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Is Deepwater Oil Too Risky?

Following up on my previous post about the Gulf oil spill, Normal Accidents?, here is a guest contribution by Charles Perrow, Professor Emeritus of Sociology at Yale University, and author of the classic book Normal Accidents. This post is adapted from the preface to the forthcoming paperback edition of Perrow’s 2007 book The Next Catastrophe: Reducing Our Vulnerabilities to Natural, Industrial, and Terrorist Disasters, (Princeton, 2011).

by Charles Perrow

oilIn 1984 I published a book, Normal Accidents (revised edition, 1999), that argued that we should abandon systems with catastrophic potential if they were interactively complex and tightly coupled, unless they could be redesigned to minimize these dangerous characteristics.  Complexity and coupling can be reduced through modular, rather than integrated designs, and catastrophic potential reduced through deconcentrating hazardous materials close to population centers or sensitive ecologies.  We might decide that some systems with catastrophic potential are so vital that the risk of a rare, but possible system failure is worth running.  Government officials felt that way about our nuclear defense system for many decades, steadily increasing the risks of a huge catastrophe.  I will argue that deepwater drilling, especially in ecologically sensitive areas, should be abandoned, because it combines complexity and coupling with catastrophic potential.

Interactive complexity is not simply many parts; it means that many of the parts can interact in ways no designer anticipated and no operator can understand.  Since everything is subject to failure, the more complex the system the more opportunities for unexpected interactions of failures.  Tight coupling means that failures can cascade through the system since the system cannot be stopped, fixed and restarted without damage; substitutions are not available, and failed subsystems cannot be isolated.

I do not think that the failure on April 20, 2010 of the rig built by Transocean and run by BP had a system accident (or “normal accident”).  While such rigs are very complex and very tightly coupled, it is more likely that faulty executive decisions resulted in knowingly running unnecessary and dangerous risks.  To be a system failure, in my definition, requires that even if everyone tries as hard as they can to operate safely, it is in the nature of complex, tightly coupled systems to inevitably (though rarely)  have the unforeseeable interaction of failures, usually small ones individually, that can cascade through the system.  This was not the case with the Transocean rig; BP management frequently overrode the objections and warnings of its own operators and engineers, and those of its subcontractor, Transocean, and independent consultants.  Nothing that transpired was unexpected.

BP has had a history of ignoring warnings by its own staff in order to cut costs.  A refinery explosion in 2005 and a massive oil spill in Prudhoe Bay, Alaska in 2006, resulted in (small) criminal penalties for executive malfeasance; the pipeline had a smaller spill last year, and there are currently strident warnings about the dangers of a massive spill on the pipeline in Alaska.  The firm had a close call in 2005 with its deepwater drilling Thunder Horse rig.

With this record, perhaps deepwater drilling is safe if the other firms engaged in it do practice safety.  It is hard to tell.  Exxon-Mobil is reportedly very concerned with safety after the Valdez accident, and said to be the industry leader in safety.  But it is not encouraging that in July of this year Attorney General Eric Holden was asked if BP was doing anything different than others in the industry.  He noted “certain commonality of the way oil companies had been operating” in the Gulf, but since the investigation of drilling is ongoing, he would give no specifics.  BP may be an extreme case of putting profits over the safety of their workers, the environment, and the viability of the firm, but disasters in the chemical industry have been increasing in recent decades, so one should not be reassured that BP is the only bad apple. The Materials Management Service (MMS) reports there are 33 rigs that have permits for exploratory drilling in deepwater in the Gulf; 29 were inspected after the spill and no serious violations were found. One may be skeptical of their finding.  For example, MMS only recommends, but does not require, a backup blowout preventer (the preventer failed in the April 20, 2010 Horizon accident).  MMS does not set specifications for all pipes, allowing BP to use less safe pipes in its rig, and so on.  Furthermore, the unsafe practices in the Horizon rig occurred when the rig ran into trouble; inspection would not catch such bad practices.  We cannot be reassured that BP is an outlier and other firms would operate safely, though a news story about Exxon’s last minute abandonment of a project, the deepest drilling at the time, is encouraging.  Less encouraging is that another drilling firm bought the lease to the abandoned exploratory drilling and has continued to drill, but for two years has recovered no oil from what is expected to be a vast pool.

