Deepwater Horizon/Macondo

Deepwater Horizon/ Macondo, Gulf of Mexico Explosion and fire leading to nine fatalities, a massive environmental spill, and enormous financial loss. 

Senior managers are concerned primarily with long-term issues. With respect to risk, they are particularly sensitive to the potential for major environmental and safety events such as the Exxon Valdez spill, the refinery explosion at Texas City, or the Deepwater Horizon/Macondo catastrophe. 

A fine example of effective stoiytelling is provided in a paper (Espinosa-Gala, 2004) that features the Deepwater Horizon/Macondo tragedy in human terms. 

Deepwater Horizon/ Macondo 2010 Gulf of Mexioo Completion Release of gas and oil during drilling of a deepwater well Major environmental damage. Loss of a world-scale drilling rig, enormous penalties and clean-up costs 11... 

Whenever there is a serious incident, such as the Deepwater Horizon/Macondo explosion and oil spUl, it is normal for one or more authoritative bodies to write an in-depth report. Such reports are generally very thorough and prepared by people of high credibility and professionalism within the industry or from related industries. Typically these reports describe ... 

Of the many reports written having to do with the Deepwater Horizon/ Macondo (DWH) event of April 2010, four are reviewed here. In chronological order they are ... 

As already noted, two of the reports discussed in this section described the actual Deepwater Horizon/Macondo incident in detail. It is worthy of note that both of these reports included a list of the names of those who died in the tragedy. They are making the point that the issues discussed here have to do with real people and whether or not they safely return to their homes. 

Prior to the Deepwater Horizon/Macondo disaster, the safety of oil and gas facilities on the United States Outer Continental Shelf (OCS) was regulated by the Minerals Management Service (MMS). Following that event, the agency was reorganized and renamed as BOEMRE. This new agency was then quickly divided into two new stand-alone agencies BOEM and BSEE. 

The Stop Work provision of the SEMS rule is not part of RP 75. It was introduced with SEMS II. The topic has received close attention from BSEE, presumably because there were so many occasions during the Deepwater Horizon/Macondo incident when someone had an opportunity to stop the event from progressing. 

As with Stop Work Authority it is likely that BSEE placed such a strong emphasis on Ultimate Work Authority (UWA) because difficulties in this area were a material cause in the Deepwater Horizon/Macondo catastrophe. 

The Deepwater Horizon/Macondo tragedy (April 2010) changed everything. Before that event, in which 11 men died, record quantities of oil flowed into the ocean, and nearly 1 billion dollars worth of equipment plunged to the seabed, the safety record of the offshore oil and gas industry was good, and had been steadily improving. Which was why the tragedy was such a shock—it was so unexpected. 

But the impact of Deepwater Horizon/Macondo went beyond the United States the accident caused oil companies all over the world to think through the effectiveness of their safety management programs. Moreover, events such as the Montara blowout in Australian waters in the year 2009 showed that these events are not confined to one place. The contents of this book therefore go beyond the United States regulatory environment. The book describes some of the major offshore incidents that have occurred over the last 40 years or so, some of which occurred onshore, that led to the development of modem safety management systems and regulations. So, for example, it contains a thorough discussion of the Safety Case approach—a system that was first used in the North Sea but that has now spread to many international locations. 

It is tempting to try to draw the conclusion that a penny-pinching attitude was at least a factor in both accidents. For Texas City, maintenance cuts were evident, and the operating budget had been reduced by 25% after BP took over Amoco. For Deepwater Horizon, Macondo was a high-profile prestige project, and the cost and program overruns for Macondo development will have received corporate-level attention. 

Bea, R.G., Gale, W.E., 2011. Rule 26 Report on BP s Deepwater Horizon Macondo Blowout. US District Court, Eastern District of Louisiana, TREX-2001. 

Final Report on the Investigation of the Macondo Well Blowout, Deepwater Horizon Study Croup, University of California (March r, 2orr), http //ccrm.berkeley.edu/deepwaterhorizonstudygroup/dhsg reportsandtestimony.shtml... 

Macondo Well Deepwater Horizon Blowout Lessons for Improving Offshore Drilling Safety, Marine Board, National Academy of Engineering (2012), 115. 

Then came the Deepwater Horizon explosion and fire followed by the spill of oil from the Macondo well. 

Deepwater Horizon was a Mobile Offshore Drilling Unit (MODU) working the Macondo field off the coast of Louisiana. The water depth was approximately 1 mile. From a technical point of view the background to the incident was quite similar to the Blackbeard situation that has already been described, although the depth of the well was less but the water depth was greater. 

Transocean, the owner of the drilling rig that was leased to BP, had experienced an eerily similar near-miss on one of its rigs in the North Sea four months prior to the Macondo blowout. In that incident the mud spewed onto the rig floor, but the crew was able to shut off the well before it became a full blowout. Transocean created an internal presentation concerning this incident but the Deepwater Horizon drill team never saw it. 

Offshore oil and gas properties are almost always owned by the national government. Through an agency such as BOEM, the government then leases the property to an operator. In the case of the Deepwater Horizon incident, for example, BP leased the Macondo property from the United States government. BP then became the operator. Typically, the operator arranges financing, is responsible for most of the costs of exploration and production, and collects the profits (or a royalty on the profits) from subsequent production. It is the operator who has... 

Some of these lessons were re-leamed after the Macondo-Deepwater Horizon accident (see Chapter 14). 

Macondo was the name of the oil field, and Deepwater Horizon was the name of the drilling rig. The name Macondo was taken from Gabriel Garcia Marquez s novel One Hundred Years of Solitude, which features a town called Macondo that is a metaphor for Marquez s home country of Colombia,... 

BP had hired the drilling rig Deepwater Horizon, owned by Transocean Ltd, based in Vernier, Switzerland, to carry out exploratory drilling at Macondo. Trans-ocean is listed on both the New York Stock Exchange and the Swiss Stock Exchange. It is a very large company in its own right in 2010 (the year of the accident), it had 18000 employees, its market capitalization was about 21 billion, revenues almost 10 billion, and it declared a profit of 961 million. 

The lease of Deepwater Horizon from Transocean cost BP about 1 million per day. On the day of the accident, April 20, 2010, BP and the Macondo prospect were almost six weeks behind schedule and more than 58 million over budget. 

The Macondo-Deepwater Horizon Blowout, Fire and Oilspill, April to July 2010 227... 

MMS was one of the first organizational casualties of the accident. Regulation of offshore oil exploration in the US at the time of the Macondo-Deepwater Horizon accident had largely developed in response to the Santa Barbara oilspill in 1968, which occurred at Platform Alpha operated by the Union Oil Company of California (later Unocal, which was taken over by Chevron). The Santa Barbara oilspill caused a public outcry because of environmental damage, and this led ultimately to the formation of the Environmental Protection Agency in 1971. However, offshore exploration was regulated by MMS, whose remit was wider than safety, and which perhaps led to conflicts of interest. 

On the day of the accident, April 20, 2010, the intention was to seal temporarily the Macondo well so that Deepwater Horizon could move away - temporary abandonment . The plan was that, at some later point, another completion rig would be put into place to install hydrocarbon production equipment. This rig would in turn be replaced by a production facility that would connect to the subsea wellhead, left by the completion rig, so that production could be started. 

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