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The BP oil disaster in the Gulf of Mexico has highlighted many problems – problems with the technology for drilling at depths where the water pressure is around a ton per square inch; problems with BP not being transparent from the outset as to the extent of the spill; problems with oil companies putting short-term profits ahead of ensuring that these issues cannot happen; problems with the US Regulators who seemingly have been extremely lax in applying the regulations and have been granting waivers freely to the oil industry; problems with our ability to clean up oil spills even 21 years after Exxon Valdez (what’s happened to Kevin Costner’s centrifuge-based cleaner?)…
But for me, one of the most surprising things to emerge from this has been the failure of leadership. BP’s leadership issues are, to an extent, understandable – although not excusable – in that they have been focused on protecting shareholder value by trying to downplay the size, scope and likely cost of the problem. This doesn’t excuse the behaviour, as I’ve said, but one can understand it, so it’s not too surprising.
No, the leadership failure I’m referring to has been that of President Obama.
I realise that this statement might cause something of a firestorm from some readers of this blog, but bear with me on this for there are lessons to be learnt and actions to be taken – so it’s not (yet) too late.
We need to recognise that when running for office, then-Senator Barack Obama focused on the need for change – a need that the US population clearly believed in, given the fact that it propelled a largely-unknown junior Senator to the office of President. Central to this theme was his strong belief that things could best be accomplished by working together on the issues with all concerned parties – no matter on which side of the fence they stood.
This, of course, has not been a great success in the Congress and Senate as the divisions have, in many cases, simply been too deep to facilitate working together. The oil spill, though, is a different matter – for there is no question that everyone has a common goal: to stop the leak and clean up the mess as quickly as possible and with as little damage to the environment as is possible.
However, apart from being slow off the mark in terms of visiting the Gulf Coast, President Obama has spent most of his time publicly berating BP rather than being seen to work with them to address the issue in the most comprehensive way. Perhaps he was trying to cover up the shortcomings in his own administration – those regulatory bodies that were not doing their job properly – given the looming mid-term elections, or perhaps his anger simply clouded his judgement. Either way, instead of seeking to work shoulder-to-shoulder with BP and for them to jointly marshal the considerable forces that could be at their disposal if they, and other oil companies, worked together, the situation has become one of adversity. And an adversarial relationship never produces the best overall result.
It’s time for President Obama to put personal feelings and party politics aside on this problem; to work with all stakeholders – oil companies, state and local government (of all political persuasions), and anyone else that can play a positive role. He needs to remember his campaign promise to change the way things are done in Washington, and to work for the best result regardless of personal feelings, of politics and of attribution of blame. There’s plenty of time for all that after the mess is cleaned up.
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Whenever there is a disaster the best solution is for politicians and corporations to work shoulder-to-shoulder to sort it out as fast as possible.
I’m glad we agree, Catarina
The short term thing is for those who don’t really have a clue about the technology to get out of the way and protect those doing the work so they can just get on with it. That’s the smart way of working together.
There’s a need for some oversight in case the incumbents are really incompetent. However those without a clue generally make things worse. (Take longer, worse solution, answer that’s really easy to explain but plain wrong…)
I see evidence here that the engineers (it’s not just BP it’s the industry) have been given permission to just get on with it and do the right thing.
To see an inkling of what’s going on look at this video http://j.mp/9Qqj8v (Kent Wells, I think, just talks about BP engineering. I understand it goes much wider. Not just to the man who directed Avatar either!)
My impression from the news media (who almost inevitably miss the point entirely and mislead all and sundry) is that Obama hasn’t made the distinction between the spectators (which he is) and the qualified doers. That’s a bad slip and I’m disappointed.
In the longer term the legislators, including Obama, need to be happy that counter measures are in place next time.
I suspect that the work already done, now that the cheque book got opened, might be enough (even if it’s not all built). That Mexican blow out years ago got a “top hat”. There should be top hats etc. on standby, modified blow out preventer designs (to accomodate all manner of back ups), teams on standby, operating procedures, “fire drills”, oversight… I suspect good enough designs, for all that, are already done (by the whole industry). Maybe even a Red Adair type team!
