The root causes of BP’s oil spill & the imminent threat of more oil-related disasters.

by BK Lim, Geohazards Specialist (1 July 2010, hydrocomgeo@gmail.com).

1 INTRODUCTION

After gushing more than 3.55 million barrels of oil into the Gulf of Mexico in 71 days, the end to BP’s oil spill disaster is still
nowhere in sight; at least until mid august when the relief wells are expected to intercept and seal off the ill-fated Macondo
well. At today’s price of 75 USD per barrel, the oil would have fetched more than 266.25 million USD in revenues. BP has
spent more than 2.6 billion USD on the recovery efforts so far and still counting. BP’s investors lost many billions more as
BP’s share value dropped more than 50% from its high of over 60 USD per share to less than 30 USD recently.

At a hearing on June 15, when Congress pressed oil executives on their readiness to handle the worst-case blowout
scenario, Exxon Mobil CEO Rex Tillerson responded frankly, "We are not well equipped to handle them. There will be
impacts." He added, "That is why the emphasis is always on preventing these things from occurring." In the same
hearing before the House Energy and Commerce Committee, BP argued that this disaster was an aberration and would
not have occurred given proper corporate oversights and safeguards.

After more than 2 months, the causes of the disaster are still in question. A disaster of this magnitude could not have been
caused by any single human error. It is a culmination of a chain of human errors, misjudgment and oversights even before
the well was spud. The health of Mother Earth from such environmentally disastrous “accidents” is at stake. It concerns all
the 6 billions inhabitants of this tiny blue planet which we all call home. Finding a convenient scapegoat to blame and
missing the real lessons to be learnt from all this, would be the true tragedy of this aberration. The search for the root
causes of BP’s Macondo blowout must include investigations on other similar gas blowouts around the world, if we are to
prevent another environmental disaster of this magnitude from happening.

2 THE HIGH RISK OF OVER REACTION AND OVER SIMPLIFICATION OF FACTS

The question of imposing a total ban on offshore drilling is as silly as the total ban on air flights over Europe caused by the
recent volcanic eruption in Iceland. Although 4 jet engines failed on the 1982 BA09 flight after passing through the ash
cloud, it must be borne in correct perspective that the flight path was less than 200 km from the erupting volcano Mount
Galunggung. In contrast, EU airspace is thousands of km from Iceland’s Eyjafjallajokull volcano. Simple logic dictates that
the particle size of the volcanic ash would diminish exponentially with distance from the erupting source as the heavier
and more destructive larger factions progressively dropped back to ground without the powerful eruptive force of the
volcano. The concentration or density of the volcanic ash, the vertical and lateral distribution of the ash clouds are also
key factors since at low concentration, the ash would not be sufficient to clog the powerful jet flow. In essence, hazards
assessment is more than just the simplistic aerial distribution of ash clouds (or amplitude anomalies in seismic
interpretation) as shown by the satellite imagery.

Just as drilling locations had been moved unnecessarily to get away from pseudo-geohazards, the flight ban over Europe
had been totally unnecessary since the vertical extent, particle size and concentration would have been too minute to
cause any serious damage. The lateral distribution of the ash clouds (visible from the satellite above) may appear
menacing and “potentially hazardous” even if the ash particles are too fine and the thickness of ash clouds strata too thin
to cause any significant damage. The Eyjafjallajokull volcano eruption flight ban exemplifies the over-reactions, over-
simplification and the real dilemma facing any disasters predictions.

A total ban without knowing the root causes of the disaster would only lead to disasters of a different kind. There are
clearly many things wrong with the oil industry but a total ban would be a cure worse than the disease itself. Has
advanced drilling technology actually decreased the number of disasters? Or has it merely suppressed and postponed the
disasters to a later date with far more disastrous consequences. Assessing the risks of disasters using superficial data in
isolation and imposing arbitrary limits (water depth > 500m) to offshore drilling without understanding the underlying root
causes would be a grave mistake. It would be an over-simplification on the same magnitude as the recent total flight over
Europe. Surely the underlying root causes could not be that simple.

Root causes of BP-style disaster & imminent threats of more - part 1 - by BK Lim (hydrocomgeo@gmail.com)
3 IN SEARCH OF THE ROOT CAUSES OF THE DISASTER

If the oversights, misjudgment and the long list of cut-corners are to be blamed for well blowouts, it stands to reason that
wells drilled by less advanced smaller oil companies with even more appalling safety and quality standards in less
regulated countries, would have blown more frequently before the recent Macondo blowout. PTTEP’s Montara blowout
occurred six months earlier in Australia; another first world country with an apparently well-regulated offshore industry.

