Tag Archives: BP

OFFSHORE | BP forms ‘powerful’ new safety unit

Originally published in bbc.co.uk, 2010/09/29

BP has formed a new unit to oversee safety across the company following the Gulf of Mexico oil disaster.

The oil giant says the division will have “sweeping powers”, including the authority to intervene in operations to uphold safety standards.

Mark Bly, who headed BP’s internal investigation into the hugely damaging US oil spill, will run the new unit.

He will report directly to Bob Dudley, who takes over as chief executive on 1 October.

BP hopes the new unit, along with a number of other organisational changes, will help rebuild trust in the company.

It is also splitting its Upstream business into three divisions – Exploration, Development and Production.

As part of the reorganisation, it will examine how it manages third-party contractors.

BP’s internal investigation, published last month, blamed a “sequence of failures involving a number of different parties” for the Deepwater Horizon oil spill.

It said it was responsible in part for the disaster, but also placed some blame on other companies working on the well.

Safeseas note 1: to learn more about the “blame” of other companies, I would suggest this BBC’s article: Who’s blamed by BP for the Deepwater Horizon oil spill

Safeseas note 2: in such big, high-profile disasters, one has to be very careful to avoid the trap of blame. The “blame game” creates an hostile environment to the progress of safety.

Safeseas note 3: 11 men died as a result of the Deepwater Horizon tragedy. This should not be forgotten.

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SAFETY | BP and truth

Finger-pointing, BP style (Houston Chronicle)

HOUSTON CHRONICLE

It doesn’t qualify as light summer reading, but BP’s report on the Deepwater Horizon tragedy in April figures to be a page-turner for interested parties in many law offices and corporate suites around Houston and in other oil and gas centers globally. And in more than a few corners of Washington, D.C.

Early reviews of the BP document are in and, no surprise, they’re less than kind.

The oil giant is accused of using the long-awaited report as a launching pad for its complicated legal defense and as a platform to shift blame for the tragedy to others involved. Would anyone have seriously expected something different?

The most succinct response to the report we’ve seen was offered by Chronicle cartoonist Nick Anderson, who morphed the ubiquitous BP flower symbol into petals shaped like pointing fingers in Thursday’s cartoon.

Yes, the BP fingers were pointing: At Transocean, which owned the rig; at Halliburton, which performed cement jobs on the well; and at Cameron, which built the blowout preventer that failed to stop the fatal explosion.

Almost immediately, fingers were pointed back at BP by the accused. And so it is likely to go as other studies of the accident are made public. The legal jousting is likely to play out over years, if not decades, experts reckon, and cost the litigants millions in fees and perhaps billions in damages.

Like most, we’ve spent our summer watching the spill drama play out. Along the way, we’ve been visited by oil and gas industry leaders and other knowledgeable insiders passing through town. Some have dropped by for meetings with the editorial board on spill-related business; others on unrelated errands.

In one way or another, the spill has always come up, and we could not help but notice an informal consensus about BP emerging among these insiders that must be addressed. It is a concern that the company’s corporate culture played a role, perhaps a large one, in setting up the circumstances that led to tragedy on April 20.

For the sake of the survival of the entire offshore industry, that subject must be addressed without flinching.

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New Drilling Moratorium: A Needed Step to Mitigate a Risky Industry

Drilling safety is not a BP problem, it is an industry problem- Ken Salazar and the Department of the Interior agree.

A Louisiana federal Judge threw out the first ban on offshore drilling last week, but citing concerns over industry-wide use of the same blowout preventers that failed BP, the Interior Department issued a new moratorium Monday.

The extreme engineering and technical lengths companies go to extract oil from miles underwater highlights the severity of our oil addiction- and we can take steps to end it today. But establishing new, rigorous standards for drilling safely in complex and dangerous situations needs to be priority number one for the drilling industry and those who regulate it.