Perhaps we should be reassured that the Horizon accident has alerted the industry to the dangers of deepwater drilling sufficiently to make accidents extremely rare, and furthermore has led them to have adequate emergency response facilities on hand if there is the rare accident.  After all, the nuclear power industry appears to have made significant safety improvements since the TMI accident; could not the deepwater drilling industry improve as well?  A rebuttal is that nuclear plants in the U.S. continue to have near misses despite improvements, and are not as much endangered by storms and hurricanes. BP, at least, does not appear to have changed its safety provisions in spite of the Thunder Horse near-disaster on July 11, 2005, because of a pump valve installed backwards and cracks in underwater pipes because of shoddy welding, and its Atlantis rig is being investigated because of whistleblower charges of unverified engineering documents.

An argument against a ban on deepwater drilling is that the expensive rigs able to do this would simply move to other locations that have no ban.  It is similar to intensive policing in one area; it simply drives the criminals to other areas, thus we should make no effort to increase policing in the high crime area – an argument for inaction. Were they to move to Norway or Brazil, where drilling takes place, they would have to have stronger safety standards – e.g. a backup blowout preventer – than those required in the Gulf.  But they might move their rigs to other nations where standards are presumably below those of the Gulf, and where there may be ecosystems as vulnerable as those of the Gulf.  The only response to this argument, unfortunately, is that one has to begin somewhere, and the U.S. ban just might encourage other nations to tighten regulations.

A further argument has been put forth by the oil industry and state governments bordering the Gulf: the economic impact upon the area would be severe in terms of jobs lost and business activity associated with pumping, transporting and selling the oil.  But the effect upon oil-related jobs is not likely to be as severe as the effect upon non-oil activities.  Oil is capital intensive, with few workers per unit of capital; non-oil activities such as fishing and tourism are labor intensive.  More jobs are at stake in non-oil operations.

A final argument is that we need the oil; shutting down deep-sea drilling would raise the price of oil in the U.S. and make us more dependent upon foreign sources.  Raising the price of oil is to be encouraged.  A higher price of oil would mean that investments in non-carbon sources of energy, such as solar, wind, and geothermal would increase, as would investments in efficiency and conservation.  The price of oil should be much higher to encourage these investments.  Since a carbon tax is out of the question in the U.S., and a pollution tax on gasoline unlikely because of public opposition, and especially oil industry opposition, curtailing production is the next best step.  Another step, a bit more likely than a carbon tax, would be a steep tax upon imported oil, reducing our dependency by tipping the market away from imports.  The market at present is not a “free” one, since the true costs of burning oil are not reflected in its price – the “externality” of pollution is treated as a free good when it actually imposes a heavy tax upon citizens and their environment.

The interactive complexity and tight coupling of deep-sea drilling rigs is apparent; even if BP had not skimped on safety and not overridden the objections of their own personnel and those of their subcontractors, the system could have the rare but possible unexpected interaction of failures. They are inevitable since nothing is perfect.  Profit motives and lax regulation only make such disasters more likely.

Content Discussion

Bill Hannahan's picture
Bill Hannahan on July 19, 2010

Charles wrote;

I will argue that deepwater drilling, especially in ecologically sensitive areas, should be abandoned, because it combines complexity and coupling with catastrophic potential.

Complexity with catastrophic potential is not sufficient grounds to ban activity. Imagine that a world trade center tower collapsed without warning due to a defect in design, and that collapse triggered the same fault in the other building. That accident could have killed 20,000 people. Are you opposed to building skyscrapers, large dams, DNA research etc?

The decision to ban activity must be based on a comparison of risk vs. benefit. Domestic oil production has enormous benefits to our quality of life and safety.

Drilling an offshore well without the ability to contain a worst case blowout is like building a nuclear power plant without a containment building. The Russians tried it, and we know how that turned out. Assuming that we can make blow out preventers so reliable that they need no backup is a huge mistake.

I am not proposing that every well have a containment dome in place, however a dome with proven reliable technology capable of containing a worst case blow out should be available with the capability of being installed within 48 hours of an accident, as a condition for being permitted to drill.

We should have been using this disaster to improve knowledge and technology. The administration should have implemented a competition for developing such technology. It would start with a prize of $500 million for the first team to develop a system capable of collecting over 99% of leaking oil. A team of independent experts would evaluate each submission, and when a collection system fails, the most promising contender would be up next until a successful technology is developed.

I believe the leak would have been contained long before now had this been done. Simply banning the technology is a lazy response. Developing the backup technology is the smart way to go.

