Tudor, Pickering, Holt & Co Securities puts out a chatty research report every day, and it is worth reading. Case in point came yesterday when I came down to the header Industry response to Macondo.
It referred to a full-page advertisement in the Houston Chronicle from BP’s peers – ExxonMobil, Chevron, Royal Dutch Shell and ConocoPhillips. The ad was for the new oil containment system this group of four have agreed to spend $1bn building to ensure there is never again such a disastrous oil spill in the Gulf of Mexico. From the ad:
Engineer it. Build it. And make sure it is never needed.
But read on….
While we don’t yet have all the facts regarding the incident in the Gulf of Mexico, we do know that such tragedies are avoidable. By starting with properly designed wells, by following established procedures and best practices, by conducting relentless inspections, tests and drills, with frequent thorough training of personnel, accidents like this should never happen
TPH analysts’ take on this?:
Bottom Line – Industry peers throwing BP under the bus…and backing the bus up and running over one more time.
Indeed, these companies may not have had an accident of this kind. But as Mariner’s explosion in the gulf at the start of September; Chevron’s June pipeline leak; the burst utility pipeline of the past week in California and so on continue to show, accidents do continue to happen in the industry. Certainly not of the scale of BP’s disaster, but they do take place, nonetheless.
If these companies are going to put out ads such as this, they would do well to take their risk management to a new level and ensure they never have any accidents going forward.
Certainly ExxonMobil insists it has done this since the ExxonValdez accident. But my sense, from talking to those in the field, is that risk management is sort of like being pregnant – you can make all the preparations you want but you cannot really know what to expect (and, therefore, how to do EVERYTHING to plan and guard against a monumental disaster) until the baby, or, in this analogy, the accident, arrives. It has to be something you take from the top to the bottom of the organisation and that leaves no room for error.
Perhaps these companies have that. And certainly their oil containment system will be a great protective device for the gulf. But it will not guard against a massive oil leak offshore Brazil or Ghana or any other of the other hot prospects. And another uncontrollable blowout would certainly push those on the fence about further deepwater development off the fence and onto the anti-development side. This underscores why it is important that not only the Big Four, but also the rest of the industry, take its risk management to the next level – not only in the US but worldwide. And the question is how that is going to get done.