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Preventable Disasters in the Offshore Oil Industry: From Piper Alpha to Deepwater Horizon</i

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Abstract

This article compares two industrial disasters in the offshore oil industry, the explosion and fire on Piper Alpha off the coast of Scotland in 1988, the world's worst offshore disaster, and the blowout and explosions on Deepwater Horizon in the Gulf of Mexico in 2010. It attempts to answer a simple question: Given the enormity of the first tragedy and the careful analysis of its circumstances and causes, why were the lessons of previous failure not learned by this globally organized industry, in the very heartland in the United States? The answer tells us much about the ability of corporate capital to configure regulatory regimes in its own interests and to do so in a manner that continues to threaten the safety and well-being of its employees and the wider environment.
NEW SOLUTIONS, Vol. 22(4) 497-524, 2012
Features
PREVENTABLE DISASTERS IN THE OFFSHORE
OIL INDUSTRY: FROM PIPER ALPHA TO
DEEPWATER HORIZON
CHARLES WOOLFSON
ABSTRACT
This article compares two industrial disasters in the offshore oil industry, the
explosion and fire on Piper Alpha off the coast of Scotland in 1988, the
world’s worst offshore disaster, and the blowout and explosions on Deep-
water Horizon in the Gulf of Mexico in 2010. It attempts to answer a simple
question: Given the enormity of the first tragedy and the careful analysis of its
circumstances and causes, why were the lessons of previous failure not
learned by this globally organized industry, in the very heartland in the United
States? The answer tells us much about the ability of corporate capital to
configure regulatory regimes in its own interests and to do so in a manner that
continues to threaten the safety and well-being of its employees and the wider
environment.
Keywords: Offshore oil disasters, regulatory capture, regulatory erosion, employee
empowerment
The Deepwater Horizon disaster did not have to happen. It was both pre-
ventable and foreseeable. That fact alone makes the loss of the 11 lives, the
serious injuries to others on the rig, and the ensuing damage and suffering
created by the blowout all the more tragic. That it did happen is the result of a
shared failure that was years in the making.
William K. Reilly, Co-Chair of the National Commission on the
BP Deepwater Horizon Oil Spill and Offshore Drilling [1]
497
Ó2012, Baywood Publishing Co., Inc.
doi: http://dx.doi.org/10.2190/NS.22.4.h
http://baywood.com
There is in every disaster an awful sameness which makes comparison a somewhat
depressing exercise. In one sense this is a truism which at the same time obscures
important particularities. Nevertheless, in every case, contingent circumstances
combine together with a constellation of deeper underlying forces that propel
events towards a catastrophic outcome. With hindsight, as every subsequent post-
disaster inquiry monotonously reiterates, that outcome was far from inevitable and
entirely foreseeable. Yet as events unfolded there seemed little that could have
halted the spiral to disaster. Whatever the immediate errors of judgment or circum-
stantial response to unforeseen events, the underlying systemic causes of failure
were of such a character that sooner or later, catastrophe was an inevitability. Such
a “structuration of failure” requires explanation. It is here that analysis must probe
beneath the contingent and immediate causes to examine the contested realms
of the political economy of an industry, its relations with the state, the culture
of its managerial practices and its system of industrial relations, and not least, the
formation and deformation of its systems of regulatory oversight. Yet underlying
predetermining factors, no matter how perverse their outcomes, must also
acknowledge the role of human agency. Individual concrete corporate actors made
individual decisions which raise questions of individual and corporate
accountability. In the final reckoning, one enduring tension shapes and permeates
the ramified chain of circumstance and causation, a conflicted interrogative which
is as pertinent today as when the question was first put on the agenda of
sociological inquiry: safety or profit? [2]. The current article addresses this decep-
tively simple question in the context of the offshore oil industry.
OFFSHORE AS A ZONE OF REGULATORY EXCEPTIONALISM
Beneath the immediate and circumstantial similaritieswhich make for compari-
sons of episodes of industrial safety failure are more enduring structural deter-
minations. The offshore oil industry is one of the world’s most powerful corporate
players, comprised of giant corporations whose reach and influence extend across
the face of the globe. Much of the contemporary history of modern warfare can be
written as the story of oil and the struggle between nations for control of this cru-
cial resource [3]. For the key players in the industry, what matters most is that a
business environment is created in which regulatory regimes provide the maxi-
mum scope for business discretion and the minimum by way of external
interference. Free enterprise, of which the oil industry is a glorious standard-
bearer, and hostility to regulation have gone hand in hand since the foundation of
the industry [4]. The power equation that has resulted has meant that oil corpor-
ations have been unusually able to shape and mould favorable regulatory regimes
to facilitate their objectives, whether in terms of fiscal obligations to national
states, or in terms of the oversight of safe conduct of their operations for both
humans and the environment.
498 / WOOLFSON
Within this equation of contested national sovereignty on the one hand, and the
freedom of capital to generate profit in a globalised world economy on the other,
the word “offshore” has acquired a special meaning. It has come to resonate with
the idea of a “permissioning zone” where the sovereign laws, rules, and regula-
tions either do not apply, or do so only selectively. Thus, finance is “offshored” to
tax havens where banking scrutiny by national authorities is conveniently lax. Jobs
are “offshored” by being exported from traditional production heartlands in
developed industrial societies to free trade zones in the developing world where
the standards of pay and working conditions are poor, as well as fundamental trade
union rights, suspended. Perhaps the most pertinent example of “offshoring” is the
widely practiced device in the maritime industry of utilising “flags of
convenience” states with lower sea-worthiness and safety standards [5].
Viewed from the perspective of the territoriality of the individual sovereign
nation-state, the dividing line between what is “onshore” and what is “offshore” is
not simply geographically defined. It is closely demarcated by the very forces of
capital described above, by “capital’s search for a ‘spatial-juridical fix’” [5, p. 683].
Thus, while technically sovereign in a geographical sense, the state cedes its
regulatory powers to the demands of capital in favor of minimal regulatory
interference. Thus, capital exploits situations in which “territorial sovereignty is
little more than a convenient fiction” and is therefore able to achieve a “bracketing”
of its activities, without challenging the right of the state to “carry on discharging
traditional roles as if nothing had happened ” [emphasis added] [5, p. 627]. The
“bracketing” has as its purpose and itself signifies the power of capital to create and
maintain the offshore as a zone of regulatory exceptionalism. The problem emerges,
however, when something does happen.
The international oil industry, in the process of extracting mineral wealth from
beneath the sea-bed, was seemingly able to create and maintain the contiguous
territorial outer continental shelf precisely as a zone of regulatory exceptionalism,
even though in law the minerals beneath the sea-bed remain within the sovereign
power of the nation-state. Comparing the UK North Sea and the Gulf of Mexico at
two different points in time, we examine what happens when the state, faced with
disaster involving loss of life, is no longer able “to carry on . . . as if nothing had
happened.” This raises the equally acute question of how regulatory regimes can
be successfully reconstructed in the aftermath of regulatory breakdown and loss of
legitimacy, or of whether and under what conditions it is possible to bring the
“offshore” back onshore.
The regulatory environment offshore has throughout remained contested, and is
itself testament to the economic importance of oil for respective national
economies. Both the North Sea and the Gulf of Mexico became provinces for
exploration and production of hydrocarbons that were deemed politically safe and
conveniently situated close to the mainland industrial societies that they served.
The search for oil in both the Gulf of Mexico and the North Sea was initially driven
in the oil-dependent economies of the United States and Britain by the price hike
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 499
resulting from the OPEC (Organization of the Petroleum Exporting Countries)
petroleum embargo in 1973, and, among other geopolitical factors, the Iranian
revolution of 1979. There is not space here to further elaborate the global geo-
politics of the international oil industry which led it to invest billions of dollars in
exploring and then extracting oil from the outer continental shelves of both Britain
and the United States. Suffice it to say that these imperatives were both politically
and economically urgent. What Kit Carson called in his seminal work, The Other
Price of Britain’s Oil, the “political economy of speed,” has been dictated by the
haste to find secure alternative sources of hydrocarbons that could provide both
energy for industry and the consumer and lucrative revenues for national
exchequers on a previously undreamed-of scale [6].
Two events, Piper Alpha, which in 1988 was consumed by fire and explosion
with the loss of 167 lives, and Deepwater Horizon, which in 2010 suffered cata-
strophic fire and explosion resulting in the loss of 11 lives and 16 injured as well as
massive environmental damage, were signal turning points in the history of the
offshore oil industry. Each disaster resulted in a searching public inquiry as
national governments struggled to come to terms with the enormity of the tragedy
and sought to provide public policy recommendations that would prevent a
recurrence. In both cases, we have utilized the official reports into these two events
as the main sources of evidence and in the case of Piper Alpha have revisited
earlier work in order to provide a template of analysis with which to approach the
most recent disaster [7].
