President Obama’s oil spill commission is set to present its final report Tuesday. But a portion released last week already includes damning evidence about managerial failures at BP and two of its contractors that caused the Deepwater Horizon blowout last year.
The report lays out decisions by BP, Transocean and Halliburton managers “that increased the risk” of a blowout. Most were made by BP managers, who had the final say on the project and who repeatedly chose riskier alternatives at crucial junctures, consistently favoring options that saved the company time and money.
The findings focus on human errors specific to the Macondo operation. Had managers made better decisions, the commission report says, they “would almost certainly” have prevented the disaster. “A blowout in deepwater was not a statistical inevitability,” the report says, echoing findings from other ongoing investigations.
It’s puzzling, then, that the oil spill commission considers these facts and arrives at two flawed conclusions.
First, the commission says the Deepwater Horizon blowout was not the result of a “rogue” management style at BP. “Rather, the root causes are systemic” failures by the entire drilling industry and government regulators. Second, the commission, despite evidence to the contrary, says it could not say whether anyone at BP or its contractors “consciously chose a riskier alternative because it would cost the company less money.”
It’s hard to reconcile these conclusions with the evidence in the report.
The Macondo well blowout was an enormous disaster, and Louisianians agree that regulatory and safety changes are needed to avoid another such tragedy. But the commission makes quite a leap in suggesting that the entire industry is flawed.
The commission notes that Transocean’s fleet extends around the world and that cementing contractor Halliburton also operates across oceans. But managers from those companies working at the Deepwater Horizon were operating under BP and in the managerial construct BP had set up. Indeed, BP managers overruled several recommendations made by the contractors that could have reduced risk at the well. Transocean and Halliburton clearly share responsibility for the disaster, but that doesn’t reveal industry-wide failings.
The commission, in arguing for “a pervasive top-down safety culture” in drilling, alludes in its report to good practices cited in testimony from the chief executives of oil giants ExxonMobil and Shell. Just as not all airlines have the same safety record, not all drilling companies share BP’s recklessness – and that’s something commission members should understand.
Some critics are already asking whether the commission’s conclusion was influenced by the politics of the national debate over drilling. Whether purposeful or not, the commission’s assertion of an industry-wide problem gives political cover to the Obama administration. The government has defended last year’s moratorium on drilling and denies that a de-facto moratorium exists for new permits. But numerous experts, including scientists in the independent Deepwater Horizon Study Group, have detailed how drilling safety could have been improved without the blanket moratorium.
The commission’s second flawed conclusion, that it can’t say whether anyone at BP or the other companies purposely chose riskier options to save money, is also troublesome. It flies in the face of evidence cited in the commission report and by other investigators. In addition, BP has a record of taking shortcuts that led to other industrial disasters in recent years, including a fatal explosion at a BP refinery in Texas.
Yet the presidential commission reaffirmed the position of its lead investigator, Fred Bartlit Jr., who last fall declined to link BP’s decisions to the company’s efforts to save money. Mr. Bartlit said there was no “evidence” that anyone explicitly decided to “do it the cheap way instead of the safe way.”
The study group took issue with that conclusion, noting BP’s corporate culture is “embedded in risk-taking and cost-cutting.” The National Academy of Engineering, in an interim report prepared with the National Research Council, also suggested a stronger connection between BP’s cost-saving and increased risks at the Macondo well.
As the study group noted, “perhaps there’s no clear-cut ‘evidence'” that BP or its contractors “made a conscious decision to put costs before safety; nevertheless, that misses the point. It is the underlying unconscious mind that governs the actions of an organization and its personnel.” In other words, no one needed to instruct BP’s managers that it was OK, or even expected, for them to take increased risks to save time and money – that instruction was ingrained in the company’s culture.
This is important because whether or not BP and the other contractors are found to have acted negligently will make a huge difference in their fines and any potential criminal charges. Already, Wall Street is receiving the commission’s conclusions as good news for BP. But the U.S. Justice Department should not be swayed as it conducts a criminal investigation of the disaster.
The evidence discovered by the oil commission and other probes points to one conclusion, that BP managers put profits over safety – and the Gulf Coast paid the price.