Part 1 of our multi-part series examines the governmental and regulatory failures behind the Deepwater Horizon and Piper Alpha oil rig disasters through the lens of quality management.
By Nicholas R. Zabaly · 20 min read · Topics: quality-management, oil-gas, deepwater-horizon, piper-alpha, regulatory-compliance, case-study
Part I in an Ongoing Multi-Part Series
It was April 20, 2010; a quiet night on the Gulf. In the moonlit dark, the border between sea and sky was difficult to make out – save for the occasional clusters of lights towering over the waves, looming like skyscrapers, or great metallic beasts. On this night, one particular beast was preoccupied with a tense mission: to finish drilling an exploratory oil well in the vast undersea Mississippi Canyon, an ancient formation which holds untold hydrocarbon wealth.
The mission was tense not only because of its complexity (a series of regulated processes involving dozens of suppliers and subcontractors, hundreds of workers, thousands of work hours, and innumerable analyses and calculations), but also because it was behind schedule and over budget. The crew of this vessel knew that the time to execute had come – and it was now, or never.
This was the Deepwater Horizon – pride of the Gulf, and jewel of the Transocean fleet of semi-submersible oil rigs held under contract to BP, one of the world’s largest energy companies. Active since 2001 and built as a state-of-the-art vessel by one of South Korea’s finest shipbuilders, the Deepwater Horizon had set the world record for drilling the deepest oil well in history, and was regarded by operators, crew, and auditors alike as an unusually successful and celebrated rig.
Some even went so far as to attribute that success to factors beyond human control – the Deepwater Horizon was said to be a “lucky” rig, one that paid well and had gone years since an accident.[1] While every member of the Deepwater Horizon crew knew that no one in the oil and gas industry could ever afford to be complacent, this was one of the most secure and safe places to be in the Gulf.
On that placid, calm night, seagulls circled above the rig, while below – approximately 5,000 feet below the ocean’s surface – the final work on cementing the production casing had just concluded. It was minutes before 10 PM, and the day’s stressful work was nearly finished. Just hours earlier, a vice president from BP had been onboard to congratulate the crew on an exemplary record: 7 years without a lost-time incident (industry-speak for an accident resulting in injury or death).
All that remained was to cap the well and move on. It was just another day at work. Just another day.
Five minutes later, the Deepwater Horizon was ablaze. Ten people were dead, with another to follow in the coming hours. And the largest oil spill in American history had begun. The consequences of what happened in that fateful five minutes are still being felt across the Gulf and around the world.
At first, it all seemed so sudden – the change from business as usual to catastrophe. But years of investigation, interviews with survivors, and extensive analysis have revealed that what happened on April 20, 2010 was not a freak accident, but a preventable tragedy with roots in systemic failures in quality management.
The inability and unwillingness to design and follow standardized processes led directly to the outcome of that terrible night – and even more unfortunately, an accident that predated the Deepwater Horizon by nearly 22 years provided a framework to avoid the catastrophe – a framework which went ignored and unutilized.
On July 6, 1988 off the eastern coast of Scotland, the Piper Alpha oil rig in the North Sea suffered a cataclysmic explosion, resulting in the loss of the platform and the deaths of 167 workers.
This tragedy, which resulted in a similar level of safety and process questioning as the Deepwater Horizon accident, is perhaps less remembered today, but laid the foundation for needed quality management improvements that have helped protect the public since – but which sadly went unacknowledged in the leadup to the Deepwater Horizon incident.
This is the story of two fateful industrial disasters – the Deepwater Horizon in the Gulf, and the Piper Alpha in the North Sea – which changed the oil and gas industry forever, and which continue to impart valuable lessons for today’s world – provided we learn, listen, and follow essential quality management practices which can prevent tragedies and save lives.
Series Format
This series of articles considers the Piper Alpha (1988) and Deepwater Horizon (2010) oil rig explosion disasters from a quality management perspective. Analysis of both accidents utilizes the official incident reports, as well as contemporary journalistic accounts and the memories of survivors, as source material.
It is important to note that, in identifying where things went wrong or could have been done better, the intention of this series is not to cast blame or assign responsibility, but rather to identify process failures which could (and have) happened to innumerable other operators and individuals. The purpose of analyzing history is to learn from it and improve, rather than to retroactively seek targets for culpability.
Each installment of the series will consider a different area of quality management where, in one or both of the accidents, failures occurred. Cumulatively, these failures led to the ultimate site failure that resulted in disaster. By examining all sides of the problem, multifaceted solutions and paths toward more responsible future management practices can be identified.
Part I: Governmental and Regulatory Failures
Introduction: Regulatory Capture Theory
In both the Deepwater Horizon and Piper Alpha accidents, a lack of governmental regulation and safety culture process commitments by both the American and UK governments directly led to the conditions which permitted the disasters to occur. The lack of regulations stemmed from industry pressure to minimize burdensome requirements, inadequate government resources and staffing, and a general tendency toward indifference and blind trust in operator practices.
In regulation, two competing theories have strongly impacted the perceived ideal role of government, the level to which it should regulate industry, and whether that regulation is indeed beneficial. The public interest theory, which was popular during the 1930s New Deal era, assumes that regulation is conducted for public benefit and reinforces good behavior within industry.