Legislation and enforcement need to ensure that without getting in the way of innovation and flexibility. (An ever present danger when the clueless get overconfident.) That’s where Obama needs to get involved. And secretly making sure remediation ends up improving some bits of the shoreline compared to before the spill.
My understanding is that the current BP chairman has been making great strides at improving safety at BP, but there’s a lot to do still. They got caught with their pants down, as did the whole industry and society. The important thing is to learn and make things fundamentally better in future. Obama and many others have a role there.
Thanks for the comprehensive input, Mike.
I agree that those who don’t understand the technology should not get in the way of those that need to do the work, but really believe that it is up to leaders in an organisation to make sure that all those that can get the job done, do so. In this case, the blame game has been highly counter-productive: had Obama rallied his top technical people, other oil companies, etc., I believe the scope of the disaster could have been much reduced (the “Red Adair” team you mention, in effect).
Legislation exists for all manner of things (such as that for these wells) but the regulators simply ignored legislation and used their powers to give the oil companies waivers on many of the safety, and other, procedures. This, I suspect, is a good part of the reason Obama has been playing the blame game – he’s trying to divert attention from the considerable failure of his administration in ensuring the application of the regulations.
Is it fair to say that BP has been “focused on protecting shareholder value by trying to downplay the size, scope and likely cost of the problem”?
All BP has said is that it will pay whatever it needs to pay, put right everything that needs to be put right at whatever cost it requires, volunteering that this would be beyond the US legal cap that it chose not to take advantage of. It said this consistently from Day 1, when the CEO Tony Hayward flew out to Houston and showed leadership from the front.
Any estimates of losses were always expressed as just that – estimates. It would be in no-one’s interests to deliberately over-estimate, beyond the available data, would it? After all, one thing Obama has proven is that you can trash a stock if you persist in attacking its reputation, and that would ultimately do the Gulf region no good at all.
I’d argue Obama took BP close to the point where it COULD NOT have paid for the clean-up and the ensuing legal claims, whereas BP shareholder and Gulf stakeholder interests are aligned, in maintaining a company strong enough to do so.
By the way, the Chairman of BP (in post one year) has been conspicuous by having ZERO direct involvement in either the Gulf response, until he was summoned to the White House, or improving the safety record of the Company (CEO Hayward has done that over the last 4 years).
Disclosure: I am currently working as a contractor for BP but have no direct knowledge of the people involved or of the Gulf response, beyond what has been published.
Thanks for your comprehensive comment, Tim.
I strongly believe that BP downplayed the estimates of the size/scope of the problem, probably hoping to minimise the inevitable fines. Frankly, they probably also realised that to try and go with the US Legal Cap would simply have resulted in that being overturned by subsequent legislation, or bigger fines, so it made sense not to try and hide behind it. However, the fact is that the intial 1000 barrel a day estimates given by BP (who at that stage seemed to be the only ones with sight of what was really happening) were woefully short. We’re now looking at close to 60x that volume – maybe more. And I agree that the Chairman was not in evidence until summoned – the CEO was, at least, present, if not playing the role expected of him.
However, the point of my piece was that President Obama, rather than adopting an attitude of “we’re all in this together, so let’s fix it and work out costs later” as one might have expected, became beliigerent almost from the beginning (well, he ignored the problem for a while to start with – presumably believing that it was a fairly minor leak). I believe that if he’d taken a team approach and brought in experts from other companies, etc., they might well have come up with some schemes to minimise the leakage earlier. At present, 2 1/2 months down the line, it seems everyone is hoping the relief wells will work, but it seems to me that this is a very long shot – intercepting the pipe so far away is akin to finding the proverbial needle in a haystack.
I have a feeling that BP might well not survive this – that it will be ripe for acqusiition, at best, once the costs and fines are paid as the balance sheet and share price will be so damaged that it will be an easy target.