The 1990 report of the UK public inquiry under Lord Cullen QC into the causes
and circumstances of the Piper Alpha disaster [8] and of the presidentially
appointed U.S. National Commission into the Deepwater Horizon disaster [1] are
authoritative, informed, and “objective” critiques of the safety failures surround-
ing the offshore oil industry. Indeed the latter is a remarkably uncompromising
document, comprehensive in scope and written in a manner accessible to the lay
reader, which justifies itself as the privileged source cited here. It is both a history
of the U.S. offshore industry and an analysis of corporate greed and of regulatory
failure. Although not necessarily quoted directly, also consulted were various
global and national media sources. Several of these have assembled compre-
hensive news archives, investigative analyses, and feature documentaries, as well
as online news, which have provided unparalleled “real-time” access to unfolding
events. Furthermore, the major protagonists, such as BP, Halliburton, and industry
technical bodies, as well as various U.S. Congressional committees of inquiry and
regulatory bodies, have held hearings which are available online and have issued a
slew of interim and final reports. Lastly, a growing and critical academic literature
has begun to emerge both in books and in journals. Indeed, to date, Deepwater
Horizon is probably one of the most studied and best documented disasters in
human history. Yet with rare exceptions, it has been perceived as a quintessentially
American tragedy, even though it has provoked regulators around the world to
review the efficacy of their own regimes. What follows is a first attempt to draw
500 / WOOLFSON
some wider comparisons between two major offshore disasters at different
moments in time. If there are common lessons to be learned, then herein lies
the answer to our overarching question—why were the lessons of previous
preventable disasters not learned?
THE PARADOXES OF OFFSHORE SAFETY
The Piper Alpha oil platform was a production installation in the UK sector of
the North Sea off the coast of North East Scotland operated by Occidental
Petroleum. Deepwater Horizon was an exploration drilling rig in the Gulf of
Mexico owned by Transocean and controlled by the oil company, BP. A funda-
mental difference between the Piper Alpha production platform and a drilling unit
is that the former gathers hydrocarbons and processes them, whereas the drilling
rig seeks never to have hydrocarbons on board except for test and sampling
purposes. For example, when circulating oil and gas from the reservoir (and
returning them) to test the well for flow, surplus gas will be flared off but no
hydrocarbons will be processed or kept onboard. Both production platform and
drilling rig are highly complex man-made structures comprising a number of dif-
ferent functions compressed into what is essentially a small island of ceaseless
industrial activity, surrounded by water. Hazard is always present arising
from the volatile and flammable nature of the product. These hazards, if not con-
tained, can have catastrophic outcomes, and therefore ensuring safety and securing
extraction and production of hydrocarbons represent a continuous challenge for
responsible managements.
The Deepwater Horizon disaster of April 2010, the worst offshore disaster in
U.S. history, was not the world’s worst offshore incident in terms of loss of human
life. That dubious distinction belongs to the explosion and fire which destroyed the
Piper Alpha platform in July 1988. In the years that followed, the recommen-
dations of the exhaustive public inquiry under Lord Cullen were meant to have
provided a turning point in the management of health and safety in the offshore oil
and gas industry. Lord Cullen, an eminent Scottish jurist, was hailed widely for
having provided the industry with a global safety manual [8]. It would ensure that
the lessons of the tragedy were learned and that the dissemination of subsequent
recommendations would secure a safe and responsible industry in the future. It did
not turn out that way.
This article addresses a number of paradoxes. The first arising from comparison
of the two disasters is that the regulatory regime of safety oversight was in each
case profoundly flawed. “Regulatory capture” meant that those who should have
policed industrial safety in the industry had adopted the assumptions of the indus-
try itself, and of governments hungry for lucrative licensing fees and revenues,
allowing production imperatives to supplant those of safety. In the trenchant
words of William Reilly, co-chair of the presidential National Commission
appointed to investigate Deepwater Horizon:
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 501
For many years we have a situation which is very close to regulatory capture,
they (the regulators) have been driven by revenue generation . . . leasing
programs have meant that this is the second largest source of revenue for the
federal government after the Internal Revenue Service [9].
Lord Cullen, in his 1990 review of the UK system of offshore safety control,
identified this conflict of purpose between production and safety. He recom-
mended separation of the regulatory oversight of safety from the functions of
energy leasing and encouraging hydrocarbon production. The Department of
Energy was duly stripped of its offshore safety monitoring functions, which were
handed over to a newly created Offshore Safety Division of the Health and Safety
Executive. Yet the regulatory arrangements in the U.S. offshore industry over
two decades later were in essence exactly those that existed before the Piper Alpha
disaster.
This leads to a second evident paradox in comparing the two disasters. Neither
Occidental Petroleum, the oil company operator of Piper Alpha, nor BP, the oper-
ator of Deepwater Horizon, was a rogue company whose practices were far out of
line with the prevailing standards in the industry at that time. True, BP’s corporate
reputation for good safety management had been seriously tarnished by the Texas
City oil refinery explosion in 2005 which killed 15 workers and by a major
pollution scandal in Alaska the following year, as a result of a huge oil spill from a
corroded pipeline. Occidental Petroleum had also had its share of prior safety
lapses, including a fatality on Piper Alpha from which important lessons were not
learned. Cost-cutting concerns had led to the postponement of crucial maintenance
work [7, pp. 287-288]. Rather than being out of the ordinary, however, both
companies were typical representatives of the industry of which they were a part,
an industry run by giant multinational organizations aggressively pursuing the
bottom line in a ruthless competitive environment.
Each case demonstrates the power of global multinationals to shape and
distort a regulatory regime in their favor and to adopt production practices that
threatened the life and limb of its workers and inflicted untold damage on the
wider community. Within the politically secure province for offshore oil explor-
ation, the Gulf of Mexico, the least safe industrial practices and forms of risk
management would seem to have prevailed, not as the exception but as the norm. It
would appear that the offshore industry and those charged with its regulation and
supervision remained oblivious to the lessons of previous disasters. How did this
come about?
THE SPIRAL TO DISASTER
On April 20, 2010 a massive explosion ripped apart the Deepwater Horizon
stationed above the Macondo exploration well in Mississippi Canyon block 252
located on the U.S. outer continental shelf, 49 miles off the coast of Louisiana.
Eleven offshore workers died in the most horrendous of circumstances [1, p. i].
502 / WOOLFSON
The rig was leased by the client operator BP together with co-venturers, Anadarko
Petroleum and MOEX USA. It was managed by drilling contractors Transocean,
itself a global player in the industry, which owned and crewed the rig. The global
construction contractor, Halliburton, was responsible for key aspects of the
drilling operations, in particular, the provision of the vital cement to ensure the
well’s integrity.
Deepwater Horizon at a cost of $350 million was one of the world’s most
sophisticated and expensive drilling rigs and the pride of the Transocean fleet. It
was drilling the deepest offshore well in the history of the industry, using frontier
technology to penetrate a high-pressure reservoir of oil and gas 5,000 feet below
the surface of the ocean and a further 13,000 feet below the sea bed. That day in
April, the rig completed the final operation, the phase of well completion, of a
successful if technically very challenging drilling job. This involved securing the
integrity of the well by a cementing process, disconnecting the drill pipe and
moving the rig away to allow a production facility at some point in the near future
to be located at the site. It had been originally estimated that drilling operations
would require 51 days in total for which a budget of $96.2 million had been
allocated by BP. It did not turn out that way. The Macondo had been what the crew
dubbed “the well from hell” and had presented several costly delays. As a result
there was substantial cost overrun on the project of $58 million and a schedule
delay of six weeks costing roughly $1 million per day. What happened next was
the inevitable result of the concatenation of pressures emanating in the first
instance from corporate headquarters of BP in Houston, Texas.
One of the final tasks was the completion of “temporary abandonment,”
moving the drilling rig from over the well head and sealing the bore hole in
preparation for a production installation taking over at some future point.
Preparing the well for temporary abandonment required a process of cementing in
place the pipe casing that ran into the oil reservoir, preventing any oil and gas from
flowing up the drill hole. A three-man crew from the oil industry services company
Schlumberger was due to fly out to the rig that same day to perform the tests to
ensure that the cement plug 3,000 feet below the top of the well was sound enough
to contain the high-pressure reservoir of volatile hydrocarbons beneath. When
they arrived they were told that the tests were not required and that the cementing
had gone smoothly.
