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Thoughts For Thursday: BP Oil Spill and Contingency Planning

May 20, 2010 · 9 comments

in Thoughts For Thursday

When I used to work in computer programming, we always had to present a ‘contingency plan’ to our client.  In other words, what were we going to do in the event our new programs were garbage and the old code had to be put back in?  It was a part of every single project we did.  While our contingency plans rarely had to be utilized, they were required nonetheless.

So if  something as basic as IT projects have contingency plans, you would think that oil drilling initiatives would undergo massive contingency planning and testing efforts.  What exactly were the contingency plans in the event of an oil well disaster?   What testing was done on the well?   From what I understand, the 3 companies involved are spending lots of time blaming each other.   BP owns the well, Transocean owns the deep-water rig, and Halliburton cemented the well.   While all the finger-pointing is going on, oil is still spewing into the Gulf of Mexico a month after the well exploded.  Tar balls are coming ashore and more damage is being discovered every day.

Photo from previous oil spill

That brings me to my question about accountability.  On the projects I worked on that required a contingency plan, our customer was very well defined, so we always knew who we were accountable to.    But for offshore drilling, who kept the construction and development in check?  Who approved the schematics of the well and required a shut-down plan?  Or, did the three companies just rely on each other and there were no checks-and-balances?   From what I understand, a Federal Agency called Minerals Management Services (MMS) is the overseer of off-shore drilling.  However, the MMS is being accused by some as letting the oil industry basically regulate itself.   In addition, the MMS also collects revenue from oil drilling (13 billion last year), which also creates a huge conflict in interest.  How much responsibility for this disaster is on the shoulders of MMS?  Given the way the system is set up, it is surprising something this major did not happen sooner.

I just shake my head when I think of how long this problem has been occurring.  It is unfathomable to me that there was not a more effective plan put in to place immediately after the explosion occurred to stem the flow of oil.   Not only that, but it seems like nobody knows really what to do.  I have heard about crazy sounding plans like shooting old tires down into the pipe, which sounds like a short-term measure to me, and a shot in the dark.    I am sure I am over-simplifying matters as I know you can’t just put a cap on it and all will be better.  But to me, its like I wouldn’t expect a nuclear power plant to not have a shut-down system in the case of a radiation leak.  Why don’t oil rigs have similar systems?  I know radiation and oil are two different things, but accidents with either one can have disastrous results.  I feel sick for the fishing industry, the states that rely on tourism for revenue, the wildlife who are affected, and the homeowners whose property values are dropping because of the oil spill.  What say did they have in the off-shore drilling project?  Who represents them when such a catastrophe happens?

What are your thoughts?   Feel free to share any knowledge you have in this subject since I am not an expert.  I am just sharing my perspective based on what I do know.

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{ 9 comments… read them below or add one }

Money Reasons May 20, 2010 at 4:44 pm

I thought there was a shutdown system call a blowout preventer in place (in fact 3 for redundancy), but for some reason, all three failed. There is a rumor that Transocean installed the blowout preventer even though they believed it was damage…

I’m worried about all that you wrote about above, and also the chemical dispersments being use to break up the oil!!! Will this poison the ecosystem (not that the oil is that great either).

Seafood prices may soar ofter this! It’s a sad sad day for BP and the Gulf of Mexico communities!

Hopefully, it doesn’t enter the gulf stream!

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Kris May 20, 2010 at 7:01 pm

Money Reasons- I have heard that it may even head up the east coast, but who knows. It is really depressing, and quite shocking. As I wrote, I just can’t believe there were not better precautionary measures in place, it is such a disaster. So very very sad.

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The Wealth Artisan May 21, 2010 at 7:35 am

Hey Kris!

My honest perspective is that our government is flying by the seat of their pants just as much as BP is. Our government can’t give any straight answers and basically has been following BP’s lead this whole time. They said they were pumping out 5,000 barrels a day, now they have a pipe that is supposedly siphoning off 5,000 barrels a day, that’s 100% right? Well I read somewhere that BP estimates they are siphoning 40%.

If 5,000 barrels is 40% then that means BP estimates that there is 12,500 barrels flowing! Not only that, but since when do we use the lowest possible estimate to determine the amount of damage? BP is trying to avoid taking the crown for the world’s worst oil spill, but I think they are on the fast track, and may have even won it.

All I can say is that the attitudes that we’ve seen from our leadership up until recent has been demonstrative of a government who doesn’t know what they are doing, and being told to keep quiet by BP. I’m linking a great video below that shows that even when the Coast Guard is involved, BP calls the shots: http://dialmformedia.wordpress.com/2010/05/20/bp-will-let-you-know-what-you-cancant-see-of-their-oil-spill/

Thanks,
Timothy
Wealth Artisan Team Member
http://WealthArtisan.com

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Kris May 21, 2010 at 8:30 am

Hi Tim! Thanks for posting that video! It was quite disturbing, but not surprising, unfortunately. (Those poor sea turtles! :()

I have a hard time even watching news reports that show all the oil spewing into the water. I also can’t imagine all the fighting that is going to ensure over off-shore drilling in the future. The whole thing is a giant mess. They need to solicit the smartest in the industry from all over the world to try and figure this problem out.

Thanks for your great comment!

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Budgeting in the Fun Stuff May 21, 2010 at 12:49 pm

NPR here in Houston has been covering this since the beginning and its nuts. First, it was 1000 gallons a day, then 5000, now they know it’s more than 2000,000 gallons A DAY and they’re only catching 25% of it with a mile long hose. Sheesh.

Oil cleanup specialists are making a ton, some fisherman have become tour guides, and tourism has actually increased around tar balls (hotels are happy), BUT fish prices are already rising, a ton of fisherman are out of work completely right now since they aren’t near anything to show tourists, and the Louisiana wetlands are already being affected. It’s a mess.

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Kris May 21, 2010 at 1:07 pm

BFS – You must be inundated with info being down in Texas.

I did hear an amusing comment on Twitter though. Someone wrote ‘I heard they invented a car that runs on water. However, you have to make sure the water is from the Gulf of Mexico’…

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tiffany a. May 27, 2010 at 4:32 pm

Just noticed some images of the oil-soaked pelicans after the spill. Makes me so sad to see this. At least there are people that care enough to help with this.

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sleep apnea mouthpiece June 12, 2010 at 1:30 pm

I am personally boycotting British Petroleum gas stations over this. It’s really a travesty that they have not stopped this oil gushing into the gulf.

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Judson Furnas June 21, 2010 at 12:00 am

I have never in my life been in a situation to be forced to moved because the air is poisonous. I could go on about the terrible actions of BP, but my time is better spent on packing

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