Deepwater Horizon:What happened, why and where do we go

from here?

ANU Seminar

May 19, 2011Canberra, Australia

Dr. Frank Alcock2011 Fulbright US Senior Scholar

Associate Professor of Political ScienceNew College of Florida

Acknowledgements

• Australia National University

• Fulbright New Zealand

• New College of Florida

Gulf Oil Spill – Surface slick areas

Gulf of Mexico – Deepwater Development

Gulf of Mexico – Annual Oil Production

Industry Conditions• Revolutionary advancements in deepwater drilling

• Confirmation of large reservoirs with high flow rates

• Cost and risk of developing deepwater prospects

• Drilling complexity/operational decision points increase

• Partnerships allow for risk-sharing and cost-cutting

• Information is increasingly compartmentalized

Regulatory Conditions• 1978 OCSLA Amendments/GOM’s NEPA Exemptions

• Reagan Administration/James Watt – Lease Firesale

• Regulatory corruption/capture

• Regulatory capacity gap widens

• US maintains outdated approach to risk management

• Industry maintains broad discretion in managing risks

The Players

What happened?• Cement job failure

• Well abandonment procedures rushed

• Kick detection failure

• Blowout preventer failure

• Poor decisions contributed to all the above

Contingency Plan?

Battlefronts

• Wellhead (containment) battlefront

• Surface/coastline battlefront

• Public relations battlefront

• Liability battlefront

Emergency Response• National Contingency Plan relied on industry

response assets and capacity

• Industry response plans were a sad joke

• Governance roles and responsibilities poorly understood by state/local governments

• Communications/public relations efforts were highly problematic

Emergency Response continued

• While ad hoc, the wellhead containment response demonstrated considerable on-the-fly innovation.

• Surface war/NCP command and control structure did a decent job in a highly politicized environment

• Use of dispersants at wellhead may have done more good than harm (???)…time will tell.

• Mother nature may have been relatively kind

Ecological Consequences

• Coastal vs. Deepwater/Benthic Impacts

• Tidal marshes and wetlands

• Underwater plumes and seabed slicks

• Fish Stocks

• Trophic cascades

So where do we go from here?

Potential for Reform - Promising

• MMS dissolved in lieu of BOEMRE• Safety case approach• Revisit Gulf of Mexico’s NEPA exemptions• Marine spatial-planning• Regulatory capacity building• Improve reporting and increase transparency• Strengthening sanctions (liability caps)• Adoption of international best practices• Stimulate industry self-policing – consider nuclear

industry experience

Prospects for Reform - Poor

• Little evidence that the Deepwater Horizon accident was a transformative event for the industry, the American public, or the current US Congress

– Spill was a non-issue in November midterm elections– Risk concerns have completely dissipated in recent polls– Gas price concerns and economic anxiety prevail– Industry has become increasingly aggressive in resuming its

push for expanded offshore access and expedited permitting– No Congressional momentum for reform– Executive discretion will be challenged

Montara Inquiry

Concluding Messages

• Industry culture, weak regulatory capacity underpin poor risk management practices

• Unwise to assume probability of blowouts are negligible

• Contingency plans

• Reform measures are available

• Political implementation is difficult

Thank You