Safe Doesn’t Mean Risk-Free

It is said that a problem poorly defined is poorly solved. A corollary may be that a question poorly asked risks being poorly answered. The form of this week’s question and its implications are potentially misleading.

Safe does not mean risk free. How safe is safe enough is a tough question that is influenced by cost, technology, the implications of alternatives and society’s values and objectives. Driving is safe but risky. We accept those risks because they are a cost of mobility and prosperity. So it is with offshore drilling. It is safe but not risk free.

Oil contributes to our economic wellbeing and our goal should be to achieve the greatest practical benefits from its development at the lowest practical cost (ie. risk). Risk reduction is not free. And the smaller the risk the higher the incremental cost to make further reductions.

The facts are that offshore drilling is currently safe and was so before the Deep Horizon accident. That is demonstrated by the fact that from 1969 until the accident there had been no offshore production accidents. Over those 41 years, 14,000 offshore wells had been drilled, including hundreds of deep water ones. That record demonstrates an industry commitment to safety and to improving technology and a regulatory regime to achieve it.

BP performed poorly and did not have a good safety record before the accident. The fact that three companies exercised control responsibilities, reminiscent of Abbot and Costello’s who’s on first routine, only made the accident worse. There were signs of a problem before the blow out but those signs of problems were mishandled. That was a human failing that in retrospect was avoidable.

To say that “that tools for responding to a major oil spill had advanced little in the 20 years since the Exxon Valdez disaster” is misleading. After the Valdez accident, the industry created the Marine Spill Response Corporation to deal with major spills. Drilling technology and standards continued to improve. It was only after the fact that it was clear that the risk of a subsea accident was larger than had been thought and that further improvements in blow out preventer were needed. Risk assessment is not a precise field of analysis. The absence of other accidents before and after indicate that risks were not being ignored. After the fact hindsight is wonderful but in the world we live in, we simply don’t know what we don’t know before the fact.

Shortly after the accident, the industry announced a new rapid response oil containment system that initially represents a $1 billion commitment that will provide containment technology and equipment that can be deployed within 24 hours of a spill in the Gulf. That is an important action and no doubt other actions will be taken to improve performance and response.

Accidents, unfortunate as they are, are learning experiences. If the right lessons are learned from the Deep Horizon accident, a low risk will be made smaller. If the wrong lessons are learned, resources will be wasted on the wrong technologies, standards, and practices, leading to perhaps a false sense of security.

Industry and government should cooperate on achieving continuous improvements in operating practices and equipment standards. The expertise is with the industry and the government should identify what it can contribute without being heavy handed. Inspections should be more effective than they were and that is fully within the government’s control.

Companies that operate safely and employ state of the art technology should be rewarded with lower compliance requirements and greater operating flexibility. Those that have poor records and citations for non- or poor compliance should face higher costs and more rigorous inspection and reporting requirements. If the incentives are structured properly and good performance rewarded, risks will be reduced and overall performance improved.

Unfortunately, it is a fact of life that an industry’s reputation is only as good as its worst performer. That isn’t fair but it is reality. BP’s negligence tainted the reputation of all the other companies operating in the Gulf. So the industry has to find ways to bring all companies to a higher level of performance and compliance. Some companies regularly report their environmental and safety performance along with information on their operating management systems. Perhaps a standard reporting system should be used by all companies with public recognition rewards for the best performers.

This article appeared in the National Journal’s Energy weblog athttp://energy.nationaljournal.com/2012/04/what-more-can-be-done-to-ensur.php#2203566

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