5 ms·

That's a bit of a stretch from the Times article. Yes, they were trying to get the well under control, that's what they were doing when it blew up. Yes, the MMS

That's a bit of a stretch from the Times article. Yes, they were trying to get the well under control, that's what they were doing when it blew up. Yes, the MMS approved lower pressure tests so it would be less risky to run the tests. I love how people act as if it were in Transocean and BP's interest for the well to explode, people to die, and the ocean to be poisoned. They didn't want this to happen. BP shareholders have already lost $52B. Transocean shareholders are down $6B. "Politics" is not a great way to solve this and the engineers on the rig were not driven by greed. For wells this deep, it looks like the risks are higher than estimates, and a relief well needs to be prepared. Human progress requires us to try new things. We learn what works, and what doesn't. We learn to price the risk.

seldo 16y ago
It is absolutely in BP's and Transocean's interests for this well to explode and people to die. That's my point. Avoiding accidents by drilling more safely and expensively is not in the interests of BP and Transocean; it makes more sense for them to be risky, gamble 50 times on other wells, make 10x more than they would if they were doing it more safely, and use those profits to cover this one unlucky time. Forcing them to do it safely even though this makes the well 2x, 5x or 10x less profitable is the purpose of government regulation. In the case of the US oil industry, the regulator is corrupt, completely in thrall to the industry with no accountability. Hence, the solution is not about pricing risk -- BP have already done that, and this is the logical result. The solution is a regulatory one, which means a political decision.
- msmith 16y ago
  Can you cite the source that leads you to believe that BP stands to make 10x more profit by running a risky drilling operation? I find it hard to believe.
  - seldo 16y ago
    My numbers were for illustration. It doesn't need to be 10x more profitable, it just needs to be any degree more profitable and the unlucky event sufficiently rare that the profit of the successful wells outweighs the costs of the failure (also keep in mind that oil companies drill many, many unsuccessful wells, so a marginal increase in the cost of drilling an exploratory well is significantly magnified). Despite the costs of cleanup, we're not anywhere near the point where it makes sense for them to change their practices. BP made $4bn in profit last year, and current cleanup costs have yet to hit $1bn. They can get a lot, lot higher before they outweigh the profits of years of risky drilling.
- richardw 16y ago
  What, and risk being shut out of the US market indefinitely, for the same political reasons? Which pol is going to defend them now? They've just lost all the money they spent on those full-page "BP does lots for the environment" adverts. Between the bad PR, increased risk of regulation and chance of being shut out of the market, this is absolutely more expensive than running a few extra tests.
- mattmcknight 16y ago
  Frankly, that's some bad math. BP just lost 3-4 years of net profit. You could talk about management interests versus shareholder interests being misaligned, but this event is not in shareholder interest. Also, I don't know where you get your "10x more" profitably number, but I have a feeling you made it up. There is new information about the risk- new to the regulators, new to the companies. We don't even know what the best mitigation approach is. The regulatory structure will follow what works and is cost effective. If the risk is too high, wells of this type will not be built until a better approach is found. Regulatory decisions are not political- not about power. They are ultimately bureaucratic.
Jeema3000 16y ago
You're missing the point: of course it's not in BP's interests to have a well explode, but the people making the important decisions are often not making those decisions based on sound engineering, but on political pressures and incentives from above. Richard Feynman showed an excellent example of this after the Challenger disaster. He was on the Presidential task force after that disaster, and he asked NASA management and engineers, separately, to quantify what they felt the odds of a catastrophic failure resulting in crew loss were prior to the disaster. The risk values quoted by engineers and by management were something like 2-3 orders of magnitude different (with the engineers quoting the much more likely value)...
- gvb 16y ago
  "Engineers at Rocketdyne, the manufacturer, estimate the total probability [of catastrophic failure] as 1/10,000. Engineers at Marshal estimate it as 1/300, while NASA management, to whom these engineers report, claims it is 1/100,000. An independent engineer consulting for NASA thought 1 or 2 per 100 a reasonable estimate." — Personal observations on the reliability of the Shuttle by R.P. Feynman http://science.ksc.nasa.gov/shuttle/missions/51-l/docs/rogers-commission/Appendix-F.txt http://science.ksc.nasa.gov/shuttle/missions/51-l/docs/roger... Empirical post script (as of STS-132 2010-05-26) Total launches 131 Failures 2 Successes 129 Failure rate: 1.5% If you read the report, you will find that NASA declared a reliability number that the shuttle was to meet (1/100,000), and then backed into the calculations that justified that reliability number. In other words, it was top-down, rather than bottom-up. IMHO, bottom-up tends to be pessimistic, but top-down tends to be be a figment of management's imagination. In his report, Dr. Feynman pointed out that many of the calculations had reliability figures that, while not necessarily wrong, were so small as to be impossible to validate... but that was the number necessary to generate the 1/100,000 roll-up (actually, rolled-down) number.

