July/August 2010

Deepwater Horizon oil disaster lessons

By Bill Lydon, InTech, Chief Editor

The impact of the Deepwater Horizon gulf oil disaster is likely to last for years. What can we learn from the list of problems leading to the Gulf oil disaster that keep coming to light?

The U.S. House Energy and Commerce Committee released dozens of internal documents that outline several problems on the deep-sea rig in the days and weeks before the 20 April explosion that set in motion the largest environmental disaster in U.S. history. 

Several days before the explosion (14 and 15 April), BP won approval from the Interior Department's Minerals Management Service for a series of permit changes that would help it speedily conclude its over-budget drilling operation at Deepwater Horizon. The changes it got on 14-15 April allowed the company to install a cheaper, smaller, single pipe in the length of the well, rather than a double-lined pipe. On 20 April, the day of the explosion, BP executives came on board Deepwater Horizon to celebrate the rig's safety record. At the same time, Halliburton, a contractor for BP, was trying to temporarily plug and cap the well with cement so the drilling rig could be moved to another job. Technicians noticed a rise in pressure from the well that suggested the cement was not holding. One test showed a "very large abnormality." They took another test and misread it, declaring the well safe. Although the pressure was rising, the workers began withdrawing drilling mud, which holds down oil and gas in the well. They replaced the drilling mud with seawater, which is standard procedure if all conditions appear normal. As they injected seawater, they observed a dangerous jump in pressure from oil and gas rising in the well. Subsequently, the rig exploded. When technicians received approval to switch on a blowout preventer, the device had no hydraulic power.

Moral, political, and legal issues aside, what can we learn from this disaster? Complacency, substandard engineering, poor design, weak project management, and improper installation only magnify problems later in a project. As my old boss used to warn, do the right job upfront because the cost later is a lot bigger. In this situation, the costs are beyond big; they are catastrophic.

This is a stark reminder that the details of every phase of a project are important. Engineering, timeline development, resource procurement, quality control, and risk management function are critical to success.

A growing concern of mine is that top management at many large companies do not understand the basics of operations and technology of their business. This concern was reinforced during a lunch discussion with a plant manager who recently retired from an oil company. He described how companies have "fast tracks" to "develop" executives by having them work a short time in each area of the business. He indicated the actual time spent in a specific area of the business is too short for a person to really learn anything meaningful. He also mentioned managers do not assign these potential executives important tasks due to the person's lack of experience in those areas; instead, a manager will simply treat them nice because they may be their future boss. In his experience, these seemingly trained top executives believe they are "experts" in every area of the business with no real understanding. Separating the guts of a business and "business management" in my opinion has created many of the problems we see in manufacturing today. If executives understood the risk and potential loss of taking shortcuts, maybe we would not have the kind of disastrous situation experienced in the Gulf. On the upside, if executives had a better understanding of the core business operations and technology, better decisions would be made, and the results would be superior performance.

Please share your thoughts. Talk to me at blydon@isa.org.