3 Business Lessons from the Great Oil Explosion/Crisis of April, 2010

News item:
So far, engineers have been unable to seal the leaks that were discovered after the April 20 explosion of the Deepwater Horizon rig. Eleven rig workers are missing and presumed dead. Crude is leaking into the Gulf from three breaches in a pipe called a riser that once ran to the rig from the well under almost a mile of water. (from the Houston Chronicle, here).

The offshore drilling rigs off the coast of the United States are not required to include an “acoustic switch,” which can be triggered even from a lifeboat…
This Remote Activated Device, called an acoustic switch, is considered a weapon of last resort when it comes to sealing off ruptured offshore wells, but isn’t required on platforms operating under U.S. laws.
The Acoustic Switch’ is used by other industrialized nations, but not considered mandatory by U.S. Regulations.
(from Reuters, here).


So here’s the thing.  One of these days, something will go wrong. Really wrong. And the bigger the damage that can be caused when it does go wrong, the more important that there be back up systems, and then back up systems for failed back up systems.

And the reason we are still arguing over government regulations (safety, financial, and other) is that many companies will try to get by with the least amount of expense “required by law.”  So when they can keep some requirement out of the law, then they can get by with the lesser expense.

Until that really big thing goes wrong.

So – we come to the great oil spill, following the explosion that cost 11 people their lives, of April, 2010.  It may do little good to cast blame.  But it does a lot of good to ask “could the oil leakage have been stopped?”  And the answer might be yes.  Yes, I said might.  But – I think that BP wishes they had installed that $500,000 acoustic switch to see if it might have worked.

How much oil are we talking about making its way to the shoreline of our country?  No one knows for sure, but the experts have increased the estimate of the oil leaking out at least four times, and the current estimate could result in this spill potentially matching the 11 million gallons of the Exxon Valdez loss.  And the worst case scenario could rise much, much higher if they cannot stop the leak soon.

So, here are some lessons for people making decisions in business. And though I am thinking of the big decisions, where the consequences of something going wrong can be massive, the lessons might be valuable for us all.  (Have you ever seen a speaker not be able to get his/her technology working properly?  Have you ever been that speaker?)

1.  Expect, and plan for, the worst case scenario. Because it really, really might happen. It only took one Exxon Valdez for the environment of the Prince William Sound’s Bligh Reef, and surrounding areas, to be damaged for a very, very long time.

2.  Budget for every possible back up system. Redundancy in back up systems was a necessity for NASA.  Regarding this explosion and aftermath, I heard one expert describe how the back up systems all failed (yes, they had more than one) – a truly rare occurrence, according to this expert.  But now that we know that there was one more that could have been included in the construction, don’t we all wish (from BP, down to all of us) that they had spent the extra $500,000 dollars to put it in place and give it a chance to work?

3.  Maybe the biggest lesson — regarding those folks who try to persuade us to let them build big projects, and they say “we are confident that nothing will go wrong” – don’t believe them! They mean well.  They are not intentionally misleading us.  But – they really can’t promise that nothing will go wrong.  We learned that one the hard way – again.

This is truly a tragedy, with the loss of human life, and a crisis — with the threat to the environment, the food chain, jobs along the coast – of monumental proportions.  I hope we learn the big lessons.

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