Strategy Of Oil Spill Disaster In The Gulf Of Mexico - Essay Example

Strategy Of Oil Spill Disaster In The Gulf Of Mexico Table of Contents Part 1 Introduction 3 Part 2 Disaster Background 3 Part 3 Risk Management Cycle 4 Part 3.1 [Risk Identification ] 5 Part 3.2 [Risk Measurement] 6 Part 3.3 [Risk Analysis] 7 Part 3.4 [Risk Decision] 8 Part 3.5 [Risk Implementation] 9 Part 3.6 [Risk Monitoring] 10 Part 3.7 [Risk Policy] 11 Part 4 Risk Management Strategy 12 Part 5 Conclusions 13 Part 6 References 14 Risk Management Cycle and Strategy of Bp's Oil Spill Disaster in the Gulf of Mexico 1.0 Introduction The society experiences unique risks that awaken their conscience towards the management of similar risks in the future. In most cases, catastrophic events come unnoticed and unexpected and disrupt habitats and livelihoods of humans and other living things. In the year 2010, oil spillage in the Gulf caused adverse destruction to humans and nature. Although the 2010 Mexican oil spillage did not come as the largest accident in history, it led to the spillage of the largest volume of oil in the sea in a single accident. Available records from the government of the United States indicate that 648,000 tones that are equivalent to 4.9 million barrels of oil were directed to the sea. The leak sank up to one mile beneath the ocean surface leading to several complications as it gushed out (Farrell, 2011, p. 43). This paper will look into the hazards faced by humans and the marine life based on the oil spill in the Gulf. It will also trace the historical disasters of similar magnitudes and highlight their relations to this occurrence. Additionally, it will analyze the risk management strategies in response to the disaster and any future precautions that touch on disaster preparedness. 2.0 Disaster Background In the month of April, the year 2010, a platform for deepwater drilling in the Gulf, located fifty miles from the Louisiana coast capsized and sank due to an explosion. Several attempts to seal the top the well continued to be futile necessitating huge volumes of oil to spill and spread to the shores. The spills reached as far as the marshes Louisiana. The company that was behind the oil-drilling venture was the British Petroleum. The effects of this disaster are tremendous and cut across several sectors ranging from the economy to the biological sustainability. The oil spillage threatened the livelihood of more than four hundred species of wildlife. The sea animals whose lives were most threatened includes tuna, whales, and shrimps together with several species of birds. The land animals mostly affected by the disaster were the white tailed deer, gray fox several amphibians like the snapping turtle and the alligator. The economic costs arising from the spillage in the Gulf were huge (The Daily Green 2010, p.1). For instance, by June 2010, the government had paid $ 62 million as compensation claims to 26,500 the residents in the Gulf of Mexico. Additionally, the insurers will likely spend up to $ 1.5 billion in compensation. Close to 12, 000 residents of Louisiana are now jobless due to oil spills in the Gulf (The Daily Green 2010, p.1). This is not the initial time the British Petroleum industry has had to confront a disaster. A refinery that the company owns in the city of Texas experienced a massive explosion in 2005. This resulted in the death of 15 workers with one hundred and seventy others sustaining serious injuries. The company was negligent and subsequently fined $87 million. In 2006, there were allegations that the company was releasing 4,800 barrels of oil from a corroded pipeline into Prudhoe Bay in Alaska (The Daily Green 2010, p.1). Apparently, it received a notification of the corrosion of the pipeline in 2002 but not take any actions. Consequently, the BP received a fine of $ 20million for that ignorance. 3.0 The Risk management cycle The risk management cycle is an ongoing process of identifying and analyzing the prevailing and evolving risks and then planning appropriate mitigation and control strategies. It also involves tracking the development activities before taking the necessary steps for the implementation of the control measures. After the implementation process, there is frequent monitoring to identify new changes. This process repeats itself in cycles. For purposes of this study, this paper will address the risks in accordance with the steps outlaid in the figure below. Ayling (2011) 3.1 Risk identification This steps identify the loss exposures from the disaster such liability risks, net income, and property. There exist several approaches of identifying the losses associated with the risk and their sources. Some of the approaches include past experience analysis, site inspections, and the reported data of the incidences of the past. These approaches provide the necessary information that guides loss estimation exposures. It is necessary to use collected information in analyzing the exact amount of loss and projecting future risks to contain losses (Hagerty, 2010, p.8). The oil spillage covered a size of 70 miles wide and 130 miles in length. This disaster led to eleven workers either losing their lives or missing. The cost of the oil spillage valued at $1.6 billion with more than four hundred species of wild life having their lives threatened (The Daily Green 2010 p.1). There are also reports that around 2,300 square miles of the historic coastal marshes of Louisiana and the cypress forest have been affected by the activities of the BP Company in oil drilling (Benoit, 2011, p. 28). The spillage also affected the psychological conditions of the victims. For example, Dr Lawrence Palinkas initiated a study known as Oiled Mayors Study highlighting the psychological impacts of the spill (Mccoy & Salerno, 2010 p. 64) 3.2 Risk Measurement There should be a measure of risk after identifying the