Spill Commission: Hubris, Greed, And Corruption Led To Gulf Disaster

The president’s commission on the BP oil disaster has found that it was an “avoidable” catastrophe “rooted in systemic failures by industry management” and “by failures of government to provide effective regulatory oversight of offshore drilling.” With a minute-by-minute retelling of the corners cut and mistakes made before the Deepwater Horizon rig exploded, the bipartisan commission reconstructs how BP, Halliburton, and Transocean repeatedly chose profit-taking risks, then ignored the warning signs that the risks were going bad — while the hobbled Minerals Management Service, with limited oversight and access, trusted the oil officials’ judgment that everything was under control.

With a political system designed to protect oil companies from sufficient oversight, systemic greed, hubris, and corruption led to the deaths of 11 rig workers and the poisoning of the Gulf of Mexico, the preview of the commission’s final report, due next week, has found.

Greed: The spill commission identified nine different instances in which BP, Halliburton, and Transocean made decisions that saved time — and thus money — but increased the risk of catastrophe:

None of BP’s (or the other companies’) decisions in Figure 4.10 appear to have been subject to a comprehensive and systematic risk-analysis, peer-review, or management of change process. The evidence now available does not show that the BP team members (or other companies’ personnel) responsible for these decisions conducted any sort of formal analysis to assess the relative riskiness of available alternatives.

For example, BP chose to use an untested mixture of re-used fluids during the negative pressure test, in order to exploit a loophole in the Resource and Conservation Recovery Act to avoid having to dispose of them onshore as hazardous waste; Halliburton didn’t wait for test results confirming the safety of the cement mixture; and Transocean ran multiple operations while conducting the hazardous effort to close the well.

Hubris: Repeatedly, the drilling companies assumed that the choices they made didn’t increase risks, or simply believed that the likelihood of disaster was so low that warning signs were ignored. A central example was how they glossed over test results that the cement job that was supposed to seal the well had failed:

Given the risk factors surrounding the primary cement job and other prior unusual events (such as difficulty converting the float valves), the BP Well Site Leaders and, to the extent they were aware of the issues, the Transocean crew should have been particularly sensitive to anomalous pressure readings and ready to accept that the primary cement job could have failed. It appears instead they started from the assumption that the well could not be flowing, and kept running tests and coming up with various explanations until they had convinced themselves their assumption was correct.

Transocean had “an eerily similar near-miss on one of its rigs in the North Sea four months prior to the Macondo blowout,” when an apparently successful negative pressure test led rig workers to miss warning signs of a blowout. “Had the rig crew been adequately informed of the prior event and trained on its lessons,” the commission concludes, “events at Macondo may have unfolded very differently.”

Corruption: The commission also found fault with the Minerals Management Service, which left the companies largely to their own devices, deferring to their last-minute decisions that set the disaster in motion:

Many critical aspects of drilling operations were left to industry to decide without agency review. For instance, there was no requirement, let alone protocol, for a negative-pressure test, the misreading of which was a major contributor to the Macondo blowout. Nor were there detailed requirements related to the testing of the cement essential for well stability.

Responsibilities for these shortfalls are best not assigned to MMS alone. The root cause can be better found by considering how, as described in Chapter 3, 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. As a result, neither the regulations nor the regulators were asking the tough questions or requiring the demonstration of preparedness that could have avoided the Macondo disaster.

In what may turn out to be an act worthy of criminal prosecution, Halliburton covered up test results finding that the cement slurry chosen by BP for the Macondo well “was unstable.” Instead, “Halliburton personnel responded instead by modifying the test conditions—specifically, the pre-testing conditioning time—and thereby achieving an arguably successful test result.” Furthermore, “Halliburton documents strongly suggest that the final foam stability test results indicating a stable slurry may not even have been available before Halliburton pumped the primary cement job at Macondo. If true, Halliburton pumped foam cement into the well at Macondo at a time when all available test data showed the cement would be, in fact, unstable.”

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