April18 2011 LESSONS LEARNED FROM MACONDO

1 Presentation to Ocean Energy Safety Advisory CommitteeApril18 2011 LESSONS LEARNED FROM MACONDOA pril 18, 2011 Sean C. Grimsley, Bartlit Beck Herman Palenchar & Scott LLPD eputy Chief CounselThe National Commission on the Deepwater Horizon Oil Spill and Offshore (CD) LESSONS LEARNED from MacondoBackgroundWhat Happened What Happened High LevelHigh LevelBackgroundBackgroundRoot CausesRoot CausesBackgroundBackgroundThoughts for CommitteeThoughts for (CD) LESSONS LEARNED from MacondoThe Commission Executive OrderSec. 3. Mission. The Commission shall:(a)examine the relevant facts and circumstances concerning the root causes of the Deepwater Horizon oil disaster;.. (c)submita finalpublicreportto the Presidentwith its findingsand(c)submit a final public report to the President with its findings and options for consideration within 6 months of the date of the Commission s first (CD) LESSONS LEARNED from MacondoTask of Chief Counsel s Investigative TeamInvestigate and identify root causes of the blowoutOther staff investigated containment and responseDid not investigate BOP failure post explosion and blowoutPresent preliminary findings at hearing on November8 9, 2010 November 89, 2010 Assist in preparing Commission s Final ReportPrepareand submitChief Counsel s ReportPrepare and submit Chief Counsel s Report detailing findings on root causes of (CD)

2 LESSONS LEARNED from MacondoTwo Reports Containing Findings on Root Cause of BlowoutCommission s ReportReleased January 11, 2011 Chapter 4 sets out Commission s findings regarding root causesChief Counsel s ReportReleased February 17, 2011 Moredetailed explanation offindingscontainedinMore detailed explanation of findings contained in Chapter 4 of the Commission s ReportContains some additional information not available at time Commission s Report written confirmed (CD) LESSONS LEARNED from MacondoBackgroundBackgroundWhat Happened High LevelWhatHappened:WhatHappened:Root CausesRoot CausesWhat Happened:High LevelWhat Happened:High LevelThoughts for CommitteeThoughts for (CD) LESSONS LEARNED from MacondoThe MACONDO (CD) LESSONS LEARNED from MacondoWhat Happened High Level1. Bottomhole cement was the only active barrier when blowout occurredMudremoved(underbalanced)and BOP was openMud removed (underbalanced) and BOP was openBP chose not to put additional barriers in place prior to displacement of mud from the (CD) LESSONS LEARNED from MacondoWhat Happened High Level1.

3 Bottomhole cement was the only active barrier when blowout occurredMudremoved(underbalanced)and BOP was openMud removed (underbalanced) and BOP was openBP chose not to put additional barriers in place prior to displacement of mud from the riser2. Bottomhole cement job failedUnusually tricky cement job many risk factorsFoamedcementslurrywas likelyunstableas wellFoamed cement slurry was likely unstable as (CD) LESSONS LEARNED from MacondoWhat Happened High Level1. Bottomhole cement was the only active barrier when blowout occurredMudremoved(underbalanced)and BOP was openMud removed (underbalanced) and BOP was openBP chose not to put additional barriers in place prior to displacement of mud from the riser2. Bottomhole cement job failedUnusually tricky cement job many risk factorsFoamedcementslurrywas likelyunstableas wellFoamed cement slurry was likely unstable as well3.

4 Nobody detected failure until too lateMisinterpretedthe negativepressuretestMisinterpreted the negative pressure testFailed to detect influx during (CD) LESSONS LEARNED from MacondoWhat Happened High Level1. Bottomhole cement was the only active barrier when blowout occurredMudremoved(underbalanced)and BOP was openMud removed (underbalanced) and BOP was openBP chose not to put additional barriers in place prior to displacement of mud from the riser2. Bottomhole cement job failedUnusually tricky cement job many risk factorsFoamedcementslurrywas likelyunstableas wellFoamed cement slurry was likely unstable as well3. Nobody detected failure until too lateMisinterpretedthe negativepressuretest HumanJudgmentMisinterpreted the negative pressure test Human JudgmentFailed to detect influx during displacement Human (CD) LESSONS LEARNED from MacondoBackgroundBackgroundWhat Happened What Happened High LevelHigh LevelRootCausesRootCausesRoot CausesRoot CausesRoot CausesLists of RecommendationsLists of (CD) LESSONS LEARNED from MacondoBP s View of the BlowoutFailure ofManagementFailure of (CD) LESSONS LEARNED from MacondoOverview of Management Absence of responsibilityAbsence of responsibility Diffuse decision making Diffuse decision making within BP and between contractorswithin BP and between contractors IneffectivecommunicationIneffectivecommu nicationIneffective communicationIneffective communication Lack of leadershipLack of (CD)

5 LESSONS LEARNED from MacondoOverview of Management Absence of responsibilityAbsence of responsibility Diffuse decision making Diffuse decision making within BP and between contractorswithin BP and between contractors IneffectivecommunicationIneffectivecommu nicationIneffective communicationIneffective communication Lack of leadershipLack of Setting Setting people up people up for failurefor failure Overrelianceon humanjudgmentOverrelianceon humanjudgment Overreliance on human judgmentOverreliance on human judgment Inadequate instruction and untimely proceduresInadequate instruction and untimely procedures Inadequate training and procedures for emergency situationsInadequate training and procedures for emergency situations PoormanagementofPoormanagementofstaffing staffing Poor management of Poor management of (CD) LESSONS LEARNED from MacondoOverview of Management Absence of responsibilityAbsence of responsibility Diffuse decision making Diffuse decision making within BP and between contractorswithin BP and between contractors IneffectivecommunicationIneffectivecommu nicationIneffective communicationIneffective communication Lack of leadershipLack of Setting Setting people up people up for failurefor failure Overrelianceon humanjudgmentOverrelianceon humanjudgment Overreliance on human judgmentOverreliance on human judgment Inadequate instruction and untimely proceduresInadequate instruction and untimely procedures Inadequate training and procedures for emergency situationsInadequate training and procedures for emergency situations PoormanagementofPoormanagementofstaffing staffing Poor management of Poor management of