BP is one of the richest, most technologically advanced companies in the world- and 13 weeks after the spill, oil continues to gush nearly uninhibited from the sea floor. Can we assume that any other company would do a better job?

The reality is, we can not. The American Petroleum institute has spent millions in public relations to save their image while throwing BP under the bus, but a government review of spill response documents of all five major drilling companies found nothing but boiler-plate, cookie cutter plans- in some cases using the exact same words.

Like BP, three other companies include references to protecting walruses, which have not called the Gulf of Mexico home for 3 million years.

Two other plans are such dead ringers for BP’s that they list a phone number for the same long-dead expert.

ExxonMobil’s response report has 40 pages on its media response strategy, yet its plans for resources protection is only 5 pages long and its plan for oil removal is just 9 pages long. Clearly they are more concerned with the safety of their brand than the safety of their equipment.

Every response plan document claims the companies can handle between 150,000 and 250,000 barrels per day. The BP spill is currently leaking between 11,000 to 25,000 barrels per day- with almost no ability to contain it.

What this disaster has demonstrated more than anything is that these companies cannot be taken at their word- not a single number BP has released relating to the scope of the disaster or its response capabilities has held up to facts.

The offshore drilling industry needs to seriously raise the bar on integrity and transparency, and forcing a moratorium until this occurs is mandatory to holding these companies accountable.

Our tolerance for risk needs to be at an all-time low as we struggle to contain this disaster, and that means an end to risky deepwater drilling until new safety controls are demonstrably in place.

Source: Sierra Club

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SAFETY AND ENVIRONMENT | The cost of beancounting

The following article was written by Clay Maitland, one of the most respected voices in the maritime industry.

Im my opinion, it is worth reading, if only to remind us that, at a time when cost management tends to be more important than safety risk management, beancounting can be indeed very expensive.

Here is Mr Maitland’s article:

Robert Dudley is an American oil man who became an employee of British Petroleum, oops, BP, when it absorbed Amoco, the former Standard Oil of Indiana, in 1998.

As of Friday,  Mr Dudley has taken the lead in managing BP’s, er, response to the Gulf oil spill.

Amoco, remember, was the owner of the Amoco Cadiz.

There are similarities between what happened to that vessel in 1979, off the coast of France, and what is happening now; both oil companies had/have rigid cost control systems in place, but no apparent means of minimising risk, or an awareness of the consequences of a failure to control it. In both cases, this failure led to vast financial and environmental loss.

One of many ironies is that the methods by which risk may be analysed and managed began with the Corporation of Lloyd’s, in the coffeehouse kept by Edward Lloyd in Tower and later Lombard Streets, in the City of London, in the reign of Charles II.

To assist shipowners and underwriters who frequented the coffeehouse, a list was maintained of the ships offered for the insurance of hulls and cargo.

These lists became in 1760 a printed volume or register book, and by 1775, the familiar classification of A1 Lloyd’s was used to denote the highest class of ship. The analysis and control of risk of loss became an essential principle, without which ships and cargoes could not be profitably insured, and shipowners avoid ruin.

Today, some of the world’s most knowledgeable and sophisticated experts in containing risks can be found within the ranks of London marine insurers. One hopes that Mr Dudley, who may be the successor to Tony Hayward as BP Chief Executive, will make use, at long last, of this resource.

It is also fervently hoped that he brings with him an institutional memory of the cause of the Amoco Cadiz oil spill.

Many readers will remember that she and her sister ships were ordered and built at the Astilleros yard in Cadiz; that all had a design flaw affecting their steering gear (not good for large tankers to have); that this caused significant loss of hydraulic fluid, which if not remedied, resulted in loss of control.

Amoco was warned to get this problem fixed on all of the Astilleros builds. This would have cost piles of money, so a less expensive solution was found: equip each Amoco tanker with large spare supplies of hydraulic fluid, carried in barrels.

This less expensive solution worked to management’s satisfaction, if not that of Amoco’s crews, until Amoco Cadizwas caught in a storm in the Bay of Biscay.