If the Macondo Blowout was an aberration as asserted by BP, then either

1. the drilling techniques used had deviated from normal industry practices or
2. the sub-seabed conditions at the ill-fated well location were not recognized as potentially hazardous, or
3. both.

Admittedly there had been some obvious cut corners and oversights. It would however, be difficult to argue that
experienced technological giants like BP, Transocean and Halliburton would be so naïve to cut corners so deep, to push
an apparently “safe” well into the brink.

With record annual earnings, BP does not look like an exploration giant that was skimming to save a few dollars here and
there. BP could have used cheaper rigs instead of the state of the art, ultra-deepwater dynamically positioned Deepwater
Horizon semi-submersible drilling rig. The “Rolls Royce” of drilling rigs had successfully drilled the deepest oil well in
history (10,683 m deep) in the Tiber field at Keathley Canyon block 102, in 1,259 m of water. Transocean’s Deepwater
Horizon had apparently won the 2008 MMS award for safety. On the day of the disaster, BP and Transocean managers
were on board to celebrate “seven years without a lost-time accident”.

It goes to show that safety records, experience and technological capability are not the yardsticks by which we measure
the safety of our oil industry and environment. BP, Shell, Exxon-Mobil and Total are all technologically advanced giants in
the oil exploration industry with some of the most stringent Health Safety & Environmental (HSE) policies. Thus while
corporate oversights, cut corners and safety lapses in the field might be the “straws that broke the camel’s back”, there is
absolutely nothing the field crew can do if the Macondo well was a disaster waiting to happen.

The analogy is like lighting up your gas stove everyday without any problem if there is no gas leak in your kitchen. Even
with a gas leak, there would be no explosion if the kitchen is well-ventilated. Thus, while a gas leak does not necessarily
lead to an explosion, it would if the escaping gas is allowed to accumulate till the air-gas mixture is just right for an
explosion to occur on ignition.

4 IF HAZARDOUS SUB-SEABED CONDITIONS EXIST WHY WASN’T BP FOREWARNED?

This brings us to the question why BP was not forewarned of the impending disaster by the geohazards site survey which
was precisely commissioned to seek out potentially hazardous sub-seabed conditions.

There has been a complete silence on the geohazards site assessment of the ill-fated well location. Why? Would this not
be the crucial starting point of any site disaster investigation? It reflects the insignificance attached to the geohazards site
survey in general and the perceived negligence. This should not be surprising given the second-rate expertise, incoherent
and ambiguous cover-all geohazards predictions found in most geohazards reports1.

The key question then is “why did the blowout occur so late in the drilling process (almost 2 months after drilling had
commenced) and not when the well first penetrated the abnormal hazardous conditions in the first few hundred metres of
the sub-seabed?” Delayed Blowouts as the name implies do not occur instantaneously as “normal blowouts” do when a
well is drilled into a high pressured gas pockets or abnormally high-pressured formation. That is why Delayed Blowouts
are difficult to understand just as Cancer, AIDS and other slow-acting diseases were initially misunderstood in Medicine.

Past investigations into previously unrecognized Delayed Blowouts at Total’s SiSi-2 (1988) at the Makassar Straits,
Indonesia and Shell’s Barton-BT5 (1991), offshore Sabah, Malaysia have all revealed a common geotechnical factor as
far back as 1991; the presence of gas-saturated, abnormally weak highly fractured-faulted stress zone at the upper rock
formation immediately underlying the Quaternary sedimentary deposits; collectively termed as Gas-saturated Weak Sub-
Formation or abbreviated as GWSF.

Root causes of BP-style disaster & imminent threats of more - part 1 - by BK Lim (hydrocomgeo@gmail.com)
The widely held perception that low-pressured gas occurrences are not hazardous to drilling is not true under such
geotechnical circumstances. Cement placement is a critical component of well architecture for ensuring casing mechanical
support, protection from fluid corrosion, and most importantly isolating permeable zones at different pressure regimes in
order to prevent hydraulic communication. The presence of gas-saturated permeable formation immediately underlying
poorly consolidated Quaternary deposits can seriously undermine cementing the well as evident in Barton, Montara and
Macondo cases.

The 1991 Shell’s Barton-BT5 delayed blowout occurred years after 4 previous problematic trajectories had been drilled.
The recent PTTEP’s Montara delayed blowout (21 August 2009, Timor Sea, offshore Western Australia) occurred more
than a year after the platform was installed. At BP’s Macondo well, the delayed blowout (20 April 2010) occurred almost 2
months after Deepwater Horizon had resumed drilling the well in Feb 2010. The well was first drilled by Transocean
Marianas semi-submersible rig on 7 Oct 2009 but was aborted at 4023 feet (1226 m) below seabed on 29 Nov 2009 when
the rig was damaged by Hurricane Ida (Wikipedia & various sources).

