Brian Orrock - Pledge
Faranda Ferguson - Pledge
Cheryl Subacius - Pledge
December 7, 2016
1. Why did the Deepwater Horizon disaster happen? How did a company known for being a relatively good corporate citizen become involved in what many argue is the nation’s worst environmental disaster?
-You should come up with a list of at least 10 resources
-Factor these resources into individual, team, corporate, and industry categories
Answer:
The Deepwater Horizon disaster happened because BP CEO Tony Hayward instituted a culture that allowed acute risk taking, ignored expert advice, overlooked warnings concerning safety issues, and hid facts from people. Instituting a culture of hubris in BP, led to BP’s failure to adequately respond and react to the Deepwater Horizon disaster. Several behaviors and decisions are accountable for the incident. Contributions to the incident happened at the Individual, Team, Corporate, and Industry level. These include:
Individual
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Team
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Corporate
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Industry
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Brian Morel - kept in contact with many team members, he would share cost cutting measures which ultimately compromised the integrity of the well.
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Limited experience of the management team operating the well.
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Safety was not a core value at BP.
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Management Procedures did not align with regulations.
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Jesse Gagliano failed to alert BP Managers on the Macondo Well Hazards.
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The decision to not use additional centralizers was not communicated across the team.
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Workarounds were employed instead of properly maintaining and servicing the oil rig.
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Stop work at all oil rigs to assess strategies for wells in deep water caused a decrease of ~2,000 oil workers and total spending by operators of $1.8 billion, leading to a decline in employment on the Gulf Coast.
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Tony Hayward downplayed the incident and failed to acknowledge the impact to the environment.
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No one acknowledged the noted Severe gas Flow Problem found and documented on page 18 of the the OptiCem Report.
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BP made a decision, to save time and costs, to reduce the circulation time and failed to complete a cement log test despite warnings of gas channeling, sending the subcontractor home and saving 93% of the costs.
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The accident in-whole contributed to many small businesses losing money, while shocking the economy; and lead to a government appropriation in order to fund the cleanup of the spill.
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2. What information and decision-making issues played a key role in the Deepwater Horizon disaster and how did they contribute to the disaster?
Cement Bond Log - failure to complete a cement test. BP did not test the integrity of the cement being used to seal the well. This decision exposed BP to risk; it may have saved 12 hours of work, but the cost from the eruption far exceeds the cost of the test..
Failure to complete a mud circulation test contributed to the disaster too. This test would have given the engineers much needed data and signal to them that there was gas influx present in the well. This test was eliminated in order to save time, it was also a very important safety measure that was overlooked.
Financial ramifications and leadership’s desire to avoid bankruptcy lead to leadership making cost cutting decisions. In the Deepwater Horizon incident, BP continuously made decisions to reduce operating costs which ultimately affected and eliminated safety measures. These decisions cost the company huge losses in resources, government fines, environmental destruction and the loss of human life.
3. How did the ability of individuals to voice their values effectively (or not) contribute to the Deepwater Horizon disaster?
BP did not address the concerns and issues which arose prior to this disaster. When information was provided to the engineers they would discuss it and then in the same breathe they would question the reliability of the data they were working with. For example, n the case of only needing 6 centralizers to center the well. I feel the BP mantra was “how can we save some money” thereby instilling a culture in all employees safety was prioritized behind profits and mitigating additional costs was paramount to the hierarchy at BP.
4. What were the arguments that each side made for using the liner casing or a long string casing?
BP executives had two avenues for securing the well’s final section: liner casing or a long string casing. The liner casing provides four barriers of protection against gas and oil leaks. In contrast the long string casing only provides two barrier against gas and oil leaks. However, the long string casing was quicker and cheaper to install than the liner casing. Despite a report in April of 2010 that advised against using the long string casing because of the risks associated with having few barriers to gas and oil leaks, the engineering team was leaning towards the long string casing because it would save 3 days and 7-10 million dollars. Even after Halliburton sent a report on April 18, 2010 that warned BP that the well was considered to have a SEVERE gas flow problem, no one read the report, they only read the parts of interest to them, because they were only concerned with saving money.