This theory, although obviously imperfect and often circumvented in actual practice, is based upon the idea that regulation is beneficial to both the public and to industry, and therefore proposed that imperfections be resolved through regulatory reform and improvement. The competing point of view is the regulatory capture theory, which was proposed by Chicago School economist George Stigler and assumes that regulators will inevitably be manipulated by those they seek to regulate.
Practical applications of ideas surrounding the regulatory capture theory have extended beyond its initial point (a warning against corrupting forces), and instead suggested that the process of regulation itself is inherently ineffective, and therefore should be done away with; the end point of this conclusion is that regulation is corrupt and useless.
Since its rise to prevalence in the 1960s, this extended application of the regulatory capture theory has defined both the practice and perception of regulation in both America and the UK.
As such, the idea that government regulators would not only be influenced by industry, but in fact expect and accommodate their own corruption, was seen as a given at the times of both the Piper Alpha and Deepwater Horizon accidents.
In part due to the prevalence of this idea, the regulators of both governments did in fact live up to the pessimistic assumptions of the regulatory capture theory, and rather than doing their jobs, simply covered for and capitulated to industry practices which were inherently anti-quality and anti-safety.
While the results would seem to point to the inevitability of regulatory capture theory becoming unquestioned truth, a deeper examination reveals that these faulty regulations were actually a defense mechanism for industry to insulate itself from quality management – a self-perpetuating circle of responsibility avoidance in which industry claimed to be in compliance with the toothless regulations they had induced the regulators to adopt.
Quality management systems which were ignored, or worse yet, twisted into anti-quality facilitation tools, were core to these failures and abuses.
As such, Part I of this series examines what went wrong in both cases, and also postulates that, in as much as proper quality management is a good business and safety practice, it is also ideologically an antithesis to cynical beliefs about the inherent validity of ‘greater good’ ideas regarding why the pursuit of quality is important and worthy of effort.
Piper Alpha: Regulators at the Service of the Regulated
In the UK in the 1980s, substantial political and governmental change was omnipresent. The government of Margaret Thatcher had significantly reshaped England and brought new prominence and potential to deregulated private industry. As the UK restructured from a manufacturing and resource-focused economy to a service and investment-based one, the social shocks of stark and sudden change were blunted, or even enabled, by the overwhelming flood of cheap oil from the North Sea.
Chief among Thatcher’s political opponents were coal miners who worked in government-controlled mines; these workers, who depended on government largess to pay for their unprofitable operations, were bitterly opposed to deregulation which would see their mines turned over to the private sector and their communities hollowed out (both economically and politically), and as such went on strike in 1984.
To survive the strike, the Thatcher government enabled to a heretofore unimaginable extent the production of abundant, cheap oil extracted from offshore platforms with minimal regulatory oversight. Such was the influx of new North Sea hydrocarbon assets that, between the years 1980 and 2010, the global consumption of oil increased by 50%, and gas consumption doubled.[2]
Within a year, this ‘cheap oil’ strategy utterly broke the coal strike, causing the number of UK coal miners to plunge from 221,000 before the strike to just 7,000 in the 2020s.[3] The influx of oil revenue also bolstered the UK’s overall economy, overshadowing steep declines in other sectors and providing valuable government revenues required to implement other Thatcher-era policies.
The offshore oil impact was so extensive that, decades later, historical analysis has suggested that, more than any other single Thatcher policy, boosting and minimizing the regulation and oversight of offshore oil enabled and drove the political regime to success. Yet, despite the outsized role that oil and gas paid in facilitating the Thatcher administration’s changes, politically and socially, the offshore energy sector remained all but invisible.[4]
This lack of public attention and scrutiny enabled the UK’s Department of Energy (DoE), the government branch tasked with overseeing offshore oil production, to operate almost unquestioned in its capacity to both stimulate production and regulate operators simultaneously.
In a clear case of the worst aspects of the regulatory capture theory in action, the DoE was expected to exponentially boost oil production (in part, serving a significant political end), while being completely subservient to industry interests and production goals by performing only cursory inspections and ineffectual regulations. A culture of reactive, rather than proactive, quality management developed.
For example, following the UK’s first major oil rig disaster in 1965 (in which 13 workers were killed), it took 6 years for a safety statute to be passed, a further 3 years before casualty reports were required to be kept, and a full 13 years before quality management standards for firefighting were codified.[5] Throughout the 1970s and ’80s, the political, economic, and regulatory priority of the DoE was clear – enable the industry, and stay out of its way.
As early as 1980, 8 years before the Piper Alpha disaster, the inherent conflict of interest with the system was clear to members of the UK Parliament. In a contentious meeting held on November 6, 1980, Member of Parliament David Owen stated: “… a fundamental principle is being breached in an industry that is of great concern to the House because the Department of Energy is to be solely responsible for health and safety.
It has many other responsibilities for the offshore industry–to get out as much oil as possible, to get the revenues and, under pressure from the Treasury, to consider the interests of the oil companies.