6 Inadequate risk assessmentInadequate risk assessment Ad hoc and tunnel vision decision making during critical operationsAd hoc and tunnel vision decision making during critical operationsPblihfidfPblihfidf Problems with safety metrics and process safetyProblems with safety metrics and process safety Focus on efficiency biases decisions toward cost savingsFocus on efficiency biases decisions toward cost (CD) LESSONS LEARNED from MacondoOverview of Management Absence of responsibilityAbsence of responsibility Diffuse decision making Diffuse decision making within BP and between contractorswithin BP and between contractors IneffectivecommunicationIneffectivecommu nicationIneffective communicationIneffective communication Lack of leadershipLack of Setting Setting people up people up for failurefor failure Overrelianceon humanjudgmentOverrelianceon humanjudgment Overreliance on human judgmentOverreliance on human judgment Inadequate instruction and untimely proceduresInadequate instruction and untimely procedures Inadequate training and procedures for emergency situationsInadequate training and procedures for emergency situations PoormanagementofPoormanagementofstaffing staffing Poor management of Poor management of

7 Inadequate risk assessmentInadequate risk assessment Ad hoc and tunnel vision decision making during critical operationsAd hoc and tunnel vision decision making during critical operationsPblihfidfPblihfidf Problems with safety metrics and process safetyProblems with safety metrics and process safety Focus on efficiency biases decisions toward cost savingsFocus on efficiency biases decisions toward cost (CD) LESSONS LEARNED from MacondoSome of the Companies Involved at MacondoSurface data loggingRig and drillingDrillingmudCementingROV supportBlowout preventerDrilling mudWell and t liCentralizersppcement loggingCentralizers, float collar, shoe trackWellhead, casing (CD) LESSONS LEARNED from MacondoOnshore Organizational (CD) LESSONS LEARNED from MacondoRig Crew Organizational (CD) LESSONS LEARNED from MacondoCement Job: Example of Problems with Decentralized Decision-MakingNumerous different risk factors associated with cementjobcement jobLittleto no communicationof thoseriskstoLittle to no communication of those risks to individuals/contractors conducting the negative pressure test or monitoring well after cement jobpgjResulted in looking at risks they knew about one at a time rather than collectively as a (CD) LESSONS LEARNED from MacondoRecommendation.

8 Make Clear Who is ResponsibleMuch finger pointing after event saying someoneelse responsiblesomeone else responsibleMakeclearentityresponsiblefor criticalMake clear entity responsible for critical decisions and (CD) LESSONS LEARNED from MacondoDid Not Communicate LESSONS LEARNED From Other Events drill crew did not consider well control as a realistic event during operation as the [d h lbi]hdbfll ttd [downhole barrier] had been successfully tested tested barriers can fail and risk awareness and control measures need to be implemented standard well control practices must be maintained pthroughout the life of the well specifyoperationsthat induceunderbalanceconditionsApril 14, 2010 Advisoryspecify operations that induce underbalance conditions in the well bore (CD) LESSONS LEARNED from MacondoDid Not Communicate LESSONS LEARNED From Other Events It s in the database April 14, 2010 (CD) LESSONS LEARNED from MacondoRecommendation.

9 Create Centralized System for Communicating LESSONS LEARNED and Best PracticesCreate centralized, industry wide system for alertingall playersto lessonslearnedand nearalerting all players to LESSONS LEARNED and near missesKeep better track of procedures used by different companies in order to facilitate study and pyidentification of best (CD) LESSONS LEARNED from MacondoOverview of Management Absence of responsibilityAbsence of responsibility Diffuse decision making Diffuse decision making within BP and between contractorswithin BP and between contractors IneffectivecommunicationIneffectivecommu nicationIneffective communicationIneffective communication Lack of leadershipLack of Setting Setting people up people up for failurefor failure Overrelianceon humanjudgmentOverrelianceon humanjudgment Overreliance on human judgmentOverreliance on human judgment Inadequate instruction and untimely proceduresInadequate instruction and untimely procedures Inadequate training and procedures for emergency situationsInadequate training and procedures for emergency situations PoormanagementofPoormanagementofstaffing staffing Poor management of Poor management of

10 Inadequate risk assessmentInadequate risk assessment Ad hoc and tunnel vision decision making during critical operationsAd hoc and tunnel vision decision making during critical operationsPblihfidfPblihfidf Problems with safety metrics and process safetyProblems with safety metrics and process safety Focus on efficiency biases decisions toward cost savingsFocus on efficiency biases decisions toward cost (CD) LESSONS LEARNED from MacondoThe MACONDO (CD) LESSONS LEARNED from MacondoBarriers to Hydrocarbon Escape Active BarriersMud (drilling fluid)Tested physical barriers Bottom hole cement Cementplugsand otheruphole mechanicalbarriers Cement plugs and other up hole mechanical barriers Closed BOP C i Bi Contingent BarriersOpen BOP depends on human judgmentUntestedphysicalbarriers testsoftendependon humanUntested physical barriers tests often depend on human judgment ( , negative pressure test) (CD) LESSONS LEARNED from MacondoSingle Physical Barrier During Displacement.