At 11 a.m. that morning the Schlumberger team was flown back to shore, saving
BP both time and a $128,000 fee. This was only the last of a series of safety
shortcuts taken under BP’s instruction, which included an unorthodox system for
fixing sections of drilling pipe in place, and alterations to operational procedures
that were not or only inadequately approved by the regulatory body, the Mineral
Management Service (MMS). Later that same morning a high-profile VIP group
of executives from Transocean and BP arrived by helicopter from Houston to
participate in a “management visibility tour” which among other matters would
celebrate the rig’s safety record of seven years of drilling without a single “lost
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 503
time incident.” The crew had even recorded a “rap” song to emphasize the safety
message. Whatever the truth of the claim to “zero incidents” might have been, the
visit by senior management was, in the view of at least one informed industry
observer, a “lost opportunity” to identify serious problems of process safety on the
rig and one of the last chances to avert the impending disaster [10].
Meanwhile other final tests were carried out by the onboard personnel that
day, including so-called “positive” and “negative” pressure tests to check the
integrity of the well. If the results from either were not as predicted then there
would be obvious grounds for concern. While the positive pressure tests
provided unambiguous results, the results from the negative tests were more
uncertain. It was expected that during these second tests the pressure in the well
would remain constant whereas in fact it repeatedly built back up, a cause of
some concern among the drill crew [1, pp. 5-6]. A second additional pressure
test was conducted that evening which again yielded an anomalous reading, but
this result was explained by reference to a supposed “bladder effect.” Acting
on the assumption that all was in order the crew began final operations prior to
disconnect, pumping seawater down the drill pipe to displace the drilling fluid
(“mud”) which is essential to lubricate the drill bit along with the capping layer
of liquid “spacer” used to separate the seawater from the drilling fluid. Drilling
mud changes as dictated by the job it has to do. The main function is to provide
hydrostatic pressure in the well bore. In the early phase of drilling it must also
be capable of lifting drill cuttings to the surface and lubricating and cooling
the bit. However, at the time of this blowout the configuration of the mud
was such that hydrostatic balance was its only function. The decision was
made by BP personnel to instruct Halliburton to remove heavy drilling mud
and replace it with much lighter seawater in order to save time and money. The
result however was that the pressure of the column bearing down upon the
wellbore no longer exceeded the upward pressure of the build-up of gas in the
undersea formation.
Sometime after 9 p.m. as the VIP delegation, having dined, now embarked on a
tour of the impressive control room on the bridge, a first “high-frequency vibra-
tion” was felt, followed by an ominous hissing noise [1, p. 8]. On the drill floor,
mud and seawater gushed up from below. As drilling fluid gushed onto the drill
floor it was realized that a kick was in progress, with hydrocarbons quickly
spewing upwards inside and over the top of the 20-storey drilling derrick. The
blowout had begun. Within seconds, a massive explosion rocked the rig as
escaping gas, which now enveloped the entire rig, found a source of ignition and
the fire began on the starboard side of the drilling derrick, thereafter enveloping
the derrick “in a firestorm of flames” [1, p. 9, 13]. Gas alarms could be heard as the
rig’s engines began revving.
The chain of simultaneous and subsequent events quickly took the initial
blowout to catastrophic dimensions. The rig was plunged into darkness and a
momentary eerie silence as power systems failed before the second in a series of
504 / WOOLFSON
explosions occurred, ripping through the engine control room and destroying
large parts of the rig infrastructure. Those who could do so rushed in panic to
emergency stations for lifeboat evacuation, taking with them the injured that
could be carried, as a general alarm sounded out. From the bridge a Mayday
message was sent out over the rig radio. What was already clear as the
conflagration continued was that a crucial piece of safety equipment, the
blowout preventer (BOP), designed to automatically shut off the rig from any
uncontrolled flow of hydrocarbons into the well beneath, had failed. The fire
had an endless reservoir upon which to feed itself. Yet even faced with this
unfolding catastrophe, the last line of defense, the emergency disconnect
system (EDS) to the blowout preventer, was not activated by the crew, who
waited for authorization from the rig manager. In a scramble of commands this
authorization was finally given [1, p.13]. Assuming that the BOP was now
unlatched, some crew members tried in vain to restart the standby generator but
to no avail. The rig still remained umbilically connected to the hydrocarbon
reservoir, stoking the exploding furnace that Deepwater Horizon had become.
The actual evacuation was chaotic with lifeboats launched sometimes only
half-filled. Some individuals decided to take their chances and jump into the sea.
By now lifeboats were either being launched, with their frightened occupants
screaming to go, or they were already in the water as evacuation became the only
possible line of action. Yet even here tragedy and farce rubbed uncomfortably
against each other. The remaining inflatable life raft snagged its rope during
launch and no knife could be found to free it (pocket knives were not allowed on
the rig), until someone discovered a suitable mechanical cutting tool. As the
inflated raft was pulled away from the disintegrating rig by some of the
survivors, now swimmers in the water (no one could find the paddles), the rig’s
captain, having jumped from one hundred feet above, splashed into the water a
few feet away. He was to be followed by others of the crew making their last
desperate escape. However, even then escape was nearly doomed as a painter
line continued to tether the life raft to the rig. The captain swam to a fast rescue
craft launched from the emergency standby vessel, to retrieve a folding knife. As
the survivors gathered in the galley of the standby vessel, now stationed next to
the blazing rig, the headcount began. Of the 126 persons onboard, 11 remained
unaccounted for, mainly workers on the drill floor, and 16 were seriously
injured. Over the next hours the disintegrating rig listed heavily and was
consumed in a final conflagration that eventually left only a smoking black
plume spewing upwards from the otherwise calm waters of the ocean into a clear
blue sky.
While every disaster has its own unique anatomy of failure, what is striking in
comparing the unfolding circumstances of these two offshore disaster events,
Piper Alpha and Deepwater Horizon, is the number of similarities. In the first
place, the spiral of events was accelerated by a series of crucial human errors and
hesitations at critical junctures. In the case of Piper Alpha, the most significant of
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 505
these was the failure of management on adjoining rigs, faced with the obvious
conflagration on Piper Alpha, to take the initiative to shut down linked pipeline
processes unless authorised by onshore management. As a result the supply of
hydrocarbons from the connected neighbouring platform pipelines effectively fed
the fire on Piper Alpha [7, pp. 238-239]. Moreover, it was clear that those who had
authority in both disasters were unprepared for an emergency of this scale. In the
case of Piper Alpha there was a failure to provide the crew with instructions to
facilitate orderly evacuation while previous safety instructions proved not to be
appropriate or relevant on the night of the disaster [1, pp. 240, 243]. On Deepwater
Horizon the bridge did not immediately sound a general alarm to begin evacuation.
Gas alarms on the rig were activated as the flammable gas escaped, but as on Piper
Alpha the emergency systems that might have prevented the gas from spreading or
igniting were not operative. The engine control room on Deepwater Horizon was
told of a well-control situation, but not of the scale of the escaping gas and mud.
When the control room did become aware of the escaping gas, the crew did not
shut down, again awaiting instructions from the bridge. Delay was disastrous as
thereafter, the engine control room was the site of two subsequent explosions.
Such failures of coordinated emergency response and critical hesitations were the
result of a lack of emergency preparedness, disabled individual responsibility, and
the fear of making decisions without authorization.
Yet other disturbing similarities mark both events and relate to more underlying
problems that are located in the labor relations regime offshore. On both installa-
tions individual operatives had voiced safety concerns over a period of time which
management did not adequately respond to and identify as warning signals that
safety systems were deficient. On Piper Alpha, the permit-to-work system which
governed the sequencing of hazardous work had largely ceased to function as an
effective means of safe task organization and had already led to one fatality. On
Deepwater Horizon members of the workforce had suggested that the safety-
critical blowout preventer on the rig might have had serious defects, but there was
no adequate managerial action to follow. Everything pointed to haste, corner-
cutting, cost-saving and sloppy management, an underlying commonality linking
Piper Alpha and Deepwater Horizon.
REGULATORY CAPTURE: OFFSHORE UK
The offshore regulatory regime was created as a zone of regulatory exception-
alism in both the North Sea and the Gulf of Mexico. This in itself provides a
compelling story of corporate power and influence over successive governments on
both sides of the Atlantic, and of continuing resistance by the industry to more
rigorous regulatory controls. For reasons of space, only the outlines of this saga can
be summarized. The starting point is the notion of “regulatory capture,” the
mechanism with which regulatory exceptionalism was obtained, whereby the
agency charged with oversight of safety comes instead to adopt the views of industry
506 / WOOLFSON
and of government itself in the prioritization of production over other concerns [7,
pp. 295-296]. This contradiction of purposes between safety oversight and
facilitation of production (and revenues) was recognized in the fundamental
reconstruction of onshore safety regimes in the UK in the 1970s but not offshore.
The question is how this “anomalous” safety regime offshore came about.