risks accrued from the disaster. Risk identification should provide information to use when distributing the losses probability. This can be achieved through determining the severity of losses and the probability frequency to gauge the distribution probability in a given time period. In the loss frequency, one seeks to determine the times that there was an occurrence of a loss within a specified time. The severity of a loss on its part is an indication of the magnitude and impact level of an identified loss. These two important variables can help in the measurement of the risks from the oil spillage disaster at the Gulf. The historical information can form an appropriate basis for predicting the variables. The past two decades have witnessed the occurrence of several cases of oil spills into oceans, seas, and lakes. For instance between 1991 up to date, there have been around sixteen cases of reported oil spills beginning with the 1991 oil spillage in Kuwait. Therefore, the probability of another oil spill in the magnitude of the Gulf of Mexico is 0.8 annually. 3.3 Risk Analysis This is the third step in the risk management cycle. Risk analysis is possible at this stage because the actual risks after the identification and measurement of the actual risks. Analysis should be performed based on the requirements of the stakeholders. Most of the risks can be mitigated regardless of the dangers in reducing them. However, the most effective approach is to find strategies of reducing the effects of risks using specific tools. The best stages to manage risks include retention, control, avoidance and the transfer of risks. One of the causes of the oil spillage disaster at the Gulf of Mexico could have been breaching of the offshore drilling regulations. There is a need to reconsider the Drilling Safety Rule as a way of containing this scenario from future occurrence. The rule sets the right standard for the improvement of safety for drilling gas and oil activities on the Outer Continental Shelf of the United States. Additionally, this rule also serves to strengthen equipment oversight like the blow out preventers. There are also reports that the disaster affected many workers employed by the British Petroleum Company. This calls for the improvement of the Workplace Safety Rule. This rule requires operators to carry out comprehensive environmental impact assessment and safety studies before the initiation of any development project to reduce the accidental errors and spills. The government has gone ahead to make the Safety and Environmental Management System (SEMS) a mandatory requirement program for all organizations carrying out any development activity. It is worrying that with all the oil spillage disaster, the administration of the United States did not have any sophisticated precautionary equipments to deal with oil spillage disaster in the future. Subsequently, the disaster caught all the stakeholders off guard. However, the lessons from the disaster have triggered some actions towards the containment of similar situations in the future. For instance, in July 2010, oil giants such as ExxonMobil, ConocoPhillips, Shell, and Chevron agreed to invest US $1 billion in the building and deployment of adaptable and flexible containment systems that are capable of capturing and holding oil from beneath water well blowout in the Gulf of Mexico’s deepwater. Once completed, the new system will help contain one hundred thousand barrels daily and runs up to a depth of 10, 000 feet. The four oil giants also formed the Marine Well Containment Company. This nonprofit organization had the responsibility of operating and maintaining the system. The British Petroleum is engaging in campaigns to persuade affected residents to take up insurance cover future damages incurred (The Daily Green 2010 p.1). 3.4 Risk Decision This is the fourth step in the management of risk cycle. It is necessary to focus on some of the decisions advanced by the British Petroleum Company before, during, and after the disaster. In the year 2008, BP merged with MIT to establish a joint program that majorly focused on the safety of its operations by continuously enhancing an improvement culture. However, despite all these measures, the company has continued to receive its fair share of trouble in oil spills (BP 2011). Sadly, the company has not used the unfortunate circumstances to retrieve any vital lessons for future precautions. During the course of the disaster, BP developed various strategies that curb the flow of oil. They made a decision to drill a new well to intersect the one already in existence. However, this was to take several months before it could complete. In the meantime, the overflow was threatening the environment and the coastlines responsible for tourism and fishing. Of the three leaks, the company decided to seal off the smallest but this did very little to reduce the overall overflow. In recognition to this, the company decided to build two cofferdams. These cofferdams were to be on the top of leaks with emerging pipes that could lead the oil into drilling ships (Mail Foreign Service 2010 p. 1). The aftermath of the oil spillage at the Gulf led the development of a raft of measures intended to produce the most desired outcomes. The company decided to employ site assessment studies that are custom-tailored with the distinct available resources for capturing the impacts of the developments. Additionally, the company has also resorted to carry out baseline conditions study to ascertain the influence of oil spill and the damages incurred (BP 2011 p. 41). 