5. What can we conclude from this analysis?
What can be concluded is that BP put dollars above the safety of people, the well being of the environment, and their own reputation in an effort to save 7-10 million dollars. Their poor judgment cost them substantially more than 7-10 million dollars in damage. Their short-sightedness and greed blinded their decisions and unfortunately people and the environment suffered as a result.
6. How could the Deepwater Horizon disaster have been prevented or at least mitigated?
The Deepwater Horizon disaster could have been prevented if BP management had followed the recommendation in the BP Forward Plan Review and not employed the long string casing because of its associated risks and lack of barriers against leaks. However, they chose to ignore that advice, so the disaster may not have been preventable but it could have been mitigated if BP management had done three things after they decided to ignore the recommendation in the Forward Plan Review. First, they should have heeded the advice of Jesse Marc Gagliano of Halliburton, who performed the OptiCem model and advised BP to use 21 centralizers rather than the 6 that were planned, otherwise there was substantial risk for gas flow problems. The centralizers help keep the casing centered, and this is important because when the cement is pumped in and forced around the outer casing and the ocean wall. If the casing has shifted it will not set evenly, which leaves weak spots where gas can leak. The decision to use the additional stabilizers was based on saving time and ultimately money on project that was already over budget. Secondly, they failed to follow the practices of the American Petroleum Institute and circulate the mud at least once prior to cementing the well. BP did not want to add an additional 6-12 hours of time to their schedule, so they did a partial circulation of the mud, which lasted a mere 30 minutes. Finally after they failed to follow best practices and circulate the mud, it was then decided to bypass the “cement bond log” test to monitor the integrity of the cement after it was pumped into the well. This decision was made even though the representative from Haliburton, Gagliano warned them of channeling because they opted to only use 6 centralizers rather than the recommended 21. This decision was made even though the contractor was on-site to perform the “cement bond log” test, but were told it was not necessary. This decision once again saved BP money, instead of paying $181,333.83, they paid $12,035.44, saving the company $169,298.39. Additionally, if the test was ran and problems were discovered it would take at least one month of work to correct any issues found and cost BP an additional 30 million dollars.
7. Why did the voice of more time,more resources,more caution consistently lose out in these decisions/debates? Is it because they were not convincing? Did they not make their arguments strong enough? What was going on?
Ultimately the decisions made were based on one factor and only one factor; money. How much is safety going to cost us and how can we curtail the expenses and seal this wellhead up with as little overhead as possible. BP had invested a huge amount of capital in this well and was trying to mitigate any additional expenses. For a “nightmare well” as stated in this article,it was deemed by BP engineers to be the ideal well for sealing. With a minimum of 6 centralizers needed because of a perfect well casing drill, no need for a cement bond log and drastically curtailing circulating well mud would give the impression of an ideal well. Not the case however, far from it.I personally feel that those involved in this did not protest enough, in fact they were complacent in their e-mails, using verbiage like “who cares, it’s done, end of story,will probably be fine”. You cannot underestimate the cost of safety, as BP found out the hard way, if they spent the extra time and money this tragedy would not have happened.
8. How would you ethically handle this situation as the CEO? What you do in the short- and long-term to change the culture and the organization overall? How do you make the change stick?
This disaster is an ethical nightmare. The first thing to do is institute a culture of safety and have regulations in place acknowledging safe work habits and reprimanding behaviors and decisions which are not safe. The program should be meaningful and introduced to all employees and team members. Also empower employees to hold one another accountable, because ultimately their lives and well-being are at risk with every unsafe decision or action when drilling for oil and/or gas.
In addition, decision making needs to be standardized and uniform with procedures and protocols that focus on ensuring the safety and well being of people and the environment. There needs to be a rigorous process for overseeing decision making, drilling expeditions, and teams should not be able to make decisions unilaterally which have the potential to impact others or the larger mission.
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