BP’s Assets

I’ve just watched a CNN video of Barack Obama addressing a group of journalists about the federal government’s response to the Macondo oil spill, and he has reiterated that the government just does not have the assets that BP has which can be used to stop the leak (I can’t find a transcript of the video).

Firstly, are there really people out there who think the US government owns a few semi-submersible drillships and a fleet of ROVs which lie idly in a harbour in the event of an oil spill?  Why is it those who are so keen on government intervention usually have the least idea what of the government can actually do?

Anyway, Obama went on to say that it is a valid question to ask whether the government should acquire assets such as those BP has in the event of another major offshore spill, and he will look into that.  But I fear Obama has got something fundamentally wrong here.  BP also does not have the assets which are being used to rectify the leak in the Macondo well which is proving so technically difficult.  Almost all the vessels and equipment working at the site are owned not by BP but by their subcontractors.  The Development Driller III, the Discoverer Enterprise, and the Development Driller II are owned by Transocean, the company which owned the Deepwater Horizon which was drilling the well and was lost when the well blew out.  The Q4000 is owned by Helix.  The ROVs seem to be owned and/or operated by Oceaneering.  All BP are providing is specialist knowledge, key personnel, and – crucially – the management and direction of several dozen contractors involving the expenditure of millions of dollars per day.  The assets themselves were kicking around on the open market available for hire to anyone who needs them and can afford them.

Something Obama said later in the video suggested he understood that BP’s oil spill response involved the rapid execution of many contracts that were already in place for this precise purpose, but I’m not convinced he or many others realise that BP did not suddenly show up with a load of kit they had lying about, but instead embarked on an impressive feat of contract management (which only oil companies can really manage) in order to bring all the necessary expertise and equipment to where it was needed in record time.

It is not assets that the Federal Government needs, it is an emergency response plan which will allow them to engage the immediate services of the companies which have the expertise and equipment to get the job done.  This might work well for cleanup and containment activities, after all the environmental protection agencies and the coast guard have much of the expertise to be able to coordinate such a response.  But shutting off a rogue well a mile under the sea?  If the government wants to be in a position to be able to coordinate contracted companies to do this sort of stuff, they’re going to have to create a government department stuffed full of oil industry technical experts, project managers, contract managers, and cost controllers at great expense who will set up the response plan before putting their feet up for a decade or two waiting for the next big spill.  Actually, that sounds pretty much like many a government department and a cushy role to boot.  Maybe I can get myself in there?

It isn’t going to work, a government just isn’t suited for a role this complex.  Better to make sure all companies who have a license to operate have a proper emergency response plan in place which enables them to get the necessary men and equipment to the scene should the need arise.  Oh, wait: they already have this requirement, which is why BP was pretty slick in getting vessels and other equipment to the site once the accident happened.

So what should the government do?  Want my advice?  Get on the phone to Rex Tillerson and ask if ExxonMobil wouldn’t mind, for a fee, being on call 24/7 to jump in and manage the next offshore blowout on behalf of the US government.  But don’t start buying semi-submersible drillships because you think BP owns some.

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