In the North Sea from the mid-1960s until the defining moment of the Piper
Alpha disaster, over two decades later, the regulatory regime was largely reactive
and only slowly came to embrace explicit concerns for safety [7, pp. 249-275]. The
loss of the Sea Gem jack-up exploration rig in 1965 eventually led to the passing of
the Mineral Working Act in 1971 with powers to regulate “the health, safety and
welfare of persons on offshore installations.” Even then, the regulatory system
was largely prescriptive in nature based on detailed regulation that was often
difficult to enforce. Government was keen to reassure the industry that it could rely
upon “benevolent enforcement . . . generally advisory in nature” resulting in a
regulatory set-up that Carson famously described as the “institutionalized toler-
ance of non-compliance” [6, pp. 152, 231]. This regime was presided over by the
Department of Energy, the very same ministry responsible for successive licensing
rounds and for ensuring the tax returns to the UK treasury.
Meanwhile the onshore safety regime, while far from perfect, evolved in a quite
different direction away from superficial or tick-box compliance with prescriptive
regulation and towards more system-oriented goal-setting regulation as embodied
in the Health and Safety at Work Act 1974 which followed on from the Robens
Report of 1972. The Health and Safety Commission and the Health and Safety
Executive (HSE) were created as new independent agencies free from sponsoring
control by individual ministries of government. What is striking however is that
the onshore regulatory regime did not follow the oil industry offshore. By the time
the first offshore production installations were pumping oil out of the sea bed and
exporting it to the UK mainland, two entirely divergent safety regimes existed
onshore and offshore, governed by two conflicting styles and philosophies of
safety and risk management. Thereafter there was trenchant industry resistance to
successive attempts by the Health and Safety Commission to extend the remit of
the Health and Safety at Work Act offshore, despite worrying levels of and a
public inquiry into fatalities, particularly in the drilling industry [7, pp. 267-270].
Eventually in September 1977, the Health and Safety at Work Act was extended
offshore, but on the basis of provision-by-provision approval of specific regu-
lations, while oversight of safety on installations was handed over to the Petroleum
Engineering Division, a branch of the Department of Energy, under an “agency
agreement” with the onshore Health and Safety Executive, thus neatly short-
circuiting the possibility of more effective regulatory scrutiny and more advanced
safety thinking. Indeed thereafter the Petroleum Engineering Division routinely
resisted any extension offshore of onshore safety regulations which mandated
goal-setting systematic approaches to controlling major hazards. A measure of
their success in so doing was that even when offshore safety did become a matter
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 507
of public inquiry in the early 1980s due to the extraordinarily high rate of fatalities
among offshore divers, the Department of Energy, with enthusiastic support from
the industry, was able to successfully marginalize the HSE and retain the status
quo [7, pp. 260-273].
In developing their congenial relationships with the regulators the oil com-
panies also successfully aimed to convince government that the Department of
Energy possessed “special expertise” and was therefore the appropriate organi-
zation to regulate offshore, since it had in the words of Shell Oil “grown up with
the offshore industry” [7, p. 264]. Ensuring that regulators would remain
compliant to industry needs was further assisted by the direct recruitment of top
officials from the Department of Energy by the industry in a hiring system perhaps
best described as “deferred bribery.” Offshore inspections were not surprise visits
but relied on the provision of transport by the oil companies for inspectors wishing
to go offshore. Due to shortages of manpower serious accidents and even fatalities
were investigated for the lessons that could have been learned in less than half the
possible cases. As it happened, Piper Alpha had had an inspection visit a mere
eleven days before the disaster, an inspection subsequently described by Lord
Cullen as being “superficial to the point of being of little use as a test of safety on
the platform” [8, Ch. 15, para. 48). Meanwhile, the Petroleum Engineering Divi-
sion, although grossly understaffed, refused personnel secondments from the
Health and Safety Executive and at the time of Piper Alpha had a complement of
only five inspectors to cover 139 fixed installations and 76 mobile rigs on the UK
continental shelf. Under-manning affected not only the frequency but the depth of
inspections leading Lord Cullen to observe that “in my view the inspectors were
and are inadequately trained, guided, and led” [8, Ch.15, para. 48].
There were also clear deficiencies in the system of permissioning overseen by
the Department of Energy. Carson documented that permissions were granted to
operators to use “temporary accommodation” modules which had inadequate fire
and blast protection long after the rig construction phase offshore had ceased and
the more hazardous drilling and production operations had commenced [6, p. 242].
The companies themselves sought successive extension of permissions to use
temporary accommodation modules even in the face of individual Department of
Energy inspectors’ concerns over safety [6, p. 244]. It was in the accommodation
module on Piper Alpha, which proved woefully inadequate to withstand the fires
on the rig, that many of the crew died. Yet the accommodation module according
to safety instructions was supposed to serve as the muster and control point for
evacuation from the rig. Doubts about its fire protection capabilities had been
raised by inspectors from the Department of Energy with the operator as far back
as 1975, but to no effect as further exemptions were granted for the next 13 years
overruling expressed concerns of Lloyds’ Register, the external certifying author-
ity. The disastrous consequences of the deficiencies of this regime were foren-
sically exposed in the public inquiry under Lord Cullen in the aftermath of the
Piper Alpha disaster [8, Ch. 22, para. 20]. The oil operators had successfully
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created and sustained a regulatory regime with outdated prescriptive approaches to
safety. It remained so largely unhindered by external regulatory interference until
Piper Alpha exploded some 13 years later.
REGULATORY CAPTURE: THE GULF OF MEXICO
The Gulf of Mexico had long been a site of oil production in the United States.
In the 1990s technological advances in underwater seismic imaging and drilling
enabled the opening up of new oil reserves trapped beneath massive sheets of salt
deposits at depths of up to 10,000 feet below the surface of the sea in the
“ultra-deepwater” of the Gulf. Such was the success in overcoming the immense
technical challenges posed by deepwater drilling that by the end of the decade
deepwater overtook the volumes of shallow water oil extraction [1, p. 41]. The
company making the running in opening up these new reserves was BP, now
excluded from previous areas of high profit such as the Middle East and Nigeria,
and with declining production from the North Sea.
The Outer Continental Shelf Lands Act of 1953 placed responsibility for the
development of offshore mineral extraction under U.S. sovereign jurisdiction with
the Department of the Interior. While local states resisted federal encroachment,
Supreme Court rulings eventually gave the federal government control of the outer
continental shelf area beyond a three-mile offshore limit. When the first outer shelf
area leases were offered for sale they were to prove immediately highly lucrative
for the federal government. Leasing policy thereafter remained largely unchanged
until the end of the 1960s, when a blowout offshore in California and the rise of the
environmental movement in the United States combined to produce the National
Environmental Policy Act (NEPA) of 1970, the first and most important of many
such environmental protection laws of the decade [1, p. 57]. It was only after the
oil embargo of 1973 had given specific and urgent impetus for the drive for energy
self-sufficiency that the Outer Continental Shelf Lands Act Amendments of 1978
provided the Department of the Interior with the impetus and authority to expand
offshore drilling leasing in the Gulf [1, pp. 60-61].
With the arrival of the Reagan administration in the first years of the 1980s a
massive and lucrative expansion in offshore leasing took place. The Mineral Man-
agement Service (MMS) was the main regulatory federal agency responsible for
overseeing this offshore province. The MMS originated in a context driven by that
administration’s desire to decrease reliance on foreign energy supplies and at the
same time, ensure the financial fruits of its plan for a massive expansion in
offshore drilling. New arrangements were put in place known as “area-wide leas-
ing” (AWL), opening up larger areas of choice to industry thereby shifting
environmental and resource assessment to the post-lease phase. The logic of
AWL, in the words of Tyler Priest of the University of Houston and leading
historian of Gulf oil exploration, was to “explore first and ask questions later”
[11]. Thus, under the authority of the Outer Continental Shelf Act, the MMS came
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 509
into being primarily in order to facilitate the more efficient gathering of revenues
for government from the accelerated procedures of offshore leasing concessions.
An inherent contradiction between stronger regulation and accelerated
development was built into the program for developing the offshore continental
shelf from its inception in the 1970s and “has bedeviled itever since” [11]. Thus,
in the view of the National Commission “environmental protections and safety
oversight were formally relaxed or informally diminished so as to render them
ineffective” [1, p. 56]. With the dramatic increase in oil prices over the previous
decade, by the 1980s, royalties and revenues from federal oil and gas resources
had already become the second largest revenue source for the U.S. Treasury. The
result was that the MMS became responsible for regulatory oversight of safety in
offshore drilling—and for collecting revenue from that drilling, with the latter
becoming “the dominant objective” [1, p. 56].
The subsequent move into deepwater drilling brought with it not only increased
technical challenges but increased risks, known and widely discussed within the
industry. However, increased risks were not matched by intensified regulatory
oversight. Indeed, the reverse was the norm in an eerie echo of how the industry
majors had responded with sustained opposition to the possibility of greater
regulatory oversight in the UK offshore sector in the years prior to Piper Alpha.
