Saturday, June 19, 2010

It's Just a Horrible Accident

It is about day 60 since the horrific explosion of the Deepwater Horizon Drilling Rig that killed 11 people and will probably result in the largest oil spill in the history of man’s exploration and production of oil and gas. It is a tragic and horrible accident. The loss of human life, the survivor’s remorse, those who will forever be reliving that accident and wondering what went wrong and how they could have prevented it, and the impact on the environment that will be played out over the ensuing decades—these are all the horrific outcomes of a tragic accident.

But all of that will most likely be eclipsed by the self flagellation that America will put itself through in the form of investigations, special commissions, second guessing, prosecutions, new laws and rulemaking, and lost opportunity that comes from overreacting to what in the final analysis is just a horrible accident. We have a history of doing this to ourselves in the wake of accidents. It can be described in six distinct phases of almost any given project: 1) Enthusiasm, 2) Disillusionment, 3) Panic, 4) Search for the Guilty, 5) Punish the Innocent, and 6) Praise for the Uninvolved.

Prior to the explosion that occurred on April 20, President Obama showed enthusiasm as he announced plans to expand offshore oil and gas leasing for a number of good and sound reasons. There is tremendous potential to develop domestic oil and gas supplies offshore as improved technology has proven the existence of huge oil and gas reserves under the ocean floor and our offshore oil and gas exploration and development industry has a sterling record of safety and environmental responsibility. Consider that when Hurricane Katrina went right through the heart of the Gulf of Mexico’s offshore drilling region in 2005, all the drilling rigs and production platforms were successfully shut down. Even though some platforms were wrecked beyond belief and blown ashore, nobody was hurt, the spillage was nominal, and full production was back online in a matter of months. Secretary of the Interior Ken Salazar testified before Congress a few weeks ago that the United States had successfully drilled and developed more than 36,000 offshore wells without a serious incident or spill up until the Deepwater Horizon accident.

Then came the disillusionment. A huge explosion rocked the rig. Lives were lost. The ensuing fire and efforts to put it out in an attempt to save the lives of those men who were missing at the time resulted in the floating rig sinking which collapsed the drill stem and broke it near the bottom of the ocean 5,000 feet below the surface. The blowout preventer—a device used on all drilling rigs to prevent accidental spills after the 1969 Santa Barbara oil spill—failed either as a result of human error or the shear magnitude of the pressure produced by this gusher.

We are still in the panic phase. How do you cap a blowout that is 5,000 feet under water when the rig that can handle the equipment is lying on the ocean bottom nearby? In typical American fashion we oversimplify or ignore the physics and engineering challenges. We argue about how much oil is actually flowing out of the hole as though that really matters. And even though the oil industry standard for volume measurement has always been the Barrel, we estimate the spill in gallons which makes the number much bigger and adds to level public panic and media hyperbole. Tourism in the Gulf Coast region is almost none existent this year because the public believes the oil is ankle deep from Texas to Florida, even though most of the oil is still offshore at this time.

Of course, since a quick and easy fix did not present itself and this disaster now has the potential to play out all the way into September, political expediency requires us to jump right to the search-for-the-guilty and punishment-of-the-innocent phases.

There is and should be culpability and accountability for this accident. The measured and appropriate punishment is the means by which society corrects wrong or inappropriate behaviors that may lead to accidents. This is the natural course of action for us to follow. Personally, I believe BP to be that guilty party and they have already owned up to this by their unflinching commitment to stop the leak, clean up the mess, and keep whole those impacted by this disaster. However, it is not lost on me that British Petroleum has for about a decade tried to market themselves as Beyond Petroleum. Despite the fact that oil and gas exploration, development, refining, and retail sales makes up the vast majority of their business portfolio, they have been spending millions of dollars trying to convince us all that they are “green.” If you look into their history, I suspect you will find that BP does not have the best track record of safety and maintenance practices and a higher than industry average of accidents and spills.

In the world of government we always rush to punish the innocent. In Washington, DC, this usually takes the form of “throwing someone under the bus.” The President is the Chief Executive, but the spill is not his fault. The Secretary of the Interior is in charge of the Minerals Management Service (MMS) which is the office responsible for selling oil and gas leases, collecting the royalties, and enforcing safety on offshore rigs. But, Ken Salazar is not to blame. In an ah-hah moment, Salazar visits the Director of the MMS, and like a good loyal political appointee, she throws herself under the bus. But, it does not stop there. An old Inspector General Report that reveled that sex and drugs were corrupting a few MMS employees in the Lakewood, CO, office suddenly becomes news again. I do not support corrupt behavior, but corruption by sex and drugs is hardly a novelty in America today. I dare say, and the annual reports of Inspector Generals across government support this, that you can find a corrupt employee in every single federal agency. It is true of the private sector, too. However, to suggest that the people cited in the report somehow were the cause of this accident is ludicrous.

I happen to have worked with many of the top managers at the Minerals Management Service and I personally know them to be honest, hard working, smart, and highly motivated to do the best possible job they can. This is one of the smallest of federal agencies, yet through their work selling oil and gas leases and collecting federal mineral royalties, they are responsible for the second largest source of revenue to the United States Treasury. In recent years they have collected as much as $16 billion a year, second only to the Income Tax in total revenue. There are, as in any organization, a few bad apples and they should be and have been punished. But, let us not, in our zeal to punish the innocent, throw the whole agency under the bus.

Many people who have no direct association with this accident or its mitigation will soon rush to try to fix the problem which will lead to praise for the uninvolved. Let me again suggest that this oil spill is the result of a horrible accident. Horrible accidents happen every day. In excess of 40,000 people die as a result of car crashes every year, but automobiles have not been outlawed and automobile use and safety has increased. From time to time an airplane crashes sometimes killing hundreds of innocent people, but we still fly in record numbers every year and flying on a commercial airline is one of the safest modes of travel we can use. People die daily in hospitals sometimes due to human error, but we don’t close down the hospitals or imprison the doctor who makes an unfortunate, but honest mistake. Let us learn from this tragic accident in the Gulf of Mexico, let us work together to mitigate this environmental disaster, let us hold accountable those responsible, but please, please, let us not stop exploring for and developing domestic supplies of oil and gas. We are the most environmentally responsible nation in the world and our track record, even with this accident, is excellent. And like it or not, we need reliable domestic supplies of oil and gas to sustain our economy, quality of life, and to get us through to the next generation of energy sources.

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