In its own Internal Investigation,1 released on September 8, 2010, BP provided its analysis of why the

Question:

In its own Internal Investigation,1 released on September 8, 2010, BP provided its analysis of why the Deepwater Horizon oil rig exploded, precipitating one of the largest oil spills the world has ever seen.

Eleven oil rig crew members were killed and seventeen injured, the ecological base for the region’s economy was dramatically compromised, and BP’s financial viability was brought into question.

Problems developed after the initial drilling had been completed during the temporary abandonment process prior to the preparation of the well for oil production.

Essentially, the temporary abandonment process involved making the wellhead and well bore secure from potential leakage from the oil reservoir under the seafloor to the sea. Usually, cement is forced into areas of the pipe casing and wellhead to provide a friction or mechanical seal so that oil flows only up a pipe attached to the wellhead. Tests are performed at various stages to assess the effectiveness or integrity of the pipe casing and the cement seal. In the case of the Macondo deep water well, BP, its partners, and suppliers botched the sealing process as well as the follow-up actions.

Although the Deepwater Horizon rig and the Macondo well are referred to as BP’s, it is important to note that the oil drilling rig was owned and operated by Transocean,2 the cement seal was designed and arranged for by Halliburton,3 and BP had two partners: Anadarko Petroleum

(25%) and Japan’s Mitsui (10%). All have some culpability in the disaster.

In the Executive Summary4 of its Internal Investigation released on November 8, 2010, BP lists the following reasons for the disaster and provides the reference diagram, reproduced as Figure 1.

1. The annulus cement barrier did not isolate the hydrocarbons. The day before the accident, cement had been pumped down the production casing and up into the well bore annulus to prevent hydrocarbons from entering the well bore from the reservoir. The annulus cement that was placed across the main hydrocarbon zone was a light, nitrified foam cement slurry. This annulus cement probably experienced nitrogen breakout and migration, allowing hydrocarbons to enter the well bore annulus. The investigation team concluded that there were weaknesses in cement design and testing, quality assurance, and risk assessment.

2. The shoe track barriers did not isolate the hydrocarbons. Having entered the well bore annulus, hydrocarbons passed down the wellbore and entered the 9 7/8 7-inch production casing through the shoe track, installed in the

image text in transcribed bottom of the casing. Flow entered into the casing rather than the casing annulus. For this to happen, both barriers in the shoe track must have failed to prevent hydrocarbon entry into the production casing. The first barrier was the cement in the shoe track, and the second was the float collar, a device at the top of the shoe track designed to prevent fluid ingress into the casing. The investigation team concluded that hydrocarbon ingress was through the shoe track rather than through a failure in the production casing itself or up the well bore annulus and through the casing hanger seal assembly. The investigation team has identified potential failure modes that could explain how the shoe track cement and the float collar allowed hydrocarbon ingress into the production casing.......

Questions:-

1. Why did BP fail its oversight and decision capabilities?
2. Describe your vision of a good risk management process that BP should have been following.
3. What aspects of a good risk management process does BP not appear to have been using?
4. Has BP had other ecological disasters since 2000 that should have alerted the company to improve its risk management process?

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