I think Tim makes some good points.
I actually don’t feel that BP has been duplicitous, evil and deserving of death in this case. If anyone is like that it’s Exxon in the Valdez case. They ended up paying just about nothing, using the evil end of a legal system to stiff everybody in sight. BP appears to have been quite the opposite!
Intercepting wells is done. My understanding is that it’s entirely doable with modern technology. They drill. Lower a sensor down the hole. Take bearings. Drill again… In their shoes I’d be inclined to say it’ll be done in October when I hope to deliver end of July. Keeps the morons of your back! They’re spending big and drilling two such holes. (I imagine that’s pretty rare.)
I don’t know what happened to Obama. I try not to. Maybe a brain aneurism or his publicity oriented wonks had one. After reading his books I had respect for him. He does the thinking, sometimes. In this case he seems to have literally lost his mind. I wonder what a bunch of pensioners who depend on BP will think if he has needlessly destroyed the rest of their lives. (Just think about those poor Zimbabwean pensioners still in the country who have quietly slipped into the great beyond simply because they didn’t want to bother anybody with their plight. They go largely unrecorded. They’re heroes in mind, in the former sense of the word, before the word got trashed after 911.)
You may be able to see. I’m with the guys doing the actual work, if they’re doing it well. From what I see they are in this case. In that situation it’s so typical for the spectators and grandstanders, to blame the uninvolved (was it Haliberton, was it TransOcean? I don’t know. Do they even understand those issues?), fire or kill those who actually fixed it, give awards to somebody who had nothing at all to do with it and name something after the biggest idiot on the block.
Thanks, Mike. I agree that BP’s not deserving of death, and they’ve not really been evil, but have been doing what any company tends to do: put shareholders’s interests first and have been downplaying the situation strongly to do so.
Unfortunately, in today’s 24-hour news channels with viewer input encouraged, any disaster is focused on very strongly (something has to fill those hours of news coverage – Anderson Cooper’s spent more than a month there covering it, for example) and companies that do what was the norm just a few years ago find themselves in trouble.
Yes, Exxon avoided everything they could – although it seems that this might be reopened now as AC has highlighted the medcial problems faced by so many of those employed to clean up the spill. Chickens coming home to roost, perhaps?
My point was simply that I am convinced Obama would have got a lot more accomplished if he had worked with BP (and others in the oil industry) rather than against them. There’s a time for confrontation and a time for putting shoulders to the wheel. This was clearly a time for the latter approach – the former could have come once the well was capped and the mess cleaned up, when determining who pays the bill.
I think some politicians actually understand that they may be causing death of a company. Truly horrible people.
If you want to see the plans there’s some good updates from Kent Wells and the team on this page http://j.mp/bNwIsR.
It shows the replacement for the LMRP cap (the containment cap). I’m in awe of the engineering these guys have done in a short time. There is evidence of pretty good co-operation on the technical level between government and industry, and it’s noteworthy that the TransOcean name is on the Containment Cap, even though it’s Kent Wells who’s explaining it. So the engineers, are doing the right thing, getting on with it. I suspect that management is doing their right thing and keeping the ignorant idiots out of the hair of these guys.
I don’t know this kind of engineering so I’m a spectator too, but I do wish the press tried to get a grip of what’s happening here. Before they flap their lips. In this they’ve failed abysmally in what I’ve seen.
In the aircraft industry they get on and find out what happened. They tend to not prosecute in the interests of getting the truth. (That make me uncomfortable at times.) The result though is an industry that is pretty safe. (See the PPRUNE site for the opinion that real pilots have of the clueless media coverage of the Air France crash out of Brasil. If we’re lucky a few journalists got a fright and decided to be decent humans in future, not fact free morons.)
We need to get the real facts in environmental catastrophes too!
Signs of progress at Macondo 252.
Containment Cap in place and under test.
Announcement http://j.mp/cWgJNJ
For video from the robots http://j.mp/9hrg2U
Fingers Crossed.