As part of the Amoco management system of control of all things great and small, each of its masters was required to be in close and frequent contact with company headquarters in Chicago. The effect of the sustained heavy weather encountered by the AMOCO CADIZ, culminating in a particularly severe storm as the vessel approached Ushant, was that most of the spare hydraulic fluid had been used.

Steering control failed, and the master, Capt. Bardari, radioed Chicago for permission (Amoco policy denied him the authority to do this without head office approval) to call for salvage tugs.

At first, and for some time, Chicago declined to grant permission to Capt. Bardari to do so, since this would probably entail his signing a Lloyd’s Open Form of salvage agreement. Surely a less expensive solution could be found.

Eventually, head office in Chicago relented, and allowed Capt. Bardari, poor soul, to call for assistance.

The stormy weather continued,  and his emergency call was answered by only a few salvors, one of which was a famous company called Bugsier.

More time was lost haggling over the potentially costly Open Form. The Bugsier tug, appropriately named Samson, arrived too late, and Amoco Cadiz was driven on the rocks of the Breton coast. The oil that spilled onto the French beaches and oyster beds, among other resources, resulted in very large damages against Amoco. A less expensive solution could not be found.

A noteworthy result of the Amoco Cadiz disaster was an extensive revision of the SOLAS Convention.
What has not, however, been done from 1979 to the present time, either in national or international law, is to deal with the disastrous effect of a business model that, particularly at some large companies, has tended to put cost controllers in policy-making positions.  This was true, at the time, at Amoco.

Such a man was Lord John Browne.

In contrast to the new management of Exxon, after the Exxon Valdez allision, (1989) which adopted pervasive, and effective, quality and safety management policies, John Browne was a ferocious cost-cutter who reined in spending across the board, including safety.

So has his successor and protege, Mr. Hayward. Despite the lash of outrageous circumstances: the Prudhoe Bay pipeline leak, the Texas City explosion, and about 760 safety violations in its refineries, cited by the U. S. Occupational Safety and Health Administration between 2007 and 2010, the corporate culture, despite all the “green” advertising, resisted effective awareness of the extraordinary risks that were being run.

Not so Exxon, now Exxon Mobil. Shortly after the Exxon Valdez spill in Prince William Sound, Alaska, Exxon’s board of directors met, and fired the CEO. It then convened a committee of senior executives, and instructed them to create and institutionalise a pervasive system of safety awareness and management within all of Exxon’s plants and other assets, including ships and rigs. Exxon Mobil now has an outstanding safety record.

This kind of cultural change requires leadership by example. If deepsea drilling is to be resumed, as I think it must, then a way to do it safely and competently will have to be found. All of the oil companies, and their suppliers and contractors must be forced to abandon hardheaded “cowboy” cultural attitudes toward safety and the environment.

There is definitely a need for federal legislation that defines and requires certificated safety management programmes; the Exxon Mobil system would provide an excellent model. A structure of outside audits will be a necessary requirement. The Institute of London Underwriters could provide useful advice.  A safety management and risk control system that delivers value, and is not “bolt-on” window dressing, requires the active engagement of senior officers of the company, and freedom from a “one size fits all” budgetary corset.

Much in the manner of Sarbanes-Oxley, there must be explicit accountability for safety awareness, and the company’s management system, from top to bottom within the company, from the “C” suite to the wellhead.

The key element is of course government enforcement; yes, another layer of bureaucracy is now inevitable! The Exxon Mobils, who will voluntarily change their safety culture, are not universal phenomena; without laws that compel compliance,the cowboys and the beancounters will continue to make their own rules, and life will be risky for those pensioners.

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GULF OIL SPILL | Accidents, tragedies and catastrophes

Michael Grey | LLOYD’S LIST

ONE cannot possibly envy poor Tony Hayward, the chief executive of BP, in his dreadful task on the shores of the US Gulf.