The industry “regularly and intensely resisted such oversight, and neither Con-
gress nor any of a series of presidential administrations mustered the political
support necessary to overcome that opposition” [1, p. 56]. Nor did the industry
itself, despite assurances to the contrary, make significant investments in drilling
safety and oil-spill containment technologies. In an indictment as damning as that
which Lord Cullen delivered with respect to the failures of the UK Department of
Energy, the National Commission concluded that “for a regulatory agency to fall
so short of its essential safety mission is inexcusable” [1, p. 57].
Here then was a classic iteration of “regulatory capture.” The agency responsible
for policing the industry had come to adopt the assumptions of the target industry as
defining and coterminous with the public good. So blatantly compromised was the
regulator that President Obama was moved to comment on the “too cozy
relationship” between the industry and the MMS. More than shared assumptions
and the subversion of priorities, it also in some instances involved payments of
royalty revenues “in kind” rather than in cash, shared hospitality and other favors
exchanged between the industry and regulatory personnel, including relationships
of industry personnel with the “chicks” of the MMS [12, 1, pp. 77-78]. How had this
state of affairs come about?
Even in terms of oil exploration on the U.S. Continental Shelf, the Gulf of Mexico
was a “zone of regulatory exceptionalism.” The southern coast of the United States
produces one third of all domestic oil and in the rush for “energy security” the Gulf
was an area of exemption (“categorical exclusion”) from the more onerous
environmental regulations which had inhibited offshore developments elsewhere in
the United States. Under the Clinton administration, categorical exclusions granted
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in the central and western Gulf rose from three in 1997 to 795 in 2000. During the
Bush years, the MMS granted an average of 650 categorical exclusions a year in
the region falling to 220 during the Obama administration’s first year [13].
Offsetting the apparent imperative of environmental review therefore, a “carefully
calibrated political compromise” was designed to promote offshore drilling in the
Gulf by effectively creating tacit exemption from the NEPA requirements for prior
environmental impact assessment [1, p. 82]. By so doing, the delay between
exploration and production of three to six years was significantly reduced and
“burdensome” and “unnecessary delays for operators” were avoided [1, pp. 62,
82]. This exemption, set in place in the early days of deepwater exploration, also
applied in the specific case of BP’s exploratory Macondo well concession
whereby the MMS “categorically excluded from any NEPA review the multiple
applications for drilling permits and modifications of drilling permits associated
with the Macondo well” [1, p. 83]. Behind this effective waiver of statutory
requirements of environmental impact assessments was the rationale that the Gulf
was a mature area of oil activity in which the risks were already well known in
comparison to “frontier areas.”
Thus it was that regulatory oversight of the industry and the collection of
revenues from that industry were combined in the same agency, the MMS,
effectively replicating the inherent contradictions which beset the UK Department
of Energy in its offshore role. However, the federal authorities were not to have it
all their own way and an increasingly hostile Congress imposed moratoriums on
the Department of the Interior’s budget, with the practical effect that expansion of
offshore drilling was inhibited, and accordingly the Gulf of Mexico assumed a
“still-more-special status” [1, p. 66]. It became one of the few areas within U.S.
jurisdiction not subject to prohibitions on new leasing activities and exploration
and development of existing leases. The zone of regulatory exceptionalism par
excellence therefore was the Gulf of Mexico.
THE MMS AND OVERSIGHT OF OFFSHORE SAFETY
How practically did the MMS perform its contradictory role under these
circumstances? The National Commission was clear that the root problem was not
the lack of governmental sovereign authority as such—the question of who owned
the nation’s natural resources was solved—but rather that “political leaders within
both the Executive Branch and Congress have failed to ensure that agency
regulators have had the resources necessary to exercise that authority, including
personnel and technical expertise, and, no less important, the political autonomy
needed to overcome the powerful commercial interests that have opposed more
stringent safety regulation” [1, p. 67].
Such regulations as existed were highly prescriptive, referring to detailed
specifications and technical requirements for pollution prevention and control,
well-completion operations, major maintenance, production safety systems, platforms
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 511
and structures, pipelines, well production, and well-control and production safety
training. Even so, unwelcome “prescriptiveness” was easily circumvented. Take
for example the regulations governing the critical blowout preventer equipment.
The industry contended that its own standards were more reliable than the
regulations and thus required less frequent pressure testing (a process that would
interrupt other activities). The MMS acceded to the industry view and reduced the
number of mandated tests by half. When third-party technical studies pointed to
possible failures in blowout preventer systems, the MMS commissioned its own
studies which found that many rig operators were not testing BOPs and were
basing claims to safety “on information not necessarily consistent with the
equipment in use” [1, p. 74]. Transocean, the owner of the Deepwater Horizon rig,
failed to recertify the BOP for over 10 years, despite recommendations from the
manufacturer and industrial bodies for recertification at 3- to 5-year intervals.
Important BOP parts were not replaced according to recommendations. Yet the
MMS never revised the regulations or instituted independent inspection and
verification procedures. Again, there were no meaningful regulations governing
the requirements for well cementing and testing. Nor were there regulations
governing negative-pressure testing of well integrity—a fundamental check
against dangerous hydrocarbon incursions into an underbalanced well. Instead of
setting the parameters for offshore safety, the MMS was dependent on “industry
standards” devised by the industry itself. The MMS adopted at least 78 such
industry-generated standards as federal regulations, American Petroleum Institute
records show [13]. On many safety-critical matters, it is unsurprising that the
federal regulations “either failed to account for the particular challenges of
deepwater drilling or were silent altogether” [1, p. 228].
Moreover the agency’s resources did not allow it to keep pace with the
expansion into the deeper waters of the outer Continental Shelf, as “senior agency
officials’ focus on safety gave way to efforts to maximize revenue from leasing
and production” in what the National Commission called “a culture of revenue
maximization” [1, pp. 68, 76]. Indeed, just as the industry moved into deeper
waters and technological developments accelerated, the MMS and its junior
regulatory partner, the United States Coast Guard, suffered severe budgetary and
staffing constraints (and in the case of the latter agency following the September
11th attacks in 2001, a reorientation of priorities to homeland security). These
constraints on resources resulted in a lower level of oversight with one inspector
for every 54 offshore facilities in the Gulf, compared to the Pacific Region
employing five inspectors to inspect 23 production facilities. In many cases, a lack
of technical training for the inspectorate in critical aspects of rapidly advancing
drilling technology made effective inspection difficult with inspectors relying on
oil company expertise and information. The already small number of unannounced
visits declined further and scrutiny of permit applications by the oil companies,
according to standardized and consistent procedures was increasingly difficult to
sustain. Much of this was familiar in the UK sector of the North Sea as previously
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detailed. However, even more fundamental was the question of the safety
philosophy underlying the respective inspection regimes and here again, the UK
experience presaged much of what was still the prevailing approach on the U.S.
continental shelf. In the words of one MMS official in 1996, later cited by the
National Commission, “We want to approach our relationship with the offshore
industry more as a partner than a policeman” [1, pp. 71-72]. In his critique of the UK
offshore regulatory regime under the Department of Energy, Lord Cullen’s report
into Piper Alpha had specifically identified the failure of the regulator to adopt a
modern goal-setting safety management approach, relying instead on an outmoded
tick box approach and detailed prescriptive regulation. Little or nothing, said Lord
Cullen [8, Ch. 22, para. 21], had been learned from the more developed onshore
goal-setting approach of the Health and Safety Executive based on a holistic
approach to safety management, or from the contiguous offshore Norwegian
regulatory system with its systematic approach to risk management based on
“internal control.” His remarks on the failures of prescriptive regulation could have
applied with equal force to the extant U.S. offshore regulatory regime 20 years later.
Lord Cullen’s key recommendation was to recommend a “safety case”
approach for the UK offshore regime that would allow comprehensive and
effective risk management throughout the life cycle of an offshore installation
and demonstrate that the operator had considered and documented potential risks
by systematic risk assessment of the various hazards facing their offshore instal-
lations and personnel [8, Ch. 17, para. 37]. Underpinning the safety case regime
were new sets of specific regulations designed to give the new regime “solidity,”
dealing with fire and explosion protection, evacuation, escape and rescue, and
other key safety issues. The whole reconstructed safety regime, which Lord Cullen
saw as not taking place overnight, required the approval of a new independent
regulator, the Offshore Safety Division of the Health and Safety Executive.
