University Assignment: Deepwater Horizon Case Study on Risk Management

This assignment analyzes the Deepwater Horizon oil spill, assuming the role of the Chief Risk Officer of BP America. It identifies the various risks the Deepwater Horizon rig faced in the Gulf of Mexico, including outdated technology, cementing procedures, and environmental uncertainties. A risk register is developed for Mark Williams, the chief electronic technician, outlining crucial checks and precautions to prevent future disasters, such as regular equipment maintenance, adherence to proper testing procedures, and the involvement of third-party auditors. The assignment emphasizes the importance of a proactive approach to risk management, highlighting the need for continuous assessment and prompt decision-making to mitigate potential threats. The conclusion stresses the critical role of effective risk management in ensuring safe operations and preventing catastrophic events, referencing the Exxon Valdez disaster as a cautionary example.

Running head: PRINCIPLES OF CORPORATE GOVERNANCE
Case Study: Deepwater Horizon
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................2
Different types of risk that Deepwater Horizon rig might be facing.........................................2
Risk Register for Mark Williams for using at the Deepwater Horizon rig................................4
Application of the information of the risk register.....................................................................6
Conclusion..................................................................................................................................6
References..................................................................................................................................8

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Introduction
Assuming as the Chief Risk Officer of British Petroleum (BP) America, the following
investigation, assessment and application of information shall be carried out in order to
determine the risks that Deepwater Horizon rig faces in the Gulf of Mexico along with
registering the risks of Mark Williams, the chief electronic technician for Transocean so that
he could use it at the Deepwater Horizon rig. The risks registered for Mark Williams shall be
used and applied by the Chief Risk Officer of BP in order to refrain from repeating the
mistakes done by Mark Williams at the Deepwater Horizon rig.
Different types of risk that Deepwater Horizon rig might be facing
Most experts are of the opinion that an oil spill disaster is a result of several risk
management failure of the company that is majorly responsible for the entire operation of an
oil rig. The major blame for the disaster is mostly put on the company controlling the major
operation of the rig, thereby they are held liable to maintain and run risk management
procedures on the rig in order to ensure safety (Ingersoll, Locke and Reavis 2012). The joint
report by the Bureau of Ocean Energy Management, Regulation and Enforcement along with
the U.S. Coast Guard usually gives the scenario and reason behind the wrong decisions
undertaken by the oil drilling company that aggravates the risk as well as their failure to take
necessary actions to mitigate such risk (King 2010). The oil spill disaster of Exxon Valdez in
1989 should be taken as an example for complying with the risk management procedures,
which every company dealing with the drilling of crude oil should follow, including
Deepwater Horizon Rig.
Risks
Drilling in deep water is a huge risk that oil drilling companies take up, not only for
making a huge amount of revenue but also for providing crude oil to the world. Although

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risky, deep water drilling has become technically feasible with the advancement of improved
drilling technology. However, drilling in ultra-deep water still remains a risk to ecology, to
the people working on it, along with the risk to the entire project of oil drilling (Ingersoll,
Locke and Reavis 2012).
The Deepwater Horizon rig in this case faces a risk involving the outdated computers
that monitored the drilling process. The computers with mid 90s era windows NT operating
system often froze, thereby putting the entire process of drilling out of control and
supervision (Ingersoll, Locke and Reavis 2012). A situation where a live operating oil drill
goes out of supervision and control of a supervisor or technician, it becomes extremely risky
to run such operation is it may result in a negative incident within moments as stated by mark
Williams (Pranesh et al. 2017).
The use of long string casing option, even after BP itself recommended not using it
due to the risk of having less gas barriers, may pose a great threat to the entire operation and
subsequently may contribute to a sudden disaster (Ingersoll, Locke and Reavis 2012).
Another probable risk contributing to a sudden disaster could be the cementing
procedures that are required to be undertaken to seal the wells. It was investigated and found
out that no bond log has been done to test the cement integrity of the well that has been
cemented. Moreover, the rig faces the risk of early removal of the mud barrier to 3000 feet
below the usual point, which may cause the rig to experience a sudden collapse. Lastly, the
use of lesser centralizers to keep the cement (cement used for cementing the well) even
around the well may pose a risk for the Deepwater Horizon rig (Ingersoll, Locke and Reavis
2012).
In addition, risks like, maritime adversities, environmental uncertainty, faulty
performances of drilling equipment, faulty construction of oil wells and faults in

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specifications and plans are among the other risks and threats that Deepwater Horizon rig
faces in the Gulf of Mexico (Ingersoll, Locke and Reavis 2012).
Risk Register for Mark Williams for using at the Deepwater Horizon rig
Mark Williams is the chief electronic technician for Transocean who is under the
responsibility of supervising and controlling the Deepwater horizon rig. There are certain
adversities that Williams should not ignore or overlook in terms of the technicalities at the
Deepwater Horizon rig, as otherwise it may pose a risk for the the largest oil spill disaster in
the world to encounter a collapse (Crone and Tolstoy 2010).
The following register of risks has been developed for Mark Williams for using at the
Deepwater Horizon rig.
 A frequent check on the environmental and maritime adversities that most off-shore
oil rigs face, like natural calamities at the sea, faulty performance of the drilling
machine, or an error in the planning of a drilling expedition (Ingersoll, Locke and
Reavis 2012).
 Regular maintenance of the equipment of the rigs and a check on their smooth
functioning is vital.
 Upgradation of gadgets, computers and other necessary tools is important for better
supervision and control of the entire process of drilling, production, transportation,
refining, distribution, retailing and marketing of the crude oil and the refined
petroleum (Ingersoll, Locke and Reavis 2012).
 Choosing the more secured option for the operation of the rig, even if it involves
higher expenditure of finances as well as resources, as it is wiser to spend more at
present than to lose a lot more later. Like, using a short liner at the bottom of the well

