But Safety is Really Expensive!

By BJ Bjornson

So one of the things that myself and a lot of people i�ve been talking to have been wondering about the Deepwater Horizon well disaster is why they haven�t been able to shut off the well head. It is that inability that has made this such a catastrophe, as the oil just keeps pumping out of the well and into the ocean. The Wall Street Journal has a good article on the problem, and wouldn�t you know it, it turns out that oil company lobbying against more stringent regulations played a part.

he oil well spewing crude into the Gulf of Mexico didn't have a remote-control shut-off switch used in two other major oil-producing nations as last-resort protection against underwater spills.

The lack of the device, called an acoustic switch, could amplify concerns over the environmental impact of offshore drilling after the explosion and sinking of the Deepwater Horizon rig last week.

. . .

Some major oil companies, including Royal Dutch Shell PLC and France's Total SA, sometimes use the device even where regulators don't call for it.

. . .

U.S. regulators have considered mandating the use of remote-control acoustic switches or other back-up equipment at least since 2000. After a drilling ship accidentally released oil, the Minerals Management Service issued a safety notice that said a back-up system is "an essential component of a deepwater drilling system."

The industry argued against the acoustic systems. A 2001 report from the International Association of Drilling Contractors said "significant doubts remain in regard to the ability of this type of system to provide a reliable emergency back-up control system during an actual well flowing incident."

By 2003, U.S. regulators decided remote-controlled safeguards needed more study. A report commissioned by the Minerals Management Service said "acoustic systems are not recommended because they tend to be very costly."

The �very costly� acoustic systems run about $500,000 according to the article. Anyone want to guess just how much the clean-up and economic damage this oil spill is going to cost?

Understand that this is still in the speculative realm. Without knowing why the well head is still pumping oil and why the regular attempts to shut it down haven�t worked, it is at this point impossible to say if the acoustic trigger would have made any difference. Still, the point that Shell and other companies install the device even when not required shows that at least some in the industry are convinced that its a good idea.

If you ever want to know the kind of bureaucrats that scare me, it isn�t the ones that work for the government (though some of those do concern me at times), but the type of bean-counters working for corporations who weigh things like safety and health concerns against potential profit margins. A half-million that you don�t have to spend on a remote back-up shut off valve is an extra half-million in the shareholders pockets. Putting off needed maintenance for another few months means a better quarterly report and maybe a bigger bonus.

Like this oil spill and the mine disaster in West Virginia, such attitudes ultimately wind up blowing up, quite literally in these cases, though you can see similar attitudes prevailing in the financial regulations debate. Unfortunately it is rarely the people responsible who wind up paying the ultimate price in such explosions.