Waxman details How Oil Companies deal with Real Risk

( – promoted by buhdydharma )

Most Companies face the common dilemma of how to best minimize their Risks, while somehow, managing to make a Profit. It’s what makes ‘Starting a Business’ a Risky proposition for most folks — there are few “sure fire” deals in the Business World.

This little “constraint” is apparently not much of a factor, in the High Tech world of deepwater drilling, however.  They have simply managed to ‘paper-over’ any Real Risks they incur for decades now.  Oil CEO’s are accustom to seeing it, as an Easy Money Gig.

Their little “risk management” charade has been coming out lately, in the Congressional Inquiries been held by Henry Waxman.

“Rubber Stamp” may take on a whole new meaning, given the way these Exec’s seem to like to ‘copy each others Homework’ …

OK, here’s one way to deal with Real RiskPretend it’s not really there

BP ‘cut corners to save money’

theaustralian.com, AP — June 16, 2010

Investigators found that BP was badly behind schedule on the project and losing hundreds of thousands of dollars with each passing day, and responded by cutting corners in the well design, cementing and drilling efforts and the installation of key safety devices.

“Time after time, it appears that BP made decisions that increased the risk of a blowout to save the company time or expense. If this is what happened, BP’s carelessness and complacency have inflicted a heavy toll on the gulf, its inhabitants, and the workers on the rig,” said Democratic politicians Henry Waxman and Bart Stupak.

OK, here’s another way to deal with Real RiskIgnore the Safety Recommendations of your Industry, and your own workers

Emails ‘prove BP systematically put safety at risk’

Nico Hines, Times Online — June 15, 2010

One BP engineer warned a colleague that the oil well had become a “nightmare” while executives were given a list of recommended safety measures which they chose to ignore. One BP official wrote a note that read: “Who cares, it’s done, end of story, will probably be fine.”

Henry Waxman, the chairman of the House Energy and Commerce Committee and the head of its investigation into the oil spill, accused BP of making at least five questionable decisions in the lead up to the disaster.

We found a pattern,” he said last night. “Every time they had a decision to make they decided to cut corners; to do things faster than they otherwise should have been done; to do it less expensively and the consequence of this, as one independent expert told us, was horribly negligent.

“They violated what their own employees were recommending they do, they violated their own industry practices and they ignored the recommendation of contractors who told them to do certain tests to avoid safety concerns.”

A 14-page letter to BP laying out these issues was published alongside internal e-mails ahead of the Tony Hayward’s appearance before the committee on Thursday.

I couldn’t find that Letter — it’s just as well, I guess — since the following video is probably a bit more riveting!

It provides yet another way that Oil Executives avoid Real Riskby paying for a ‘sham’ Response Plan, just so they could get their Term Paper, done on time!

Too bad ‘the Teachers’, never bothered to read them … but perhaps they were kind of busy, going to those industry-sponsored ‘Frat Parties’ …

Oil CEO’s Testify: Same Company Wrote All Five Cookie Cutter Spill Plans

Attention101

Henry Waxman describes cookie cutter Oil Spill Response Plans of all five companies drilling in the Gulf.

Henry Waxman:

The same company, The Response Group, wrote the five plans, and described them as ‘Cookie Cutter’ plans.  Much of the text is identical. Four of the plans discuss ‘How to protect Walruses‘. But there are No Walruses in the Gulf of Mexico.

We analyzed two key parts of the plans: the provisions for stopping a subsea blowout — like the one that is spewing oil across the Gulf, and their Worse Case Scenarios. We found that NONE of the five Oil Companies has an adequate Response Plan.

[…]

But when you look at the details, it becomes evident that these Plans are just ‘Paper Exercises’.

[…]

ExxonMobil, Chevron, ConocoPhillips, and Shell, are as unprepared as BP was — and that’s a serious problem. In their testimony and responses to questions, the companies say that they are different than BP, but when you examine their actual Oil Spill Response Plans, and compare them to BP, it’s hard to share their confidence

Awe Shucks, you caught us, you don’t think we were really serious about that now, Mr. Waxman?  You know, that’s just what happens at Frat Parties — we had the Commander and Chief of Frat Parties, in office at the time — come on Dude, cut us some slack!

This next clip kind of illustrates that ‘Devil may Care’ attitude, among those “Easy Money” Good ole-y Boys … when they’re caught ‘red handed’ …

Crude politics: Oil execs grilled by US Congress

RTAmerica  –  June 15, 2010

The CEOs of ExxonMobil, Chevron, ConocoPhillips, BP America, and Shell were grilled by the Energy and Environment Subcommittee during a hearing on oil drilling. This is the first time since the BP oil spill that those executives had come to Capitol Hill to answer the question of how they would respond to such an oil spill if it were their company’s fault, and how, if possible, to prevent it from happening in the first place.

