Free Markets, Free People

To my friends in the oil industry

Almost everyone has heard of the infamous “Blackhawk down” incident in Somalia in which Army Rangers were ambushed while on a mission and 18 brave special operators died.  COL David Hackworth, one of the most decorated and outspoken field commanders during Viet Nam, blamed the fiasco on two of the generals there.  His words are harsh, but they tell the tale:

[The generals] made every basic error in the book, beginning with not understanding the enemy. They had bad intelligence, were overly dependent on firepower and technology and were arrogant. Nor did they bother to put a go-to-hell-plan in place in case the [stuff] hit the fan.

That “go-to-hell” plan Hackworth is talking about is something every operations officer in the military has learned about from history and experience.  Essentially a “go-to-hell” plan envisions the very worst case scenario one can imagine in an operation and that scenario is then planned for, staffed,  equipped and exercised (at least at a sand-table level) in case it has to be executed.  The point, of course, is that plans usually don’t survive first contact and commanders are faced with situations in which they have to modify orders and, in dire cases, enact the “go-to-hell” plan.  With such a plan in place, commanders have the chance of minimizing the losses they may be facing – in territory, casualties and effect -because they have planned for this eventuality.  Without it, however, they’re likely to be left in the situation that Hackworth describes in Somalia – nothing ready to go and trying to improvise everything at a critical moment.  That rarely, if ever works out well.

Anyone watching the situation in the gulf with the oil spill has to believe that they’re witnessing the very worst case scenario that can be imagined in that type of an environment – a cutting edge, deep water platform has an explosion, burns and sinks.  Tragically 11 lives are lost.  The riser to the surface is bent and the blow-out prevention device fails allowing 5,000 barrels of crude oil to escape from the well head daily 5,000 feet below the sea.  A true nightmare.

But seeing the reaction to the situation, I had to ask, where was the “go to hell” plan?

As anyone who reads this blog regularly knows I am a proponent of continued exploration and exploitation of petroleum reserves because the alternative fuels and technologies simply aren’t available yet or can’t be produced cost effectively.  They’re certainly the future, but not for some time to come.  Oil remains, and will remain, a critical component of any future energy plan.

I’ve been able, through trips paid for by the American Petroleum Institute, to educate myself on the petroleum industry and see first hand what they do and how they do it.  I’ve seen their intensive focus – bordering on the obsessive – on safety and the precautions they take to produce oil safely and in an environmentally friendly way.  I’m certainly not an expert, but I do know that this is an industry that deserves our support because they provide a critical product – the lifeblood of our nation – and they care about how they produce it.

Unfortunately, this spill and the inability to cap the well is reflecting on the industry in a way which will be detrimental in the long run to both the industry and our energy future.  Certainly they’ve reacted as well as they can given their resources and their effort has been mammoth in size and scope. But the bottom line is the problem for which they didn’t plan persists.  And each day the problem persists, the public’s confidence in the industry’s ability to produce oil off-shore in an environmentally responsible way wanes.  That’s reality.

That reality drove me to participate in an American Petroleum Institute conference call last week as an invited blogger. I posed the following question to the panel:

My question has more to do with the future, I guess.  My background is military plans and operations, and when we wrote plans and operations, we always had a “go to hell” plan, you know, in which the worst-case scenario was imagined and planned for.

I get the impression that what’s going on out there is definitely the worst-case scenario for the petroleum industry.  And my question is, why wasn’t there a “go to hell” plan, or if there was, did it envision this?  And in the future, will the industry address this type of a scenario and have teams and equipment available to address it more quickly?

Richard Ranger, who is an expert on Upstream/Industry Operations for API fielded the question and replied:

And I think really, the array of vessels, the number of personnel, the amount of equipment being deployed indicates that it is execution of what I think you could call the “go to hell” level of an oil spill contingency plan.  The plans that are developed – BP, other companies in the industry that have them are, you know, routinely re-examined and adjusted based on lessons learned, most usually from drills and exercises.

And the drills and exercise – because, you know, our record, certainly, up until this horrible incident has been a record where there have been very few spills of scale against which to test a plan.  So the drills and exercises themselves are carried out at different scales.  They’re carried out not simply by the companies, but in collaboration with government officials, be it – usually involving, for the OCS, the Coast Guard and Minerals Management Service.  There’s a tremendous transfer of knowledge throughout industry and between industry and government.

Now, so the question, in terms of scale here, was there access to equipment for an immediate response?  Yes, there was.  Was there access to additional, out-of-region equipment to cascade into the Gulf of Mexico to augment the initial response?  Yes, there was.  Has there been a scaling up of the government or public side of the response across Coast Guard districts and involving additional personnel from both federal and state agencies?  Yes, there has been.

