A quick note before we begin: my comments here relate to the oil and gas industry in general, and are based on my personal experience and conversations with other people. They do not reflect any particular country or company, least of all my own employer. These opinions are not a specific critique of any individual person, project, or practice, and inevitably exceptions will number in the thousands. Nor am I writing them out of frustration or anger. They are merely frank observations of an imperfect industry which needs to improve, and I don’t think the industry will be well served if its participants deny its shortcomings, or are not able to engage in self-criticism.
The US Justice Department has unsealed federal grand jury indictments against three BP employees who will face criminal charges including manslaughter, violating the Clean Water Act and lying to Congress in connection with the 2010 Macondo disaster.
BP’s top two company men on the Deepwater Horizon rig, Robert M. Kaluza, 62, of Henderson, Nevada and Donald Vidrine, 65, of Lafayette, Louisiana, have been indicted on 23 counts, including involuntary manslaughter and violating the Clean Water Act, officials said at a press conference with Attorney General Eric Holder in New Orleans Thursday
Attorneys for the accused said their clients were innocent of the charges, saying it was misguided to dole out blame for a complex disaster on a few individuals.
“It is almost inconceivable that any fair-minded person would blame this hard working and diligent man for one of the most catastrophic events in the history of the oil business.” Vidrine’s lawyer, Bob Habans, said in a statement.
The indictment alleges the company men were “grossly negligent” by mishandling pressure test information and failing to call in help to prevent the blowout that killed 11 workers.
They face maximum possible sentences that could send them to prison for the rest of their lives: 10 years for each seaman’s manslaughter count, eight years on each involuntary manslaughter count and up to a year in the Clean Water Act count.
Among other things, the workers failed to call engineers onshore when tests indicated the well could be insecure, did not account for abnormal readings during the testing and accepted a “nonsensical… bladder effect” explanation for the test results. This all paved the way for the withdrawal of the drilling fluid and cement casing breakdown that led to the blowout, the indictment said.
My first reaction is to feel somewhat sorry for two men who are now facing charges which could see them ending their days in jail for only doing their job. I went into considerable detail in this post about the decisions which were made on board the Deepwater Horizon, and the pressures which oilfield workers face when making what are essentially judgement calls.
But one thing surprises me more than anything: the age of Robert Kaluza. In my earlier post, I quoted another article:
[A] BP manager overseeing final well tests apparently had scant experience in deep-water drilling. He told investigators he was on the rig to “learn about deep water,” according to notes of an interview with him seen by the Journal.
A little after 5 p.m., to check the well’s integrity and whether gas was seeping in, rig workers did what is called a “negative pressure test.” It was supervised by a BP well-site leader, Robert Kaluza. His experience was largely in land drilling, and he told investigators he was on the rig to “learn about deep water,” according to Coast Guard notes of an interview with him. BP declined to comment on his experience.
At the time I assumed he was some high-flying careerist with another 20 years to go. But it turns out he was around 60 at the time of the accident. So what the hell was he doing being sent to the Deepwater Horizon to “learn about deep water”? You send guys of 25 and 30 to gain experience in new areas, preferably under the watchful eye of somebody much older who knows the ropes. But you don’t send blokes in their 60s into unfamiliar situations for the learning experience. This sounds like nonsense to me. I can only speculate as to why he was given this assignment, and that is exactly what I will do now: I expect BP had nobody else around to do the job, so just threw in anyone they could find. And if you don’t believe this is common practice in the global oil industry, then you’ve not worked in it. I’ll be keeping a close eye on the court proceedings to see if the reason for his assignment to the Deepwater Horizon is addressed, because there is a good chance his inexperience – and any difficulty BP had in filling the position or reluctance to take the job on his part – will be key to his defence.
And as I predicted in my earlier post, the senior BP company man on the rig is getting clobbered. As I said at the time:
So, my point is that many of the decisions made in oil and gas are judgement calls, and those who have to make them are expected to shoulder a degree of risk and responsibility. For this reason they are handsomely rewarded, which is why it is so frustrating when you encounter somebody who won’t make a decision but is happy enough to draw the salary for doing so. Mr Vidrine would have been perfectly aware of the personal responsibility he was taking on himself in making the decision, and he will have to explain to the investigators the process by which he made his judgement. If he can convince the investigators that his judgement process was sound and each competing factor was adequately assessed he stands to come out of this all right. Not exactly smelling of roses, but all right.
Which under the circumstances based on the evidence presented in the article, is going to be a pretty tall order.
This is pure speculation on my part, but we might find that several similar warning flags had been raised in times previously and safely ignored. One of the many dangers in the oil and gas business is doing something wrong several times without consequence, and eventually so many times you get used to doing it that way. And then one day it catches you out. Maybe we’ll learn that Mr Vidrine had made similar judgement calls previously that paid off, saved the project a few million each time, and earned him a hearty slap on the back and a Leatherman from his bosses? If so, it’s going to be hard to put the entire blame on him personally.
