Teamwork, Regulation and Moral Responsibility

The Macondo blowout is a disaster, a financial mess, an ecological emergency, and catalyst for international reform of deepwater oil exploration.

Not only has the US moratorium worked havoc among offshore operators and rig owners, but repercussions have been felt around the world. Norway and Italy halted deepwater permits. Idled rigs in the Gulf of Mexico have been moved to West Africa and the Middle East.

Force majeur and a flood of lawsuits will take decades to unravel. The list of litigants sounds like a roll call of the world's most successful and competent players - BP, Transocean, Anadarko, Cameron, Halliburton, Schlumberger, DrilQuip, Smith, Mitsui, plus Noble, Shell, Exxon, Petrobras, Marathon and dozens more hit by the moratorium.

If it was simply a question of liability and killing the Macondo blowout, most of the legal complexity could be resolved. But it's not, and it won't be.

Open-ended costs of remediation, civil suits, and potential fines threaten BP's existence as a going concern. Assets in the North Sea and South America are being sold to raise cash. Dividends have been suspended indefinitely, and a $20 billion down payment was pledged against undefined and undefinable claims for compensation.

BP might end up reimbursing everyone in five US states that lost income by closure of tourist beaches and fishing areas in the Gulf. Tens of thousands of people have been deployed to scoop up dead birds, dolphins, turtles, and tar balls. The US government put thousands of Coast Guard, Interior, Energy, Defense, Homeland Security, EPA, and NOAA staff to work at sea, at makeshift coordination centers, or detailed to police the clean-up effort.

Worse, there's no guarantee that a fleet of drilling platforms, drillships, processing vessels, service boats and ROVs will succeed in controlling the blown Macondo well. They've been working on it for over 70 days, with silly improvizations, repeated failures, and without much progress.

Some time in the next few weeks the first "relief well" will bore into the blowout and attempt to pump heavy mud upward from the soft reservoir rock. No one knows whether this will work. I've speculated in technical debates that more than one relief well will be needed. But all of us hope that Boots & Coots can successfully shut in Macondo in early August, performing one of the greatest feats of well control in history.

So stunning and urgent is this high-risk operation, amid explosive oil and gas on the surface where dozens of vessels are crowded together, that few engineers or investors are thinking much farther ahead than a safe and successful conclusion at sea.

But it's an illusion, like all great displays of iron nerve and technical skill.

Debate on the future of oil exploration and industry regulation percolates quietly in Congress, at the Department of Interior, and at The Oil Drum forum where knowledgeable people gather anonymously to talk about Macondo. Corporate bosses may be preoccupied at present with emergency finance and careful calibration of their legal rights and defenses. But they, too, know perfectly well that the future is shot. Everything will change.

Macondo has blown up each and every line item of the offshore industry.

They say that politics is the art of the possible, constrained by public opinion. In the US, with Congressional elections looming in November, public opinion matters more than ever. Perhaps it is an ultimate watershed in US history, when the delicate balance between private enterprise and government control will tip irrationally and permanently against oil companies.

BP and Transocean have brought this hell upon themselves and everyone else by indulging a corporate culture of obedience to The Team, which values collective buck-passing and castrates every individual employee. On the deck of Deepwater Horizon, no one lifted a finger to prevent a disaster that was 100 percent predictable, obvious in its cause, and for which they had ample, measurable, documented advance warning. The committee on shore said "get 'er done" and the committee on board sullenly agreed, putting hapless victims in charge without supervision.

In the Coast Guard investigation of who did what, when, and why, every BP and Transocean employee pointed the finger of responsibility at The Team and denied personal wrongdoing.

That's why legislators and ordinary citizens are ready to demolish oil companies root and branch, and give government regulators vast new powers, most likely freezing all deepwater exploration forever, not as explicit policy, but the consequence of inifinte uncertainty and endless delay.

It was bad enough that oil companies were misguided by amoral Teams that rewarded conformity and collegial good vibes, and shunted unwelcome worries about well control and design.

Now it is proposed to give Teams of underpaid, inexperienced civil servants absolute authority to impose "one size fits all" deepwater specifications that sound safe to nervous politicians.

All of this could have been avoided - the loss of life, awful oil spill, financial ruin, and a worldwide crisis of confidence - if just one man had put his hand up and yelled "Stop!" either onshore or on the deck of the rig, in defiance of an irresponsible, backslapping Team.

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