seldo 16y ago

It is absolutely in BP's and Transocean's interests for this well to explode and people to die. That's my point. Avoiding accidents by drilling more safely and expensively is not in the interests of BP and Transocean; it makes more sense for them to be risky, gamble 50 times on other wells, make 10x more than they would if they were doing it more safely, and use those profits to cover this one unlucky time. Forcing them to do it safely even though this makes the well 2x, 5x or 10x less profitable is the purpose of government regulation. In the case of the US oil industry, the regulator is corrupt, completely in thrall to the industry with no accountability. Hence, the solution is not about pricing risk -- BP have already done that, and this is the logical result. The solution is a regulatory one, which means a political decision.

msmith 16y ago
Can you cite the source that leads you to believe that BP stands to make 10x more profit by running a risky drilling operation? I find it hard to believe.
- seldo 16y ago
  My numbers were for illustration. It doesn't need to be 10x more profitable, it just needs to be any degree more profitable and the unlucky event sufficiently rare that the profit of the successful wells outweighs the costs of the failure (also keep in mind that oil companies drill many, many unsuccessful wells, so a marginal increase in the cost of drilling an exploratory well is significantly magnified). Despite the costs of cleanup, we're not anywhere near the point where it makes sense for them to change their practices. BP made $4bn in profit last year, and current cleanup costs have yet to hit $1bn. They can get a lot, lot higher before they outweigh the profits of years of risky drilling.
richardw 16y ago
What, and risk being shut out of the US market indefinitely, for the same political reasons? Which pol is going to defend them now? They've just lost all the money they spent on those full-page "BP does lots for the environment" adverts. Between the bad PR, increased risk of regulation and chance of being shut out of the market, this is absolutely more expensive than running a few extra tests.
mattmcknight 16y ago
Frankly, that's some bad math. BP just lost 3-4 years of net profit. You could talk about management interests versus shareholder interests being misaligned, but this event is not in shareholder interest. Also, I don't know where you get your "10x more" profitably number, but I have a feeling you made it up. There is new information about the risk- new to the regulators, new to the companies. We don't even know what the best mitigation approach is. The regulatory structure will follow what works and is cost effective. If the risk is too high, wells of this type will not be built until a better approach is found. Regulatory decisions are not political- not about power. They are ultimately bureaucratic.

Jeema3000 16y ago

You're missing the point: of course it's not in BP's interests to have a well explode, but the people making the important decisions are often not making those decisions based on sound engineering, but on political pressures and incentives from above. Richard Feynman showed an excellent example of this after the Challenger disaster. He was on the Presidential task force after that disaster, and he asked NASA management and engineers, separately, to quantify what they felt the odds of a catastrophic failure resulting in crew loss were prior to the disaster. The risk values quoted by engineers and by management were something like 2-3 orders of magnitude different (with the engineers quoting the much more likely value)...

gvb 16y ago
"Engineers at Rocketdyne, the manufacturer, estimate the total probability [of catastrophic failure] as 1/10,000. Engineers at Marshal estimate it as 1/300, while NASA management, to whom these engineers report, claims it is 1/100,000. An independent engineer consulting for NASA thought 1 or 2 per 100 a reasonable estimate." — Personal observations on the reliability of the Shuttle by R.P. Feynman http://science.ksc.nasa.gov/shuttle/missions/51-l/docs/rogers-commission/Appendix-F.txt http://science.ksc.nasa.gov/shuttle/missions/51-l/docs/roger... Empirical post script (as of STS-132 2010-05-26) Total launches 131 Failures 2 Successes 129 Failure rate: 1.5% If you read the report, you will find that NASA declared a reliability number that the shuttle was to meet (1/100,000), and then backed into the calculations that justified that reliability number. In other words, it was top-down, rather than bottom-up. IMHO, bottom-up tends to be pessimistic, but top-down tends to be be a figment of management's imagination. In his report, Dr. Feynman pointed out that many of the calculations had reliability figures that, while not necessarily wrong, were so small as to be impossible to validate... but that was the number necessary to generate the 1/100,000 roll-up (actually, rolled-down) number.