In the industry globally, formal safety assessment in the shape of a safety case
regime was already a conventional wisdom following the Seveso disaster in
Italy in 1976, and since then enshrined in the safety management protocols of
high-hazard onshore petrochemical establishments. However offshore, it was an
approach that was flagrantly ignored, particularly in some of the murkier more
compliant Third World regulatory regimes in which the international oil industry
operated. That the U.S. offshore authorities and those same offshore operators had
seemingly remained “impervious” to modern safety thinking in the offshore First
World speaks volumes to the power of the multinationals to create a selective
exclusionary “regime of exceptionalism,” this being sustained in the very geo-
graphic heartland of the U.S. oil industry. Even tentative steps towards requiring
operators to produce a “safety and environmental management program” (SEMP)
that would have acknowledged some of the reforms introduced offshore elsewhere
after major disasters such as Piper Alpha remained, as the National Commission
put it, “indefinitely frozen in time” [1, p. 71]. There were extended renewals in the
lengthy consultation process with the industry as the regulators advanced the
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 513
possibility of a new approach to safety and environmental management, leading
the MMS to urge companies to adopt such systems voluntarily and thereby prevent
formal regulatory intervention. But even this was not enough. When the MMS in
2003 proposed to update its requirements for the reporting of key risk indicators
(all unintentional gas releases to be reported, because even small gas leaks can lead
to explosions), the White House stiffly opposed [1, p. 72].
The U.S. offshore industry, with the consent of successive federal governments,
was itself therefore entirely complicit in resisting efforts to reform which might
have encroached upon its freedom to operate in the manner it thought best. When
faced with the threat of regulatory reform being imposed, it was effectively
torpedoed by industry promises of “self-regulation” through the creation of
voluntary guidance or industry-led “performance standards.” Such voluntary
guidance either failed to emerge or did so in such a tortuously slow manner as to
render the status quo largely unaffected. In this respect, the U.S. offshore industry
exactly paralleled the pattern of studied resistance to regulatory renewal that
characterized the UK offshore sector prior to Piper Alpha. In each province, the
International Petroleum Institute (API), the International Association of Drilling
Contractors (IADC), and national associations of major oil operators operated as
alert “in-house” watchdogs for the industry, guarding the regulatory boundaries of
the offshore zone of exceptionalism from unwelcome regulatory encroachment.
The National Commission observed:
Beginning early in the last decade, the trade organization (API) steadfastly
resisted MMS’s efforts to require all companies to demonstrate that they have
a complete safety and environmental management system in addition to
meeting more traditional, prescriptive regulations—despite the fact that this is
the direction taken in other countries in response to the Piper Alpha rig
explosion in the late 1980s [1, p. 228].
Until the Macondo well blowout consumed Deepwater Horizon, the U.S. regu-
lator’s efforts to devise a more effective safety regime had repeatedly failed. At the
time of the blowout, MMS had not published a single rule mandating that all oil rig
operators have detailed plans to manage safety and environmental risks—more
than 20 years after a rule was first proposed. Indeed such proposals “were repeat-
edly revisited, refined, delayed, and blocked alternatively by industry or skeptical
agency political appointees” [1, p. 71].
POST-DISASTER REGULATORY RECONSTRUCTION
OF THE OFFSHORE REGIME
Faced with the comprehensive failure of the existing regime of regulatory over-
sight, industrial disasters of the scale of Piper Alpha or Deepwater Horizon call
forth demands for public policy interventions of a far-reaching nature and
piecemeal reforms are deemed as inadequate. In the case of Deepwater Horizon,
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protracted, unsuccessful attempts to “kill” the well were relayed on nightly
television for 152 days, until a relief well begun in early May was ultimately
successfully drilled. News reports depicted crude oil escaping uncontrollably
from the sea bed, gooey slicks seeping ashore on the pristine resort beaches and
encroaching on the sensitive environmental wetlands of Louisiana and Florida,
igniting a national fury against BP. The seemingly futile efforts at containment
using shoreline booms, airborne chemical dispersants and oil skimming from the
surface of the sea suggested a patently inadequate oil spill response plan in which
local, state and federal officials struggled to co-ordinate their efforts. The sight of
oil-sodden sea-birds gasping for survival along the shorelines more than anything
summed up BP’s loss of corporate credibility. The company stumbled to manage
its response under the inept leadership of its harassed chief executive, Tony
Hayward (“There’s no one who wants this over more than I do. I would like my life
back.”) [14]. BP appeared incapable of containing the oil still gushing out from the
well head as initial estimates of the “modest” scale of the spill were repeatedly
revised upwards from the hundreds to thousands and ultimately tens of thousands
of barrels of oil a day [1, p. 147].
As the days turned to weeks with no conceivable end in sight, and repeated
unsuccessful attempts to staunch the flow of oil into the Gulf, on May 2nd,the
President himself embarked on a hurried catch-up fact-finding tour to the Gulf coast,
the first of several. This brought him face-to-face with the reality of impoverished
shrimp boat fishermen from devastated local coastal communities. Obama quickly
echoed the nation’s popular outrage in famously un-presidential words, “I want to
know whose ass to kick” [15]. Such refreshing calls for accountability are, of course,
always welcome from the executive branch of government. Unfortunately, the
answer seemed to lie, at least in part, uncomfortably close to home. In the words of
the National Commission, the disaster was created not only by corporate misman-
agement, but by “failures of government to provide effective regulatory oversight
of offshore drilling” [1, p. 122; emphasis added].
In the introductory section of this article the question was posed as to what
happens once the state is no longer able “to carry on discharging traditional roles
as if nothing had happened,” when sovereignty can no longer remain simply a
“convenient fiction” and its absence becomes an “inconvenient fact” that must be
somehow contemplated. A disaster on the scale of Deepwater Horizon makes
carrying on “as if nothing had happened,” in other words, business as usual, a
political impossibility. It reveals what had previously been disguised from view;
that the sovereignty of the state had been effectively “bracketed off” (albeit with
the state’s tacit compliance) from an area of its legitimate and proper exercise. In
the aftermath of disastrous failure, the state is obliged to develop both immediate
and longer-term responses that attempt to address the causes and consequences of
failure.
In the case of offshore Gulf of Mexico that immediate response was a six-month
moratorium on deepwater drilling in U.S. coastal waters announced by President
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 515
Obama on May 27th, the same day on which the head of the MMS tendered her
resignation. Thirty-three offshore drilling rigs ceased operations. The moratorium
may be dismissed as a knee-jerk reaction to appease public opprobrium, but it
ignited fierce opposition among the offshore industry with local political support
as local jobs were threatened. Certainly it was duly lifted as the balance of
geopolitical convenience, not least the rising price of gasoline for the American
consumer, favored an early resumption in the eternal quest for “energy security.”
The far more acute question however is one of how regulatory regimes are
reconstructed in the aftermath of regulatory failure. This goes to the heart of where
the ultimate balance between the power of the state and that of capital lies.
Whether and under what conditions it is possible “to bring the offshore back
onshore” can best be addressed by looking at regulatory reconstruction and the
attempt to “re-legitimize” the regime in the aftermath of disasters on a similar
scale. In this context comparison with the aftermath of Piper Alpha is appropriate.
In the UK offshore industry, following Lord Cullen’s recommendations, a new
fully resourced and independent regulator was established with a remit to establish
a new regime based on formal risk assessment and a safety case for each offshore
installation. In the Gulf of Mexico a new regime was also established with sepa-
rated agencies governing production and safety. Any comments regarding this
regime are necessarily preliminary given that its shape is still evolving. There are
also serious objections that can be made based on the UK experience to claims that
highly technical and confidential safety cases can in themselves provide a safety
panacea in the reconstruction of the U.S. offshore regime [16]. Nevertheless, there
are some clues at least as to potential pitfalls which such a regime reconstruction
might face based on the experience of nearly 25 years since Piper Alpha.
Just a few weeks before the lifting of the drilling moratorium in the last months
of 2010, the Department of the Interior promulgated “new regulations on topics
such as well casing and cementing, blowout preventers, safety certification,
emergency response, and worker training” [1, p. 152]. In addition, a new U.S.
regulator was established, the Bureau for Ocean Energy Management, Regulation
and Enforcement (BOEMRE). To overcome the inherent conflict of purposes
which had bedeviled the MMS, BOEMRE was itself reorganized in October
2011 into two new, independent agencies responsible for carrying out offshore
energy management and enforcement functions: The Bureau of Safety and
Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Manage-
ment (BOEM) [17].
However, many oil and gas industry analysts complained that the change was
only cosmetic and the revamped agency was too close to its predecessor, and
lacked resources needed to hire new blood, especially for qualified inspectors and
administrators. “The same people inside BOEMRE are the same people inside
MMS. That ingrained culture is still the same. . . . You can’t keep doing the same
thing and expect different results,” said Professor Bob Bea of the University of
California’s Deepwater Horizon Study Group [18]. Even with the required
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funding and staff additions, it will take significant time for the new agencies to
develop the capabilities to address the system risks associated with ultra hazardous
hydrocarbon exploration and production projects [19].
