Today, the presidential oil spill commission issued its final report concluding that the blowout of BP’s Macondo well was certainly preventable, was caused by identifiable mistakes made by BP and its contractors, and resulted from complacency and poor risk management–placing doubt on the safety culture of the oil and gas industry as a whole. The commission also pointed out that the regulatory agencies charged with oversight were outclassed by the industry and failed to keep up with rapidly developing technologies of deepwater exploration. The combination of these failures resulted in the BP disaster.
The commission’s conclusions are surprisingly astute for a panel that had no member from the oil and gas industry. Though I don’t agree with all of the panel’s conclusions as to who is to blame for the catastrophe, their recognition of systemic failures and inadequacies of both safety policy and systems were spot on. However thorough the conclusions and recommendations are, though, they are of little consequence outside the world of media and Washington politics. Because the White House ignored calls for a more inclusive commission–including not just environmentalists, academics, and politicians, but representatives from the technical disciplines and the industry itself–the conclusions and recommendations of the commission have already been dismissed by those most in need of them, members of the industry itself.
No industry likes to be preached to and scolded as the oil spill commission has done in this report, no matter how well deserved. There was an alternative, though. The objective of the commission was to determine the causes of the blowout and subsequent spill, then make recommendations to prevent this kind of disaster from occurring again. The problem is that in order to initiate necessary changes, something actually has to be done. That means getting the industry itself to admit mistakes and accept changes to their way of operating. We all knew that the industry as a whole would resist changes to offshore operational and safety procedures for two reasons. The first is simple: money. The second is that the industry believes it knows better than everyone else how to drill big, deep oil wells in deepwater because it’s complicated and they’ve been doing it for years. To them, no environmentalist, bureaucrat, or politician is ever going to tell them what to do. In our deregulated nation, oil companies remain free to keep profit as their top priority, and set their own safety standards.
That could have been different. The Obama administration missed a golden opportunity for a teachable moment in this tragedy due to its own proclivity to push the oil and gas industry away. That distance from the industry is the key reason the White House was so far behind in its response to the blowout to begin with: there was no one close at hand who knew what they were looking at or who recognized the potential scope of this disaster. You could tell in the early White House statements that the president wasn’t being well advised. In establishing the commission, the administration continued on this path, excluding any industry representation on the commission itself and hiring engineers and scientists only in staff or lower-level advisory roles. The panel itself was appointed to meet political objectives, relegating its primary objective–improving safety–to secondary importance.
Because the administration made little more than a token effort to include influential industry representatives on the commission, the results are predictable. The industry will reject the report’s important conclusions and recommendations wholesale, and the new Republican controlled House will support that rejection. Since much of the significant change must be legislated, if the industry doesn’t support that change, the House leadership will simply do the same; therefore, nothing will improve. . Had there been an industry member on the commission, that member could have sold the industry, and the Congress, on making critical changes to make drilling in the deepwater safer.
Clearly, it’s a missed opportunity.
Read the original article on The Daily Hurricane
Bob Cavnar is a 30-year veteran of the oil and gas industry with deep experience in operations, start-ups, turn-arounds, and management of both public and private companies. He was most recently President and Chief Executive Officer of Milagro Exploration, a large, privately held oil and gas exploration firm based in Houston, Texas with operations along the Texas, Louisiana, Mississippi Gulf Coasts, and offshore in the Gulf of Mexico. Cavnar holds a Master of Business Administration degree from Southern Methodist University and completed the Program for Management Development at the Harvard Business School.
He blogs at dailyhurricane.com.