Rex Tillerson, CEO of ExxonMobil:  

We have to take every step to prevent these things from happening — because when they happen, it is a fact that:  We’re not well equipped to prevent any and all damage.  There will be damage occur.

[… Regarding their ‘Response Plan’ for the Gulf of Mexico, and a certain ‘comically’ Species]

It’s unfortunate that Walruses were includedit’s an embarrassment that they were included.

“Unfortunate”?   I guess that’s one word for it!

How about: Incompetent, Dishonest, Despicable, and dare I say, Criminal?

“There will be damage occur.” ???  Is that written somewhere in the Corporate Profiteers Handbook? … Question: Can’t safety measures, mitigate — or even prevent — such Damage, Mr. Tillerson?  I’m just wondering how far a Billion a year would go, towards, dialing back that Risk?  

Real Risk to REAL Endangered Speciesbesides those cute, phantom Walruses!

OK, here’s one last way to deal with Real Risk, when you got more Money than Sense — Simply accept the ‘tradeoff between cost and safety’ … Especially when there’s Millions in Profit, riding on everyone of them picayune, pencil-neck, Safety Decisions … those ‘techs’ keep asking for.

BP ignored warnings on Gulf well: investigators

By Erika Bolstad, McClatchy News Service; with files from AFP and Reuters

June 15, 2010

BP knew its Macondo well in the Gulf of Mexico was a “nightmare” in the days leading up to its fatal April 20 blowout, congressional investigators said yesterday, but the company “appears to have made multiple decisions for economic reasons that increased the danger of a catastrophic well failure.”

From the company’s uncommon well design to its fatal decision not to fully circulate drilling mud — which could have cleared out pockets of gas — and the lack of critical testing — which could have pinpointed problems with the well’s cementing — BP had many opportunities to prevent an explosion, investigators with the House Energy and Commerce Committee have found.

Instead, the company violated industry guidelines and proceeded “despite warnings from BP’s own personnel and its contractors,” said the chairman of the committee, Rep. Henry Waxman, and the chairman of the investigative subcommittee that handled the probe, Rep. Bart Stupak.

[…]

The common feature of these five decisions is that they posed a tradeoff between cost and well safety,” Waxman and Stupak wrote. BP, their investigation found, “repeatedly chose risky procedures in order to reduce costs and save time and made minimal efforts to contain the added risk.”

Well, at least they managed to ‘reduce costs and save time‘ — like any good Ole Oil Company would be, want to do —

Competitive Forces, being what they are, and all …

Shucks, now, don’t you go ‘putting a crimp’, in our “Profit Centers” … Mr. Waxman now, or we just might have to pull out of your country … you wouldn’t want that now, would ya? …  ‘Earl’ means Jobs, don’t you know?

1 comment

    • jamess on June 17, 2010 at 1:20 am
      Author

    someone on dKos, directed me to the letter: pdf

    on Page 10

    from the Waxman letter,

    we find out about the MMS regs,

    that BP ignored to save $118,000 ….

    Minerals Management Service (MMS) regulations also appear to direct a cement bond log or equivalent test at the Macondo well. According to the regulations, if there is an indication of an inadequate cement job, the oil company must “(1) Pressure test the casing shoe; (2) Run a temperature survey; (3) Run a cement bond log; or (4) Use a combination of these techniques.”[39] In the case of the Macondo well, the Halliburton and internal BP warnings should have served as an indication of a potentially inadequate cement job.

    On April 18, BP flew a crew from Schlumberger to the rig. As described in a Schlumberger timeline, “BP contracted with Schlumberger to be available to perform a cement bond log … should BP request those services.[40] But at about 7:00 a.m. on the morning of April 20, BP told the Schlumberger crew that their services would not be required for a cement bond log test[41] As a result, the Schlumberger crew departed the Deepwater Horizon at approximately 11:15 a.m. on a regularly scheduled BP helicopter flight[42] The Schlumberger crew was scheduled for departure before pressure testing of the well had been completed, indicating that the results of those tests were not a factor in BP’s decision to send the crew away without conducting a cement bond log.[43]

    BP’s decision not to conduct the cement bond log test may have been driven by concerns about expense and time. The cement bond log would have cost the company over $128,000 to complete.[44] In comparison, the cost of canceling the service was just $10,000.[45]

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