3.5 Risk Implementation This is the fifth step in the management cycle of risks. The BP oil Company demonstrated this risk management stage with two actions in response to the oil spill. The first risk implementation strategy was to focus on deepwater (BP 2011 p.14). The company incorporated the lessons from the oil spills at the Gulf to develop new technical requirements for their future operations in deep water drilling. One such requirement is to develop capping equipment for pre planning relief. The company also developed contingency plans to take care of any foreseeable risk including the economic and environmental risks and mitigate them. The company is also striving to stay afloat with the global standards in terms of the requirements for deepwater drilling. In this regard, they follow a planning process that can help them predict the behavior of oil spill and follow it with the identification, assessment, and understanding of the social and environmental factors that are risk (Farrell 2011 p. 44). According to the company sources, the industry has already installed the predictive modeling tools oil spill, designed to capture the modeling data of the wind and the ocean current. This has the implication of providing better scenarios of oil spill. Besides, as a further approach to risk implementation, the company is currently developing updated and sensitive maps with very high resolution to help in remote sensing satellites (National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drill, 2011, p. 181). 3.6 Risk Monitoring Risk monitoring is the risk management cycle’s step number six. Here, one monitors if the decisions put in place in the implementation stage are actually meeting their objectives. Apparently, there were several implementation strategies. The correct monitoring approach will involve studying the in situ and observing the remote sensors to ascertain if they are in good working conditions and can actually identify and notify an impending oil spillage. Additionally, it also includes conducting the numerical model and laboratory studies on the oceanographic conditions in a four dimensional approach. The most efficient tools and equipments necessary for successful monitoring include SUVs, aircrafts, vessels, satellites, drifters and moorings. The monitoring of the risks follows a series of steps. The initial step is using aircrafts, satellites, and vessels to map conditions of the ocean. Then there is modeling the dispersal of the exterior oil trajectories and then dispersing the subsurface of the plumes of hydrocarbons in three dimensions. Conducting statistical studies and the oil-spill risk analysis is another important step in carrying out a risk monitoring process (Hagerty, 2010 p.29). 3.7 Risk Policy This is the seventh step in the risk management cycle. In this stage, one seeks to gather to collect more information for minimizing and reducing further risks associated with oil spill. The dangers caused by the oil spill at the Gulf and the long period taken to contain the spillage demonstrated how the initial policies were not adequate for addressing serious disasters. Besides, it came to the fore that the British Petroleum Company overlooked some of the policies that it was supposed to observe. 4. Risk Management Strategy Governments and organizations require these activities for the identification of operations for the attainment of their objectives. The problem of oil spillage in oceans and seas has apparently been with us for a long time. Governments have made significant steps trying to contain the menace. However, more need to be done because the available strategies were designed to handle low magnitude cases. For example, GAO has established a fund that will mitigate the probable risks (Fleming, 2010, p. 17). The British Petroleum Company came up with several strategies to manage the risks therein. Some of the risks were well planned and coordinated like the building of the funnel shaped Cofferdams helped greatly to funnel away oil to the drilling ships (Mail Foreign Service 2010 p. 1) 5. Conclusion Prevention remains the best strategy though there could be development of sophisticated technologies that handle disaster of such magnitude. The oil spillage could not have happened had the company carried out a comprehensive study of environmental impact assessment. However, the implementation of proper risk management strategies can address a disaster. While it is true that governments have made significant steps in trying to contain the menace, it is equally true that appropriate strategies should be adopted to handle low magnitude cases. Reference List Farrell, C 2011, The Gulf of Mexico oil spill, Edina, Minn, ABDO Pub. Fleming, S. A 2010, Oil Spills: Cost of Major Spills May Impact Viability of Oil Spill Liability Trust Fund: Congressional Testimony, Washington, DC: DIANE Publishing. Hagerty, C. L., & Ramseur, J. L 2010, Deepwater Horizon oil spill: selected issues for Congress. [Washington, DC], Congressional Research Service, Library of Congress. http://assets.opencrs.com/rpts/R41262_20100618.pdf. Mail Foreign Service 2010, 'Volcano' of oil to be absorbed using stockings stuffed with HUMAN HAIR as daily cost to BP hits £6.7m Viewed November 30 2012 at http://www.dailymail.co.uk/news/article-1272637/Gulf-Mexico-oil-spill-absorbed-using-stockings-stuffed-HUMAN-HAIR.html#ixzz2DgcPkLH7 Mccoy, M. A., & Salerno, 2010, Assessing the effects of the Gulf of Mexico oil spill on human health: a summary of the June 2010 workshop. Washington, D.C., National Academies Press. National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling 2011, Deep water: the Gulf oil disaster and the future of offshore Drilling: report to the President. [Washington, D.C.], National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. The Daily Green 2010, the Gulf of Mexico Oil Spill by the Numbers Viewed November 30 2012 at http://www.thedailygreen.com/environmental-news/latest/gulf-of-mexico-oil-spill-facts#ixzz2Dgfp5Mbb (Farrell 2011 p. 43) (Farrell 2011 p. 44) Fleming 17 National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling 2011 181 (Mccoy & Salerno, 2010 p. 64) Read More