blow-out preventers (BOPs). To be specific, the Presidential Commission that investigated the Deepwater Horizon disaster found that oil companies lost control of Gulf wells 79 times between 1996 and 2009.
Is Regulation Enough?
Turning to Europe, I do not believe we can or should be content with a position which says that regulation is that much tougher in the UKCS and NOCS than in the US OCS and that therefore things are OK.
Regulation is necessary, but not sufficient.
My personal view is that there seems to be an industry problem, rather than one confined to BP or to the Gulf of Mexico. In addition to the large output from the aforementioned Presidential Commission, evidence for this view comes from various sources, some of which are reviewed below. As a consequence I want to make the case that we need to find technology solutions, as well as improve internal processes, set new standards and so on.
David Payne, Chevron’s Vice President of Drilling, speaking at an industry meeting in Florence in January 2011, reportedly said “It is apparent that the Deepwater Horizon crew had information they needed to know [to prevent disaster] and took no action….These were experienced men. My theory is that the interface [providing information about drilling operations] was too complex. The Macondo incident is a wake-up call to the fact that as wells become more and more complex we have to think about how we manage the man:machine interfaces. We need to get engineering solutions to match up with the people. Simplifying the human interface is an engineering problem most engineers don’t want to deal with.”
Understanding Complex Systems
In mid-March 2011 the Deepwater Horizon Study Group from the University of California, Berkeley, listed up to a dozen separate decisions made on the rig that increased risk. These ranged from not cementing well drilling liner overlaps and delaying installation of the casing hanger seal assembly lock-down, to not using recommended casing centralisers and running underbalance tests with most of the drill pipe out of the well instead of running a full string to total depth.
With so many reports from different investigative bodies, there is a very large amount of information to digest. However, it does seem that it may be necessary to consider not simply the performance of the individual technologies that have received so much attention, such as BOPs, cement jobs and acoustic triggers, but also the interaction between these technologies and the decisions related to them, in what is a somewhat complex system.
This raises a number of questions. For example: can such systems be understood; whose role is it to assert that the whole system will function correctly; can any one individual respond quickly enough if something goes wrong; can more intensive simulator-based training help; can better rig-to-onshore communications help? And if the worst happens, do we have rapid containment facilities and what new rules might we see put in place by regulatory authorities?
At a recent Finding Petroleum Forum in London, these issues were probed in greater depth, resulting in a number of insights.
Perhaps the most significant insight, aside from those directly connected with actual drilling operations, was a risk management one – that issues of personal or occupational safety are more or less unrelated to issues of operational integrity. In particular, an emphasis on safety metrics, such as the number of Lost Time Incidents and “golden rules” which focus on trips and slips and lifting, whilst essential and laudable, has little or nothing to do with assuring operational integrity.
Thus it behoves companies to have a system of performance and risk management that is relevant to maintaining operational integrity and that is necessarily different from, and in addition to, one that maintains occupational safety.
Relating to critical relationships during drilling operations, gaps were identified in three key areas:- training; control systems and the measurement and control of well parameters; and rig to HQ communications.
We need to build drilling personnel competency through training, particularly the ability to ‘think downhole’ in an era of data overload. Outsiders to the oil and gas industry sometimes refer to either the nuclear industry or the civilian air industry as examples from which we might learn. Recent events in Japan rather undermine the former suggestion, and I am not sure that the latter is an appropriate analogue for the oil and gas business – I don’t think oil and gas operations in Texas or Siberia resemble operations at London’s Heathrow airport, for example!
Nonetheless, I am struck by the analogue with flying modern planes and by the extraordinary amount of time that pilots spend training, especially in simulators, which can replicate more or less every eventuality that a pilot may face in flight and in combat. Isn’t there a case for such intensive simulator-based training in our industry?
Communications and Information Flow
With regard to measurement and control of well parameters, instead of looking at raw data the drillers need to be able to know the answer to operational questions. Where is the bit - inside the casing, open hole or riser? Are the BOP and choke/kill line open or closed? Where are and what are the fluids inside the drill string and annulus? What is the pore/fracture pressure and pressure along the wellbore? All these and many more are real time questions needing rapid answers.
This implies getting better data to begin with, having systems to clean up data and make it easy to understand, and systems to make this information easier to work with, for example more precise alarm systems, so that all available expertise can be brought to bear on remote operations, especially in anticipating and dealing with problems.
Effective collaboration needs the ability to visualize and understand current conditions through valuable information rather than raw data, with a notable lack of a common platform to convey the same information to individuals and companies, both local and remote.
We may need to introduce a step-change in communications and information flow between onshore ‘command centres’ and drilling rigs and remote installations. Many things come down to the crew on a rig not only not knowing the right information at the right time but also not being able to bring all potentially available expertize to bear on a problem - for example, being unable to access onshore technical experts and/or share critical knowledge with them quickly.
Who Sets the Standards?
I think we as an industry need to respond along these lines……because the alternative is not attractive.
While the UK government, for example, believes current regulations are adequate, globally regulators may well move in the direction of requiring operators to post a bond to deal with the cost of any spill. Bearing in mind that BP’s Macondo-related costs have long since passed US$12bn, these bonds would need to be quite large, beyond the scope of oil and gas companies capitalised at less than say US$10bn or even US$15bn. This has serious implications for small to medium sized oil and gas companies.
In addition, one of the more scary concepts touched on in the aforementioned Forum is that of 'extraterritoriality' - the suggestion that any company headquartered in the EC will have the same rules and regulations applied to all its global operations. My objection to this is not that companies should be held to the same high standards of behaviour everywhere they operate - of course they should - but that a bureaucrat in Brussels should feel capable of figuring out what these standards are!
This problem isn’t just confined to Europe, it seems. According to Mississippi Governor Haley Barbour and Gulf Coast employers, as told to a US House of Representatives committee on 2nd June 2011, the Obama administration's reactions to the Macondo oil spill did more damage than the crude itself. Barbour said little oil reached Mississippi's shores, but the administration's May 2010 decision to impose a five-month ban on most deep-water drilling has left a lasting impact. The moratorium "not only cost jobs in all the Gulf states, it hurt the economy nationally by reducing domestic oil production," Barbour told the House Oversight and Government Reform Committee.
Let’s hope we don’t get reminded of the insight of President Ronald Reagan about the scariest words in the English language:
“Hi, I’m from the Government and I’m here to help you”!