Deepwater Horizon event

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The Deepwater Horizon burns after the explosion. Photo: US Coast Guard

The Gulf of Mexico oil rig Deepwater Horizon was either a triumph of 21st century human engineering or one of the worst excesses of global capitalism, take your pick. For 13 years the South Korean-built monster rig plied ocean waters finding hard-to-reach oil 10,000m deep in the Gulf of Mexico until its life was ended, as was 11 people aboard, in a spectacular explosion on April 20, 2013. There followed the largest oil spill ever over 87 days until the well was finally capped.

The Hollywood film Deepwater Horizon barely taps at the surface of many of the issues but as disasters action films go, it shines a rare light on corporate excess. The movie partially focuses on the death by a thousand cuts in the lead-up and ignores the destructive aftermath to concentrate on the human element of the disaster on the day, but to that end it does a fine job.

Deepwater Horizon, the rig, had a complicated history the film alludes to in its corporate colour-coded cast. Swiss company Transocean owned the rig and flew it under the Marshall Islands flag of convenience. Almost half the world’s fleet is registered in three countries – Marshall Is, Liberia and Panama – none of which has a large maritime fleet. The flag of convenience is globalism writ large, offering economic and regulatory advantages, and increased freedom in choosing employees from an international labour pool but also anonymity, tax advantages and immunity from prosecution.

The rig had worked in the Gulf of Mexico all its life. In early 2013 the rig was in the Macondo Prospect 40km off Louisiana, a field whose exploration rights were owned by a three-company conglomerate. The majority shareholder (65%) was British multinational oil giant BP. Texan oil company Anadarko owned another quarter, with the remaining 10% with the Japanese keiretsu Mitsui. Transocean and all three field owners would suffer big financial penalties after the event but well-known BP carried the most reputational damage.

Deepwater Horizon’s primary asset was its ability to explore for oil at deeper levels than any other rig in the world. It had a great success rate in finding oil wells and was finishing off at Macondo at the time of the accident. It was considered a “lucky” rig and had a fine safety record. But as the GFC began to bite and the oil price dived, the owners and operators were looking to make cost savings whereever they could. Inevitably, maintenance suffered as the company culture changed. BP was investigated for having a “worse health, environment and safety record than many other major oil companies.”

The problem was exacerbated by a administrative conflict of interest. The US government makes big money from Gulf wells through selling off the exploration rights licences in auctions held by the Minerals Management Service. However that same Minerals Management Service was also in charge of the regulation and inspection of the oil rig. The pro-business George W Bush administration was keen to remove “red tape” from commercial enterprises. But some of that tape was holding things together. According to an Associated Press investigation MMS’s examination was performed with a lack of detail, lax regulations and poor record keeping. During its lifetime, Deepwater Horizon had six citations of non-compliance, five relating to safety and the sixth to electrical equipment.

The safety event covered in the film was the failure to test cement at the well.  The investigation found this would have cost $128,000 and taken 12 hours. BP and Transocean blamed each other for the lack of safety checks and misinterpreting the results of the checks that were performed. Neither admitted cost cutting caused the accident. BP issued a terse statement after the movie’s release to say it was not an accurate portrayal of events and it ignored “multiple errors made by a number of companies”.

Accurate or not, the film’s portrayal of the explosion was spectacular on screen. The proximate cause was a problem with the blowout preventer. Some of the 126 workers on board later testified the electric lights flickered, followed by two strong vibrations. A blowout occurred – a bubble of methane gas escaped from the well and shot up the drill column, expanding quickly as it burst through seals and barriers before exploding.  The explosion caused an uncontrollable fire and after 24 hours, the rig sank. The nearby Tidewater-owned supply boat took 94 workers to safety. Four more made it to another vessel and 17 were rescued by helicopter. Those that died were mostly on the platform floor at the time of incident. The film Deepwater Horizon is dedicated to those 11.

The tragedy did not end there. It took almost three months to cap the oil spill and almost five million barrels of oil spilled into the Gulf of Mexico. There was extensive damage to marine and wildlife habitats in one of the most productive ocean ecosystems of the world. Oil and compounds entered the food chain leading to fish with oozing sores and lesions and pelican eggs with petroleum compounds. Several species were critically endangered and there was a sharp increase in dolphin deaths. There were also human physical and mental health consequences to those living near the Louisiana and Florida Gulf coasts.

In July 2015 BP agreed to pay a fine of $18.7 billion to the US government and five states, the largest in US corporate history. The size of the fine shows that although the regulator was compromised (and eventually split up by the Obama administration), the US court system remains a strong bulwark agains unfettered capitalism. Imagine how little BP would have paid had the accident happened in, say, Mexican waters. The company remains bullish. BP recorded a loss in September 2016 of $1.5b but the net loss includes a $5.5 billion loss for settlement in the gulf of Mexico oil spill, leaving the adjusted net income to be around $1.5 billion in profit. Its dividend is still safe.

Deepwater Horizon, the rig, was a force of nature, that ultimately was unnatural. Deepwater Horizon, the event, was a tragedy with many deep repercussions. Deepwater Horizon, the Hollywood movie plays on that tragedy for emotional reaction. BP might well say that the movie did “not reflect who we are today, the lengths we’ve gone to restore the Gulf, the work we’ve done to become safer, and the trust we’ve earned back around the world”. But the movie forces people to think about chain reactions and human agency in corporate decisions. That’s no bad thing and it deserves a wide audience.

 

 

 

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