What will be key to Mr Vidrine’s defence is the degree to which his actions were his alone, and the degree to which they can be credibly argued as representing the explicit and implicit wishes of BP’s management. I find it highly unlikely that Mr Vidrine was a rogue operator who willingly and knowingly acted against the wishes of BP’s management. I think it far more likely that he acted in a manner which he thought was in accordance with the wishes of BP’s management, but now finds himself in the dock trying to prove it whilst – probably – that same management furiously denies ever having expressed such wishes.
Which brings us to an interesting conundrum which many oil industry workers face. As a manager, engineer, or even a lowly worker in the oil and gas business, you have not only a right but a duty to ensure the work you are involved in is safe. In most western companies, all employees are empowered to intervene in any situation they feel is unsafe and stop the proceedings. Every employee is expected to only partake in work which has been properly assessed and judged by competent persons to be safe, and to refuse to do so otherwise.
At least, that’s the theory. Unfortunately, the practice often looks quite different. Enormous pressure is put on employees to complete “urgent” works on time, with the heavy implication that achieving this goal is more important than safety or quality. Of course, this is never explicitly said nor written down, but the implication and the pressure is very real. Cultural aspects come into play a lot, especially with workers from hierarchical societies in Asia and Africa where the “boss is always right”. Despite the soothing words from management in the weekly safety bulletins, there exists a genuine fear of reprimand, poor performance ratings, or dismissal if a worker defies management instructions on safety or quality grounds. Nobody wants to be the guy who holds up the job and costs the operation a million quid because he wanted to double check that something wasn’t going to go horribly wrong.
The main reason for this is that by virtue of the incredible value of what is produced, even a small delay results in millions of dollars of lost revenue. A deep water drilling rig costs over $500k per day, and even that isn’t huge compared to lost production from delays in a well coming onstream. Even a modestly producing well at 10k barrels per day represents $1.2m at recent prices. You delay something by only a few hours and the lost production and the rig costs are already well over $1m. When you’re talking about large integrated projects producing 100k+ barrels per day, any slippage in your “first oil” date is going to be hitting you in the pocket to the tune of $12m+ per day. Little wonder those offshore are put under pressure by the management on the beach, who have partners and investors to satisfy.
So going back to Mr Vidrine’s predicament, if he can demonstrate that safety at BP was often subordinate to production as practiced and endorsed – even if not officially – by management, then we might find he is not the last BP boss to be hauled into court. However, even if this is the case, it is unlikely to save him – as the company man on the rig, he is expected to make the right decisions, in defiance of his superiors if need be. Now if he made a judgement call to the best of his knowledge which turned out to be wrong, then he really is an unfortunate soul. But chances are, he knew he was running a risk and is now wishing to hell that he had the balls to go along with the advice of his contractors even if it meant incurring the wrath of the management over cost and schedule overruns. Unfortunately, with careers made or broken on such decisions, and it being awfully difficult to point to people who would otherwise be corpses in defence of your actions, such courage is rare among oil company employees.
So what should be done? In my opinion, there needs to be a corporate culture instilled across the industry whereby safety and quality really is placed above production – in practice, not just in words. Anybody who has worked in the oil industry will tell you umpteen examples of a corporate or managerial directive telling you safety is the top priority, and before the day is out another set of (usually verbal) decisions are made which demonstrate that actually, safety is not the first priority after all (and sometimes not even the second or third). Management directives need to be consistent with subsequent managerial decisions, and top management need to demonstrate that safety really is top priority by – if necessary to reduce the risk of an accident – losing production. Executives of oil companies need to remind their investors that unforgiving, hell-for-leather financial performance expectations can lead to catastrophic incidents like Macondo which came close to eliminating the entire company, and remind them again that such behaviour is not what they bought into when choosing to invest in a responsible oil company.
Management should also drive a culture whereby employees have the courage to speak up and challenge their superiors on matters of safety and quality without being dismissed out of hand or belittled. Employees should be made to understand that they are not obliged to endorse, approve, sign, or authorise anything unless they are fully satisfied that it represents a minimised residual risk and sound industry practices, and management should put in place procedures and systems to ensure they are never asked to do so in the first place.
But mainly, the major step which needs to take place is an industry-wide reconciliation of “safety” and “production”. By repeating over and over the “safety first” mantra, the subject has become to a large extent divorced from the actual purpose of the company, i.e. hydrocarbon production. The prevailing culture therefore is often one by which “safety” is addressed first with posters, meetings, and statistics and once that’s out of the way and the box ticked, everyone can get down to the more serious business of “production”. In my opinion, this is the wrong approach as it reduces safety to a series of exercises which are too often removed from the context of production. Safety should consider production activities as much as production should consider safety. One cannot be considered independently of the other. I would much rather see oil companies move their priority to one of “safe production”, which would go a long way to clarifying what the company stands for and minimise the instances in which safety and production conflict with one another.
“Safe production”. You heard it here first.
(And for my part, I pinched it from a colleague.)