This event has been moving at a very fast pace, but I think it would be mistaken to suggest that there hasn’t been, really, a very complete commitment, certainly, of the resources that BP has available, the resources that the key government agencies have available, and most importantly, the resources, the expertise and the personnel that the response organizations, like MSRC, have available.  So I would argue it’s been demonstrating scalability of the response plan.

While it is clear that the industry has responded as best it can it is also clear, at least to me, that the industry has no answer to the scenario which has unfolded before it with the Deepwater Horizon disaster.  In essence they relied on technology to be the failsafe and it failed them.  And when it failed, there was no real backup plan – a “go to hell” plan – to do what the failed technology hadn’t done.

As to the plan Richard talks about – it is a plan mostly geared toward oil spill containment, as he notes.  But the real problem isn’t just containment.  In fact the need for containment is a result of the real problem.  An unchecked deepwater blowout, albeit one caused by a catastrophic accident.  No planning, apparently, had been made to address a deepwater blowout in which all the technological failsafe devises didn’t do their job.  That was the point I was trying to make.  So I asked a follow-up question:

I guess what I’m getting at, Richard, is the fact that there’s been – it’s been almost a month fabricating this dome that’s going to be placed over the wellhead. And while I appreciate the fact that people have responded and are out there doing the best they can, and that we don’t know whether this dome is going to work or not, that kind of gets to my point. If this dome had been available at the time of the accident, and if it, in some way, had been tested or we knew more about it, wouldn’t that type of a response have been much more, I guess, impressive than what we’re seeing now?

Richard answered and, as you’ll see, eventually acknowledged that perhaps that particular scenario hadn’t been on the industry radar screen as perhaps it should have been:

Well, I guess, Bruce, in response to that, with your military background, I forget how the words go, but you’re probably familiar with the adage that you have a plan and once the gunfire starts, you throw the plan away.  And I think what there has not been before is this type of catastrophic event effecting a failure of the drilling rig.

The sinking of the rig, the consequent bending of the riser and the creation of a situation where you’ve got this, you know, significant leak of oil from below the sea floor and you have to put something over that leak – so this is kind of a serial number one effort that, I think with all of the anticipation and all of the forward planning, this particular scenario, perhaps, hadn’t been envisioned before.

So your question’s a good one.  There are things that are going to be learned about the performance and effectiveness of this particular piece of equipment, but I think it’s a significant achievement that, in the span of a very few days, this idea was conceived, this piece of equipment’s been fabricated and being brought to the location.  So yes, I would agree you’re partly right, but I think the response that BP and others have put together shows the adaptability of people and expertise when confronted with the kind of situation we have here.

Those are the words of an honest man realizing that perhaps, despite the heroic effort that BP and others have made, there was no real “go to hell” plan in place that envisioned this obvious (now) worst case scenario or how to defeat it.  Instead they are pretty much reduced to winging it at the moment.

And, of course, the failure of the first attempt to place the containment dome only strengthens the point.

My desire here isn’t the beat up on the petroleum industry.  As I’ve said I’m a huge supporter of what they do and how they do it.  I’ve also pointed out that another institution – the military – of which I’m a very big supporter has learned this lesson the hard way.  Instead this is intended to point out what I see as a deficiency the industry needs to address and address quickly because the policy implications of not doing so are profound.

We all know what will happen next.  There are obvious political ramifications to this. It will start with Congressional hearings and a battle over the safety of off-shore drilling.  The sides are well known.  Unfortunately, situations like this hand ammunition to those opposed to the oil industry and drilling that they’ll gladly use.  In fact, gleefully use.  This sort of on-going, constantly-in-the-news disaster is a political God send to them.

To begin to win back those who are now wavering about off-shore drilling, the petroleum industry has to be able to show Congress and the public that it understands the gravity of the problem,  accepts the worst case scenario as possible and is developing a plan to deal with it.  It will have the equipment necessary along with trained crews available in the future to cap something like this is days – not weeks or months.  The industry must also have a plan to  successfully manage the situation that develops after containment and until a more permanent solution can be implemented (such as a relief well).

For example, if the containment dome is found to be a workable solution and eventually successfully caps the well, such domes would be prefabricated and available in all areas where off-shore drilling is being done or planned, ready for immediate deployment if necessary.  That sort of plan would point to a proactive industry learning and applying lessons from this situation to prevent it from happening again to the extent this situation has developed.  The industry has already proven that it can deploy containment assets quickly to address a spill.  That’s both noteworthy and praiseworthy.  But everyone also understands that those assets are finite and the probability of continued containment success lessens each day that the spill builds and the surface area grows.