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with additional seals, sufficient use of centralizers for keeping the cement even, tests
to measure cement integrity, et cetera (Ingersoll, Locke and Reavis 2012).
 Ensuring the correct process of carrying out of tests and reaching a correct outcome.
Like, pressure tests carried out to measure the pressure of the blowout, which is
important to understand the stability of the well (Lindøe, Baram and Braut 2017). A
heavy pressure on the blowout is a signal to shut the operation of the well entirely and
give it some time to cool down.
 Haste work is absolutely non-permissible for oil drilling operations, as it tends to
mislead the technicians or make them overlook minor yet significant details that
becomes fatal for the entire operation afterwards. Like, the removal of the mud barrier
earlier than when it should have been, to 3000 feet below the usual point (Bhandari et
al. 2015).
 Keeping a check on the maintenance issues of the rig would save it from sudden
accidents or malfunctions. It important to take the drilling rig to a dry-dock at a
frequent interval for running maintenance tests and carrying out necessary repair
works (Lindøe, Baram and Braut 2017).
 Hiring third party auditors and maintenance companies who could help the chief
technician in charge in terms of maintaining the rig and the well and providing their
expert opinion on running diagnosis of the maintenance tests and coming out with a
correct result, thereby facilitating a double check of the structural and operational
work of the rig (Lindøe, Baram and Braut 2017).
 Quick decisions need to be taken in case of emergencies like rig explosions, for
saving the lives of the staffs and technicians living at the oil rig.
 Formal risk assessment routines should be carried out for assessing the risks
associated with operational decisions.

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The above-developed risk register could be followed by Mark Williams in the capacity of
the chief technicians for Transocean for maintaining a smooth functioning of the oil rig.
Application of the information of the risk register
As the Chief Risk Officer of British Petroleum, America, it would be my utmost duty
to ensure the safety of the operational rigs and wells of the company. As a chief risk officer, I
would make sure to minimize the risks and threats involved with the drilling process and
other operational processes like production, transportation, refining, distribution, retailing and
marketing. A regular risk assessment test is of most importance in this situation that would
alert about the probable risks lurking around. Taking the example of the risk register of Mark
Williams, it could assessed that a technician or a risk officer could adopt several measures to
prevent a large scale disaster; however, the fault should be diagnosed well in advance, giving
them the time to take the best suited decision to prevent the mishap and save the environment
(Nelson 2017). A constant tab on the equipment, electrical and electronic gadgets and tools
and reading the test results correctly would minimize the threat of sudden accidents to a great
extent (King 2010).
Conclusion
Therefore, it could be concluded that it is of vital importance to maintain a correct risk
management process in order to ensure risk-free operation of the Deepwater Horizon oil rig.
The risk register developed for Mark Williams shortlists the probable threats or risks that an
operational oil rig may face and the technicians could refer to it for ensuring smooth
functioning of the rig. The risk register highlights the Do’s and Don’ts for a chief technician
of a rig or a risk officer of an oil drilling company. Therefore, in order to avoid accidents and
terrible disasters like the Exxon Valdez in 1989, it is important to run regular risk assessment
tests to ensure that the Deepwater Horizon oil rig is free of any probable threat.

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References
Bhandari, J., Abbassi, R., Garaniya, V. and Khan, F., 2015. Risk analysis of deepwater
drilling operations using Bayesian network. Journal of Loss Prevention in the Process
Industries, 38, pp.11-23.
Crone, T.J. and Tolstoy, M., 2010. Magnitude of the 2010 Gulf of Mexico oil
leak. Science, 330(6004), pp.634-634.
Ingersoll, C., Locke, R.M. and Reavis, C., 2012. BP and the Deepwater Horizon Disaster of
2010. MIT Sloan School of Management, Case Study.\
King, R.O., 2010. Deepwater horizon oil spill disaster: Risk, recovery, and insurance
implications. Diane Publishing.
Lindøe, P., Baram, M. and Braut, G.S., 2017. Risk regulation and proceduralization: An
assessment of Norwegian and US risk regulation in offshore oil and gas industry.
In Trapping Safety into Rules (pp. 69-86). CRC Press.
Nelson, S.H., 2017. Containing environmentalism: risk, rationality, and value in the wake of
the Exxon Valdez. Capitalism Nature Socialism, 28(1), pp.118-136.
Pranesh, V., Palanichamy, K., Saidat, O. and Peter, N., 2017. Lack of dynamic leadership
skills and human failure contribution analysis to manage risk in deep water horizon oil
platform. Safety science, 92, pp.85-93.