We categorically and emphatically say that making health and safety its sole responsibility is insufficient.” Owen strongly urged for regulatory responsibility to be removed from the DoE, and instead transferred to the Health and Safety Executive (HSE), the legal entity responsible for workplace health, safety, and welfare, which had already overseen onshore oil inspections since 1972.[6]
Transference of onshore regulatory responsibility to the HSE had, by 1980, led to new and improved implementation of industry-directed self-regulation which was organized in concert with government oversight. In this revised system, the onshore industry had shifted from hiding responsibility behind prescriptive and ineffectual government regulation, to goal-oriented self-regulation that the HSE strictly held them to, thereby improving quality management processes and protecting worker safety.
However, the offshore industry was dominated by American oil companies which sought to fiercely protect the insulation and responsibility-avoidance they had cultivated for decades with the DoE, and therefore were in no hurry to adopt the requirements of self-regulation backed by government enforcement.[5]
In the same heated meeting, Member of Parliament Harold Walker highlighted the failings of the DoE’s Petroleum Engineering Directorate (PED), which was responsible for carrying out inspections, citing a contemporary safety report in which industry workers were interviewed and had claimed “… no offshore safety committee visited by us has ever seen a PED inspector.
PED told us they have never needed to meet safety committees or safety representatives…”, and cited a 1978 instance where the head of the PED was “so obviously in the pockets of the oil companies that I don’t think they had any respect for him.”[6] In that meeting and subsequently, Owen, Walker, and others who took their position were overruled, and responsibility remained with the DoE.
Following this, collusion between regulator and regulated was so comprehensive that frequent interchanges of personnel between the DoE, the industry, and even government ministerial positions became standard and was retroactively labelled as a system of ‘deferred bribery’. A later analysis of the state of the industry prior to Piper Alpha described the state of UK regulatory capture as being “near complete” and normalizing a quality control culture where regulations were “never rigorously enforced.”[5]
Under such conditions, it should be obvious in retrospect that quality management was neither a priority, nor even a factor, in most applications of the DoE’s so-called ‘regulation’ of the offshore industry. Following the Piper Alpha disaster, an exhaustive two-part report by Lord William Cullen revealed just how deeply compromised quality management was at the DoE. One noteworthy example was deliberate sabotage of auditing power, due to a lack of auditors.
At the time of the disaster, the entire North Sea area had only five inspectors, meaning that rigs were inspected, at most, on average, once every two years. Inspections, when they did happen, were cursory and merely existed to check boxes and create the illusion of compliance.
The Piper Alpha platform had been inspected several weeks before the accident, and Lord Cullen described this effort as “superficial to the point of being little use.” Lord Cullen also criticized the DoE for having “a lack of ability to look at the regime and themselves in a critical way” – in other words, a lack of a self-responsible safety and quality management culture.
In light of these conclusions, Lord Cullen advocated for regulatory responsibility to be transferred from the DoE to the HSE – which it was by 1992.[7][8] Following this, the number of fatal and serious accidents involving UK offshore oil facilities decreased, before eventually tracking with larger industry trends: decreases of accidents in periods of economic booms for the industry, and increases in times of setbacks as operators reduced maintenance and safety spending.[5]
Although the shift to HSE management was by no means a comprehensive solution, and questions of regulatory effectiveness in the UK continue to the present day, the separation of direct interaction of regulators and the regulated was, on the whole, a net positive for safety and quality management across the UK offshore industry.
Although the UK was able to learn from and improve its industry following Piper Alpha, it would take the rest of the world more time, and accidents, to adjust their own systems. In the United States, a false sense of security built with time and permitted regulators and industry to believe they were safe from a repeat of Piper Alpha; this unfortunately set the stage for the Deepwater Horizon tragedy.
In Part 2 of our series, we will examine the lessons that were not learned in time to prevent disaster, and why Deepwater Horizon overlooked the Piper Alpha failures.
Continue reading: Part 2 – Deepwater Horizon: Repeating the Mistakes of Piper Alpha
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Authors
Nicholas R. Zabaly is the Editor-in-Chief of QMS2GO’s research and knowledgebase operations. An experienced researcher and technical writer, he has worked closely with the company since its foundation and serves as its lead article writer.
Additional References and Resources
Mark Washburn / McClatchy – A Huff and Boom Ended Deepwater Horizon’s Good Luck
Giuliano Garavini / Contemporary European History – Thatcher’s North Sea: The Return of Cheap Oil and the ‘Neo-Liberalization’ of European Energy
Georgina Morris / BBC – Miner’s Strike 1984: Why UK Miners Walked Out and How it Ended
Ian Jack / The Guardian – North Sea Oil Fueled the 1980s Boom, But it Was, and Remains, Strangely Invisible
Charles Wolfson and Matthias Beck / New Solutions – The British Offshore Industry After Piper Alpha
UK Parliament – Offshore Safety Volume 991, Debated on 6 November 1980
William Cullen / Department of Energy (UK) – The Public Inquiry into the Piper Alpha Disaster: Volume 1
William Cullen / Department of Energy (UK) – The Public Inquiry into the Piper Alpha Disaster: Volume 2
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