In order to regain the initiative in the policy realm, it is critical at this juncture that the industry begin an immediate analysis of this disaster and the formulation of a critical “go to hell” plan.  It may not answer all the mail when the inevitable political hearings begin, but it will demonstrate an engaged industry that has recognized the reality of the problem and is working proactively (and without Congress mandating solutions or increasing regulation) to provide a workable and timely solution should such a situation ever again occur.  And that may also help allay the fears of some and stiffen the spines of others that are ready to abandon the effort to drill off-shore.

Time is critical and off-shore drilling is vital to our national interest and national security. I’m sure the brilliant minds within the industry can come up with a contingency plan that will make the case for its continuance.


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17 Responses to To my friends in the oil industry

  • BP was the one oil company who tried to get people to think they were a green energy company instead of what they really were. Instead of saftey redundencies they were more interested in giving donations to Democrats.
    Now a twelve year advertiseng blitz has been shot to shit.  Oh well, the company might not survive this. I have spoken to people in my Wife’s company Conoco/Phillips, and they say the do have emergency contingency plans, but might have to revise them upward.

    • It is obvious they have contingency plans, but, as noted, they seem to address oil spill containment, not an deepwater blowout in which the blowout preventers failed and couldn’t be manually closed or the well easily capped. That’s my point. They’re winging it at the moment and that’s rarely a good thing.

  • “but I think the response that BP and others have put together shows the adaptability of people”

    Mr. Ranger sure took a long time to say that this was their ‘go-to-hell-‘ plan. The French had a word(s) for it, ‘debrouillez-vous’, and we all know how well it  worked for them. 

  • Growing oil output globally helps the oil industry how?   They spend more money in pumping a larger volume of oil which increases costs.  And now there actually is more oil on the market which because of the short term inelastic nature of oil demand, cuts both ways and drives oil prices down. 

    Sure there’s a desire for each company to expand its percentage share of the market.  But there’s motive for the industry as a whole to cut production.  Which is why quasi-cartels like OPEC exist.  OPEC which is partially enforced by the Saudis who could flood the market with oil that is cheap enough for them to pump but expensive enough to drastically cut the other players. 

    I’m not saying this is a conspiracy to kneecap offshore drilling.  But a lot depends on how BP is positioned to be helped or hurt by offshore US drilling (since they are somewhat more international could they lose marketshare) that may affect their motivation level. 

  • Perhaps in this instance they thought that they did have a ‘go-to-hell’ plan; they just hadn’t imagined properly what hell might look like.  There is also the possibility that they were depending on the government’s contingency plan (formulated in 1994) that was neither properly equipped nor implemented in a timely manner.

    • I think that’s precisely the problem, Wayne – they got to believing technology was indeed failsafe and would always function properly. Most of us know better than that.

      As for the government, its plan was a spill containment plan as well. As I point out in the post, that’s not the real problem in this scenario. So even if the government had been fully equipped for the contingency, the contingency they’re equipped for isn’t the problem.

      • The solution to this problem is always going to be a technological one, even if the technology is just a big rock and gravity.
        This comment isn’t intended as a rebuke, but there is always a judgment of when you have reached the point of diminishing returns in your redundancy systems.  At some point, you have to decide that you have provided enough backups and get on with the work.
        I guarantee you that the engineers who designed the equipment that failed here did not believe that their equipment was “failsafe.”  Merely that it was capable of sustaining without failure the system design stresses multiplied by some factor of safety.
        But maybe they should have built a 400-ft diameter by 5,000 foot tall cofferdam, pumped out the water, and drilled in the dry.  Because there really is nothing could ever have gone wrong with that.

  • My perception of the problem is that everyone is too concerned about being stuck with the bill if a proposed solution fails. One test of this hypothesis will be if BP injects water into the riser between the first and second leaks. The intent would be to provide the water necessary to form methane hydrate in that section of riser and form a blockage, just as there was in the dome. That would reduce the number of leaks by 50% with essentially zero risk.

    The ultimate solution is to inject drilling mud into the well below the BOP. It was the loss of the hydrostatic head in the well that caused the blowout in the first place. Restoring that head would bring the well back under control. AOL indicates that option is on the table. 

    “Shooting mud and concrete directly into the well’s blowout preventer, a device that was supposed to shut off the flow of oil after a deadly April 20 oil rig explosion but failed. The technique, known as a “top kill,” is supposed to plug up the well and would take two to three weeks.”