Equally important as the immediate question of adequate resourcing and
training of personnel for the new regulator, or the character and stringency of its
remit to revamp offshore safety management practices, is a far more insidious
process which was quickly evidenced in the reconstruction of the safety regime in
the UK offshore sector. This is characterized in the analysis of the evolution of the
new regulatory regime established in the aftermath of Piper Alpha as “the gradual
erosion scenario,” whereby a legislative reform agenda mandating behavior
change gradually deteriorates as it faces a host of “veto points.” These emerge as
concrete regulations that are negotiated and amount to a renewed “strategy of
containment” of regulatory interference and an attempt to re-assert industry-led
“compliance discretion.” In the UK offshore sector, post-Piper Alpha, this particu-
larly concerned the industry’s unwillingness to have the new safety case regime
“accepted” by the new regulator [7, pp. 361-365]. In the U.S. sector, future
research will determine whether and to what degree “veto points” have emerged,
but even limited information available suggests that claims of an aggressive
reform agenda in the new regulatory regime may be overstated [20]. Prominent oil
companies are already cautioning against “the rush to regulation.” A new
Workplace Safety Rule now requires operators to have a comprehensive Safety
and Environmental Management System (SEMS) that addresses “the root
cause of work-related accidents and offshore oil spills” [20]. The Workplace
Safety Rule makes mandatory what was previously a voluntary but largely
unimplemented program to identify, address and manage safety hazards and
environmental impacts. It was however devised by the American Petroleum
Institute as Recommended Practice 75. The continuing dependency of the new
regulator on industry-set standards is thereby exemplified.
Many observers of the industry rightly point out however that in the UK sector
of the North Sea at least, the new safety case regime has been “successful,” as there
has been no subsequent catastrophic event of fire and explosion similar to that of
Piper Alpha. However, room for complacency would appear to be narrow. A
review of this regime in 2009 by the Health and Safety Executive, in which one
third of tests for safety-critical items scored “red lights,” identified poor main-
tenance, cost-cutting, and managerial short-termism as eroding operational safety
and undermining commercial viability [21]. Near-misses with potential conse-
quences on the scale of a Piper Alpha have included the gas line rupture on BP’s
Fortes Alpha platform in 2003. This produced a major gas emission which failed
to find a source of ignition, in part due to high winds that helped to disperse the gas
cloud after about 20 minutes of extreme danger. The platform and its crew of 180
escaped unharmed. The incident resulted in one of the highest fines ever being
imposed on an offshore operator in the UK sector. Transocean, the owners of
Deepwater Horizon, had also experienced a near miss on one of its North Sea rigs
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 517
only four months before the Macondo well blow-out in a strikingly similar
incident when gas entered the riser as the crew was displacing drilling fluids from
a well with seawater during a completion operation. Lessons from this incident
were not transmitted to the Gulf of Mexico. Even in Norway, with its much
vaunted system of “internal control,” the Gullfaks incident in May 2010 provided a
near-disaster scenario that only luck prevented from being realized. In the words
of the company itself, this event was due to “deficiencies in connection with risk
management and compliance with internal requirements for drill operation
planning and execution” [22]. Finally, in late March 2012, a “well control
incident” resulted in a gas release sufficiently serious as to require the evacuation
of 209 personnel from the Total Elgin platform and a neighboring drilling rig in the
Franklin field 150 miles off Aberdeen [23]. With the platform enveloped in a
flammable gas cloud, coastguards said shipping was being ordered to keep at least
two miles away while a three-mile air exclusion zone was imposed for aircraft.
Shell also removed 120 non-essential staff from its two installations, about four
miles from the Elgin, because of concerns over drifting gas. The platform was
powered down as the operators contemplated how to contain the release which
fortuitously did not find a source of ignition.
CONCLUSION
Three months into the Deepwater Horizon disaster, on July 30th, BP established
a $100m charitable fund to assist rig workers experiencing economic hardships.
However, this was dwarfed by the $20 billion fund that BP created, at President
Obama’s urging, to compensate financial losses. In the first eight weeks of the
operation of the Gulf Coast Claims Facility more than $2 billion was paid out to
127,000 claimants. Does BP’s corporate contrition, including the change-out of its
chief executive, signal a moment of epiphany on the long road to rebuilding a
shattered corporate reputation and a renewed embrace of corporate responsibility?
Equally, was BP the chief or the only corporate villain in the piece? What if any
might be the appropriate sanctions that should apply in any event? Does the
criminal justice system have a role to play here, not least in terms of a possible
charge of corporate homicide? Should or could the “nuclear option” of corporate
debarment and suspension (commonly referred to as “exclusion”) be exercised
[24]? A detailed discussion of these issues is beyond the scope of the present essay
and will ultimately be resolved in the courts following indictment of BP for gross
negligence and willful misconduct, lodged by the U.S. Department of Justice in
the State of Louisiana in September 2012 [25]. That BP was dominated by a
long-standing “corporate culture” of cost-cutting with tragic but foreseeable con-
sequences seems beyond contest. That in the words of the Department of Justice, it
operated with “a culture of corporate recklessness” suggests a different order of
culpability [25, p. 6]. Emails exchanged between senior operational management
reveal organizational disarray over the procedures being followed in the final well
518 / WOOLFSON
abandonment procedures on the Deepwater Horizon, with one complaining of “so
many last minute changes to the operation” while another warns that “offshore
rig-based staff have finally come to their wits end. The quote is ‘flying by the seat
of our pants”’ [25, p. 8]. Yet other emails speak of “this huge level of paranoia
from engineering leadership . . . driving chaos,” while another warns “the
operation is not going to succeed if we continue in this manner” [25, p. 8].
These exchanges would seem to provide the hitherto absent internal company
documentation supporting the detailed analysis by the National Commission of a
series of instances in which BP adopted drilling procedures or operational
decisions that were designed to save time and therefore money—the use of “long
string” well design, non-standard procedures in the cementing process, the
irregular use of centralizers and lockdown sleeves, deviations from normal oper-
ating procedure in the final processes of sealing the well [1, pp. 95-125]. Yet BP
operated in partnership with Andarko and MOEX, and employed as its key
contractors, Halliburton and Transocean. The National Commission speaks of “a
single overarching failure—a failure of management” and embraces in this all the
key corporate partners [1, p. 96]. The Deepwater Horizon Study Group under the
leadership of the inestimable Professor Bob Bea is clearer in apportioning the
majority of blame on BP as the chief operator responsible, as indeed does the
investigation of BOEMRE in its report [26]. If BP was concerned with issues of
safety, it was with “high frequency, low consequence” accidents of the “slips, trips
and falls” variety which present hazards to individual operatives. The more
devastating “low frequency, high consequence” accidents as a result of a lack of a
more systematic approach to risk inherent in highly complex processes seemed to
have not received the same attention, said Bea [27].
Without doubt, the attempt at mutual corporate blame-shifting as the executives
of BP, Halliburton and Transocean were collectively arraigned before Congres-
sional committees, presented a deeply unedifying spectacle which enraged the
United States from President Obama downwards. Subsequent claims by BP of
crucial evidence being destroyed by Halliburton, only add to the sense of being
unwilling witnesses to rather distasteful domestic feuding [28]. Given the ultimate
stakes however, for BP alone possible costs of $70 billion in future civil and
criminal liabilities, such infighting was perhaps understandable [29]. In in a plea
agreement with the Department of Justice in November 2012 and in order to
forestall a wider criminal indictment, BP agreed to a record $1.26 billion fine, the
largest single criminal fine in US history, as part of an unprecedented $4.5 billion
settlement in which the company pled guilty to 14 criminal charges including 11
counts of felony manslaughter. In addition, in a rare attempt at securing individual
accountability for corporate misconduct, two responsible BP supervisors on
Deepwater Horizon on the day of the disaster were also each indicted for
manslaughter charged with negligence in the conduct of the safety pressure tests,
while an onshore BP executive who subsequently attempted to conceal the gravity
of the oil spill was criminally indicted for misleading Congress. Having settled
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 519
criminal charges, this still left BP facing potential fines for pollution offences of
$21 billion as well as major liabilities in civil litigation with a number of parties
including Transocean and Halliburton which the company stated it would
“vigorously defend” [30].
More important however than these outcomes is the future integrity of the new
regime offshore. While as part of its humiliating settlement, BP had to agree to
direct government monitoring of its safety procedures for a period of four years,
the “gradual erosion scenario” would suggest caution. One of the key conditions
for the success of regulatory reform is the active support of all constituency groups
(stakeholders). Yet the Achilles heel of the reconstruction of the new offshore
safety regime is the lack of proposals which address the unresolved issue of
employee empowerment. This is the final troubling similarity which exists
between Piper Alpha and Deepwater Horizon. Ordinary workers in the industry
who could have provided front-line safety intelligence and risk monitoring “from
below” were afraid to voice their concerns [31]. In a hierarchically structured and
even authoritarian system of management, employees were reluctant to speak out
for fear of retaliation. As a result employee voice was discounted and this meant
that the capacity of management to respond to early warning signals was already
impaired. The oil companies and their contractor partners sought to create an
offshore union-free environment, similar to many “offshore” export manufac-
turing and processing zones. In the UK offshore oil industry a harshly anti-union
atmosphere prevailed and those who raised safety concerns were more often
regarded as “troublemakers,” likely to be blacklisted by the employers [7, p. 143].