Every expert that can be dragged in from the world of offshore petroleum has been put to work, but the poor chap still cannot do anything right in the eyes of his critics.

Goodness, he dare not open his mouth, lest he be condemned for disrespecting those who lost their lives aboard the Deepwater Horizon, or for showing a lack of sympathy to the shrimps or the shrimpers, many of whom are getting a pretty good daily rate for participating in the clean-up. The corpse of a dolphin has been sighted, which probably means old Hayward’s goose is cooked.

The language of US greens becomes more lurid by the day, as they marshal more Big Oil haters to their colours, demanding pretty well everything short of the death penalty for the evil Brits who have caused such a catastrophe.

Prosecutors are rushing to get in on the act, while BP is occupying a place in the lexicon of horror in Washington that was once reserved for world communism.

Experts who would be better employed in actually trying to stop the outflow of oil, or helping to defend the coastline. are wasting hours having to give evidence to politicians, whose role in the fight against pollution must be considered questionable.

Even President Obama, of whom one might have thought better, is starting to use the same sort of language he employs when referring to the Taliban.

I am sorry, but having spent an hour or so reading various US newspaper columnists inveighing against the Brits in general and BP in particular, it is very difficult to remain either measured or polite.

Of course, it is a wretched business, and we know US lawyers do not understand the concept of an accident, but is it yet a “catastrophe”? The US media want it to be so described, and pander religiously to the greens by parroting their extravagant language.

On May 27, we were told, breathlessly, that the quantity of oil that had been emitted was now the greatest spill in US history and had exceeded that which had gushed from the Exxon Valdez, which is the popular yardstick that everyone in the US likes to remember. Ask any American child to name a ship, and if it is not the Titanic; this is the one they remember.

That unfortunate navigational miscalculation spilt 11.2m gallons of North Slope crude into Prince William Sound, which, when we spell it out in this modest and homely unit, seems an astronomical amount of oil, but amounts to some 36,446 tonnes of the stuff.

This is less than half of that spilled from the shattered wreck of the Braer around Shetland, and almost exactly half of the crude oil that washed around the pretty coves and beaches of Pembrokeshire after Sea Empress failed to make the entrance to Milford Haven.

I know language is relative and that used by politicians and those with a point to prove is far from accurate, but a “catastrophe” to me is the Second World War.

In modern marine terms, it might be used in connection with Dona Paz, which killed nearly 4,500 people after colliding with a tanker, or the 1,000 who died in the Estonia. The 29 dead men and the 270,000 tonnes of crude that spilt into the Atlantic off Tobago from Atlantic Empress, and the 30,000 tonnes that leaked out of the very large crude carrier with which it collided, could better be described as a tragedy.

The current tragedy is the sudden deaths of the workers on the rig. The same word could probably be employed with justification over the terrible outpouring of an entire cargo that poured out of the wrecked Amoco Cadiz, or the entire quarter million tonnes lost from the ABT Summer and Castillo de Bellver respectively.

And for sheer nastiness, the heavy oils lost from Erika and Prestige sinkings come high up on the scale, because of their persistence, which is not usually the case with crude in warm waters.

But while thinking of nastiness, you do not get much nastier and more ill-informed than some of the muck that is being thrown at BP by the US media, dancing vigorously to the shrill pipes of the environmental campaigners, who seem increasingly to dictate the political agenda in the US.

Don’t any of these people ever use petroleum products, or realise that the average American burns about four times as much per capita as people in other industrialised countries?

Maybe they all ride bicycles. They probably don’t remember the 167 mainly Brits who died when the US oil company-operated Piper Alpha blew up in the North Sea.

But as I recall it, the aftermath of that tragedy (still a bit short of a catastrophe) was not a hysterical witchhunt on Americans, but a serious inquiry to discover what had happened, and to make sure it would not happen again.

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BP OIL SPILL | UK warned Transocean about blowout preventer in 2006

UK SAFETY officials warned Transocean in 2006 about a defect in one of its rig’s blowout preventers – the same safety device being blamed in the Deepwater Horizon disaster.