  • Bruce

    If you can get the guys at the API to listen, here is what you need to tell them.

    News reports state that the flow through the BOP is 5,000 barrels per day (210,000 gal per day) or 145.833 GPM. Further, assuming the well casing is 9″ diameter, that the oil has a specific gravity of 0.9 and the orifice constant is 0.51, then this orifice flow calculator yields a pressure difference across the discharge 0.0125 psi. That is infinitesimal!

    This strongly suggests that the shear ram nearly closed off the well completely. We still do not know the static pressure of the well on the inlet side of the BOP.

    WHY NOT???????? If we knew the well pressure we could use the calculator to determine the worst case scenario of removing the BOP completely.

    We know that the well was under control with sea water in the casing (SG = 1.03 )  before the accident. The likely cause of the blowout was the result of gaseous methane getting into the well creating a two-phase flow. The gas bubbles reduced the specific gravity of the sea water allowing the well to blow out. The simplest analogy would be opening a bottle of champagne. As you open it the cork pops off and foam spills out. As the gas is depleted, the foam subsides. The methane in this well has been depleted. The inlet pressure to the BOP is not too much greater than the water pressure at the mud line. Killing the well ought to be a piece of cake.


    Even sea water could do the job given that its specific gravity is 1.03 while the oil it would displace is 0.9. It wouldn’t take that manny thousands of feet of sea water to overcome the well pressure head.

  • I’m no expert, but it seems to me that you reach a point where there can be no “go to hell plan” because there is simply no way to ameliorate the catastrophe in any significant way.  Perhaps this is such a case.

  • BP’s go to hell plan is just to blame the maker of the blowout valves. according to this story
    “BP PLC told Congress Tuesday its massive Gulf oil spill was caused by the failure of a key safety device made by another company.”
    of course when in doubt just keep blaming someone else forget about responsibility

    Newman also cites a third company, Halliburton Inc., which as a subcontractor was encasing the well pipe in cement before plugging it – a process dictated by BP’s drilling plan.
    A Halliburton executive, Tim Probert, planned to assert that the company’s work was finished “in accordance with the requirements” set out by BP and with accepted industry practices. He says pressure tests were conducted after the cementing work was finished to demonstrate well integrity.”
    i used to be a free marketer without regulations kinda guy, but if this is the best the free market has to offer, im thinking tighter government regulations are in order to prevent disasters like this. again and again history has shown that private corps will only lookout for their immediate profits without a care for the overall good of the people.


  • Kerry’s draft has restricted cap-and trade to electric utilities only. And he’s stopped calling it cap-and-trade because the American people have figured out that it is an indirect tax on them. Now it’s “pollution reduction and investment.” Similarly, a gasoline tax has been renamed “linked fee.” Call it whatever you want, it’s still a tax that consumers will have to pay. …
    What’s become increasingly apparent is that this legislation no longer has much to do with reducing greenhouse gas emissions. It’s a monstrous collection of payoffs to big business special interests, ranging from Goldman Sachs to Duke Energy to General Electric.

  • Bruce, a bunch of fine points, intelligently made.
    One thing I noted in a lot of the coverage of this incident is that a BOP is, by nature, a redundant technology.  There are levels of BOP on a typical stack, the last…or spit switch…is what we called on land rigs the “blinds”, or shear rams.  They were your last resort, since they deform the drill or production string.
    I’ve wondered if there is a failure of the surface casing and/or the surface cementing.  That would indicate that the BOP worked, and the leak is down-stream.  I’ve not heard any treatment of this question.
    As to a “go to hell plan” I suppose that when you have a system as reliable as BOP technology is, you…with some justification…plan on assumptive reliability.
    The proper plan has to focus on mitigation, it seems, since even EXTREMELY unlikely events DO occur.

  • How far down the chain of improbables should a “go to hell” plan contemplate?

    In order for X to happen, variables A through W had to fail, consecutively, without pause or repair, which would be catastrophic but also would be fantastically unlikely.  In hindsight, we can say “You should have seen that coming” but if we insist everyone solve that level of detail before they begin an endeavor, industory is stopped before we begin.

    I wonder if this was such a situation?

    • If it happens, it isn’t “improbable”. This happened and thus should have been planned for. Certainly ” a rig explodes and sinks” may not have been THE scenario, but a deepwater blowout as a probable category? Oh yeah.

      • Not to quibble, but if it happens it isn’t “impossible”.
        It may be HIGHLY improbable, and still possible, and still happen.