“nuclear plants in the U.S. continue to have near misses despite improvements”

Provide examples of nuclear accidents that came close to a large-scale release of fission products.

“Raising the price of oil is to be encouraged.”

This is a very cruel position. Higher energy prices mean a lower standard of living and a harder life for most people.

U.S. energy policy should be focused on one goal. Develop clean safe reliable dispatchable sources of energy that are cheaper than burning fossil fuel and can be mass produced in unlimited numbers.

1     Increase R&D for energy by more than a factor of ten to $100 billion per year, 90 cents per day for each american. Push every technology as hard as possible, build prototypes of everything as it becomes possible and publish the performance data.

Let the marketplace decide which new technology to build on a level playing field.

When someone says R&D most people only hear “Research”. In truth Development is the really expensive part, and the U.S. has done very little of that in recent decades.

Build intermediate scale plants of all promising technologies, advanced nuclear, cellulosic biofuel, algae, solar power, geothermal, coal with full sequestration. For those technologies that are successful in medium scale we should built at least one full scale commercial size demonstration plant.

We have yet to build a fully sequestered coal plant after years of talk. We need to try even if the first plant is a failure.

There are dozens of ways to split a uranium atom. What are the odds that a steroidal submarine reactor is the best? There are huge improvements to be made in nuclear power plant design and construction, yet we have not built a new experimental reactor since 1973.

Geoffrey Styles's picture
Geoffrey Styles on July 19, 2010

Many people want higher oil prices in order to make alternatives more competitive, though it was fairly clear in 2007-8 that this wasn’t a guaranteed outcome, because it turned out that things like ethanol had high inputs of energy and other other commodities that followed oil prices up, while other alternatives relied on both materials and construction capacity that were driven up by the global commodities boom.  So instead of various technologies needing  $50/bbl oil to be competitive, the figure advanced to $100, then $150.  (Some refer to this as the law of receding horizons.) There’s also an enormous difference in impact on the national economy if oil prices are raised by imposing a domestic tax, or raised by stifling domestic production.

Bill Hannahan's picture
Bill Hannahan on July 20, 2010

 

Geoffrey said:

Many people want higher oil prices in order to make alternatives more competitive

Europe has had gas prices 2 – 4 times higher than the U.S. for several decades. So Europe should be flooded with alternatives, electric, hydrogen, flywheel, fuel cell etc, right?

In reality most vehicles in Europe are still piston powered. Driving energy prices up without giving people practical low cost alternatives simply leaves them with less to spend on the necessities of life, making life harder and more dangerous. Making oil more expensive in the U.S. will not solve the world’s energy problems.

For now we need abundant low cost oil to get our economy going so we can afford to do the R&D to create the low cost options that the whole world will want. Spending huge amounts of money on expensive unreliable intermittent energy sources is a waste of resources that gives the illusion of progress while the underlying problems get worse.

Charles Barton's picture
Charles Barton on July 20, 2010

Charles Parrow wroote: “we should abandon systems with catastrophic potential if they were interactively complex and tightly coupled, unless they could be redesigned to minimize these dangerous characteristics.”

A couple of weeks ago I was hospitalized for 4 days, for a “medication adjustment.”  The medication was to control cardiac arrythmia, and hospitalization was required because the medication could have a potentially deadly side effect.  My hospital stay was extended because the initial dose was not effective.  So should this medical approach be abandoned, because there is some potential danger to the patient?   

What bothers me about this and many other EC posts, is that neither the writer nor the poster, feels responsible for discussion of the issues that he raises.  The writer has written in the past about nuclear safety issues, yet how well he really understands nuclear safety is open for debate.  It would seem that the debate is not going to occur on the Energy Collective, however. 

Geoffrey Styles's picture
Geoffrey Styles on July 20, 2010

Rod,

 

You’re right; I DO know what higher oil & gas prices mean to the value of my portfolio, but I guarantee that you DON’T.  For example, do you truly imagine that my portfolio is made up only of oil & gas shares, as opposed to index and other mutual funds that suffer when energy prices become so high that they harm the rest of the economy?  My interests are not as unaligned with those of my fellow citizens as you seem to think.

I’m happy to discuss energy issues with you any time, although I find myself agreeing with you much more often than you seem to agree with me, even when we’re saying essentially the same thing.  So be it. However, I don’t think it benefits either of us or the readership of TEC to take that discussion into such personal territory as you have done here.  If you have anything further to say on this, I suggest you take it up with me in email.