Oil is continuing to spill into the Gulf of Mexico from a well leak caused by an explosion on Transocean’s Deepwater Horizon rig last month, which has been linked with the failure of its blowout preventer.

The fatal blast took place four years after the UK’s Health & Safety Authority issued an improvement notice to Transocean relating to one of its other rigs.

“The multipurpose tool used in blowout preventer pressure testing was not so constructed as to be suitable for the purpose for which it was provided: and failed in service, exposing persons to risks that endangered their safety on 29th April 2006,” the authority said in the notice dated 9 June 2006.

The company successfully complied with the notice by the authority’s November deadline.

Earlier that year, the authority also issued a notice pointing out that the removal of the rig’s forward secondary de-ballast pump had “prejudiced the integrity of the installation, and you have failed to put in place suitable arrangements for ensuring the pump is replaced in timely manner.”

Geneva-based Transocean also complied with this notice.

Meanwhile, Transocean said yesterday that the US Department of Justice has asked it to preserve evidence from the explosion, fire and sinking.

In addition to the DoJ, the Department of Homeland Security and the Interior Department also investigating the disaster, the company said in a public filing, while the US House of Representatives and Senate have asked it to participate in hearings.

As for BP, its BP spokesman Robert Wine told Fairplay: “A blowout feeder on the seabed didn’t manage to stop a surge of pressure from coming up from the well in the Gulf of Mexico. We don’t know why it happened.

“We have been doing our best to respond to the incident from a safety-at-sea point-of-view.”

Source: SAFETY AT SEA INTERNATIONAL

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BP OIL SPILL | Disaster hits shipping, too

By Lloyds List Comment (2010/05/03)

THE disaster unfolding in the US Gulf and threatening the Louisiana, Mississippi and Alabama coastlines has been dubbed by President Obama a “potentially unprecedented environmental disaster”. BP, struggling mightily to seal the gushing well, is faced with a diabolically difficult task as the looming environmental catastrophe draws closer by the hour.

BP was actually leasing the well from Transocean, which owns the rig, and it initially sought to make Transocean accountable. BP’s senior managers soon grasped that it was liable for the cleanup and the environmental damage.

The wavering aside, BP’s distress is understandable, and as a shipping journal we sympathise with its sudden plight.

We can be forgiven for an initial reaction of “thank God this did not come from a ship”. The likely course of events would have been instant calls for more stringent measures against owners with a knock-on effect of tighter regulation, higher insurance premiums and, within the bounds of possibility, a new tax on shipping. Yet, the relief is short-lived, because the magnitude of the disaster will make it a shipping problem.

The two relevant international funds covering oil pollution from tankers are the International Convention on Civil Liability for Oil Pollution Damage and the International Oil Pollution Compensation Funds.

Influenced by the 1999 Erika and 2002 Prestige oil spills, and mounting costs of clean-ups generally, a protocol came into force in 2005 providing for an IOPC Supplementary Fund to increase the compensation under the CLC. The total amount of compensation payable for one incident is limited to special drawing rights of about 750m, or around $1bn at current conversion rates.

No one can yet estimate the full liability to be shouldered by BP, but each major spill brings an increase in claims and liability pricetag.

The Erika casualty brought 7,100 claims amounting to $520m. Prestige yielded 1,300 claims worth $1.7bn. The 2007 Hebei Spirit spill brought 126,000 claims worth $43.2bn.

Environmentalists dub the funds’ contribution to clean-ups as inadequate. Claims are settled with only a portion of IOPC Fund, because the fund provides compensation for the economic cost of the cleanup and the loss of income by those affected by the oil spill. P&I clubs foot the rest of the bill.

Environmentalists argue that both should be tapped to cover for environmental damage. As the impact of the Gulf spill builds, so too will pressure on shipping to bear additional cost of future cleanups.

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