Those who worked on the rigs off the coast of the Gulf of Mexico were also
without union representation or collective voice [32]. A previous attempt to
unionize the rigs at the start of the decade had been met with a vicious campaign
orchestrated by a leading U.S. “union-buster.” It involved community agitation
against union activists, best exemplified by hostile highway billboards carrying
the warning: “There ain’t no you in union” [33]. Victimization, intimidation, and
blacklisting remained rife in the so-called “right to work” southern states.
The crucial dimension of employee empowerment in the safety management
process was not to be adequately addressed directly by the President’s National
Commission or by other technical reports. Its absence presents a fundamental flaw
in any attempted reconstruction of the safety regime. Corporate “safety cultures”
may be revamped, but there is a finite limit to what can be achieved without the
validation of employees’ rights and their significant empowerment as key stake-
holders with an independent voice in the safety management process. Only this,
together with the necessary training to perform that role, can provide the crucial
safety-auditing “from below” and the confidence and back-up that enable
employees to challenge managerial diktat. Yet while the consequences of the
failure to learn these lessons of Piper Alpha and Deepwater Horizon are tragic, in
other provinces, inadequate offshore employee empowerment continues to remain
unaddressed by the global oil industry and the fatalities and injuries continue [34].
520 / WOOLFSON
As the search for new reserves of oil offshore continues, and the price per barrel
reaches a new historic high, “offshore” will tend to remain just that, a “zone of
regulatory exceptionalism.” When the legitimacy of such arrangements is called
into question, as in the aftermath of disaster, some redrawing of “territorial” juris-
dictional boundaries between what is onshore and what is “offshore” takes place.
“Sovereignty”, at least in the sense of the power of the state to grant exemption, is
rebalanced. New state regulators may emerge to reassert greater oversight and
readjustments may take place in the calculus between safety and profit, at least for
a time. Ultimately however, the hegemony of the international oil industry and its
ability to re-mould, subvert, and circumscribe the reach of national regulatory
regimes threatens to nullify any attempted assertion of the prioritization of human
life and environment over “the bottom line.” It has been argued here that the
spatial/juridical “de-territorialization” of the regulatory regime in the offshore
industry accounts for the “structuration of failure” exemplified by disturbing
commonalities revealed in two preventable major offshore oil disasters. Insofar as
this industry pursues its objectives, sooner or later there will be new disasters to
confront. Indeed, in one important sense, the hope must be that “offshore”—
cost-driven, short-termist, and anti-union—does not “return onshore.”
AUTHOR’S BIOGRAPHY
CHARLES WOOLFSON, together with John Foster and Matthias Beck,
co-authored Paying for the Piper: Capital and Labour in Britain’s Offshore Oil
Industry (Routledge, 1986) and co-edited with Matthias Beck Corporate Respon-
sibility Failures in the Oil Industry (Baywood, 2005). During 2000-2009,
Woolfson lived in the Baltic states, teaching and conducting research into labour
standards in post-communist societies. Until 2009, Woolfson also held the chair of
labour studies at the Department of Law at the University of Glasgow. From 2010,
he took up an appointment at Linköping University in Sweden. Contact him at
charles.woolfson@liu.se.
NOTES
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and M. Beck (Amityville: Baywood, 2005), 1-14.
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 521
5. N. Lillie, “Bringing the Offshore Ashore: Transnational Production, Industrial
Relations and the Reconfiguration of Sovereignty,” International Studies Quarterly
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6. W. G. (Kit) Carson, The Other Price of Britain’s Oil (London: Martin Robertson,
1982).
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Britain’s Offshore Oil Industry (London: Routledge/Curzon, 1996).
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(London: Her Majesty’s Stationery Office, November 1990).
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Blowout,” Safety Science, 49(10) (2011): 1421-1425, doi: http://dx.doi.org/10.1016/
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11. T. Priest, Remarks Before the National Commission on the BP Deepwater Horizon
Oil Spill and Offshore Drilling, Meeting #2, Panel #3: Regulatory Oversight of
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Guardian, June 8, 2010, http://www.guardian.co.uk/world/2010/jun/08/barack-
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http://www.boemre.gov/ (accessed September 16, 2012).
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Agencies Find,” The Christian Science Monitor, September 14, 2011, http://www.cs
monitor.com/USA/2011/0914/Majority-of-blame-for-Gulf-oil-spill-lies-with-BP-two
-US-agencies-find (accessed September 16, 2012).
19. Deepwater Horizon Study Group, Investigation of the Macondo Well Blowout Disaster
(Final Report), University of California and Center for Catastrophic Risk
Management, March 1, 2011, http://ccrm.berkeley.edu/pdfs_papers/bea_pdfs/DHSG
FinalReport-March2011-tag.pdf (accessed September 16, 2012).
522 / WOOLFSON
20. US Department of the Interior, “Salazar Announces Regulations to Strengthen Drilling
Safety, Reduce Risk of Human Error on Offshore Oil and Gas Operations,” September
30, 2011, http://www.doi.gov/news/pressreleases/Salazar-Announces-Regulations-to
-Strengthen-Drilling-Safety-Reduce-risk-of-Human-Error-on-OffshoreOilandGasOperati
ons (accessed September 16, 2012).
21. UK Health and Safety Executive, Key Programme 3 Asset Integrity Programme:
A Report by the Offshore Division of HSE’s Hazardous Installations Directorate
(HSE, 2009), http://www.hse.gov.uk/offshore/kp3.pdf (accessed September 16, 2012).
22. Statoil, “Gullfaks Incident Entails Drill Routine Changes,” November 5, 2010,
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rt.aspx (accessed September 16, 2012).
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upstreamonline.com/live/article1242808.ece (accessed September 16, 2012).
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William & Mary Environmental Law and Policy Review 36 (2011): 81-118,
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25. U.S. Department of Justice, Memorandum of The United States of America in
Response to “BP Defendants’ Memorandum In Support Of Motion For Final Approval
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September 16, 2012).
26. Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE),
Report Regarding the Causes of the April 20, 2010 Macondo Well Blowout, September
14, 2011, http://www.boemre.gov/pdfs/maps/DWHFINAL.pdf (accessed September
16, 2012).
27. CBS News, “BP’s Disaster: No Surprise to Folks in the Know,” June 23, 2010,
http://www.cbsnews.com/2100-215_162-6605248.html (accessed September 16, 2012).
28. BBC News, “Halliburton ‘destroyed’ Gulf of Mexico spill evidence,” December 6, 2011,
http://www.bbc.co.uk/news/world-us-canada-16044836 (accessed September 16, 2012).
29. ThomsonReuters News and Insight, “Factbox: BP’s Potential Price Tag for the Gulf
spill,” July 14, 2012, http://newsandinsight.thomsonreuters.com/Legal/News/2012/
07_-_July/Factbox_BP_s_potential_price_tag_for_the_Gulf_spill/ (accessed Septem
ber 16, 2012).
30. C. Krauss and J. Schwartz, “BP will plead guilty and pay over $4 billion”, The New
York Times, November 16, 2012, A1, http://www.nytimes.com/2012/11/16/
business/global/16iht-bp16.html?ref=todayspaper, (accessed November 16, 2012).
31. I. Urbina, “Workers on Doomed Rig Voiced Concern about Safety,” The New
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html?pagewanted=1 (accessed September 16, 2012).
32. D. Corgey (Vice President, Seafarers International Union’s Gulf Coast District), “Lack
of Union Workers Hurts Offshore Oil Industry,” Houston Chronicle, Opinion, June
10, 2010, http://www.chron.com/opinion/outlook/article/Lack-of-union-workers-hurts-
offshore-oil-industry-1716136.php (accessed September 16, 2012).
33. ITF (International Transport Federation) Seafarers, “Offshore Workers in the
Spotlight,” 2002, http://www.itfseafarers.org/offshore-spotlight.cfm (accessed September
16, 2012).
PREVENTABLE DISASTERS IN THE OFFSHORE OIL INDUSTRY / 523
34. LNG World News, “ACTU: More Workers Will Die Unless OHS Laws Are
Extended to Offshore Industry,” August 28, 2012,http://www.lngworldnews.com/actu-
more-workers-will-die-unless-ohs-laws-are-extended-to-offshore-industry/ (acces
sed September 16, 2012).
Direct reprint requests to:
Charles Woolfson
Institute for Research on Migration, Ethnicity
and Society (REMESO)
Linköping University, Campus Norrköping
Holmentorget 10, Bomullsspinneriet
SE-601 74 NORRKÖPING
Sweden
e-mail: charles.woolfson@liu.se
524 / WOOLFSON
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