In both BP’s Macondo and PTTEP’s Montara incidences, the drilled wells had already reached their targeted reservoirs
when the wells blew; compounding the blowouts with even more disastrous oil gushes from the high pressured reservoirs.
Would BP and PTTEP stop and abandon their wells before reaching the oil reservoirs, even if they knew that the wells had
a high risk of blowing as the list of abnormalities grew as the drilling progressed? It would be like stopping a speeding
train. On the contrary, BP was rushing to complete the well and in the process skipping a few critical procedures and
integrity tests. It appears at least some top managers knew the score and were hoping against hope and racing against
time to quickly plug the well before something “serious” happens.

"Any employee, anywhere at any level, if they have any concern about safety, has the ability and, in fact, the responsibility
to raise their hand and try to get the operations stopped, whether that's our operations or a contractor's operations," Lamar
McKay, chairman and president of BP America, told the House Natural Resources Committee. (CNN,27 May 2010)

Preliminary findings from BP’s internal investigation released by the House Committee on Energy and Commerce on May
25 indicated several serious warning signs in the hours just prior to the explosion.[29][30] Equipment readings indicated
gas bubbling into the well, which could signal an impending blowout.[24] The heavy drilling mud in the pipes initially held
down the gas of the leaking well. [31] A BP official onboard the rig directed the crew to replace the drilling mud, which is
used to keep the well's pressure down, with lighter seawater even though the rig's chief driller protested.[23] According to
a number of rig workers, it was understood that workers could get fired for raising safety concerns that might delay
drilling.[23] (Wikipedia & various sources)

Was it a coincidence that the CEO of BP (Tony Hayward) cashed in a third of BP’s shares before the rig burst out in
flames? Similarly Goldman Sachs sold more than half of its BP’s stock in the month of April before the blowout (The
Telegraph, 29 June 2010). It seems that the tell tale signs from the “nightmare Macondo well” were taken more seriously
than most would care to admit. If it was a prudent financial precaution, perhaps more could have been done on the
“nightmare well” (proactively) instead of letting the “speeding train continue in its collision course”. Imagine telling a board
of directors that an almost completed well had to be abandoned after spending millions on it. You would be told to “jump
into a lake” first.

On March 10, 2010, a BP executive e-mailed the Minerals Management Service that there was a stuck pipe and well
control situation at the drilling site, and that BP would have to plugback the well.[32] A draft of a BP memo in April warned
that the cementing of the casing was unlikely to be successful.[24] Halliburton has said that it had finished cementing 20
hours before the fire, but had not yet set the final cement plug.[21][33] A special nitrogen-foamed cement was used which
is more difficult to handle than standard cement.[31]. (Wikipedia & various sources)

It happened in Barton-BT5, Sisi-2, Bajt-F and many other near-misses and near-disasters around the world. That is the
reality of the oil business. It is almost impossible to stop a disaster from happening when it has not happened yet and
even more impossible to pin the blame on the ones who could have prevented the disaster from happening in the first
place.

Root causes of BP-style disaster & imminent threats of more - part 1 - by BK Lim (hydrocomgeo@gmail.com)
5 BP’S OIL SPILL A DISASTER WAITING TO HAPPEN

The gas blowout on TransOcean’s Deepwater Horizon rig on 20th April 2010 was a disaster waiting to happen, just as
Total’s SiSi-2, Shell’s Barton-BT5 and PTTEP’s Montara. Sad to say, many more such disasters are just waiting to happen
especially at the shelf edge zones. Why?

With water depths rapidly changing from tens to thousands of metres, the geotechnically stressed continental shelf edge
zones are fraught with GWSF hazards. High resolution seismic data from geohazards site surveys at these shelf edge
zones reveal evidence of past landslides, creep movements, subsidence and other geotechnical instability. Yet none of
these potential geohazards were ever understood or reported. Why? (see part 2).

6 OUR BADLY BROKEN LINE OF DEFENCE

Our line of defence against disaster in the oil industry consists of:
• Geohazards site surveys;
• Certification & Regulations (safety training, medical fitness, critical failsafe systems and policies);
• Quality Control (QC) supervision at site.
On paper it makes good sense to seek out geohazards and geotechnical problems and to forewarn the oil companies of
impending disasters if appropriate precautions are not taken. Regulations, certifications and various safety audits are in
place to ensure that Health Safety & Environmental (HSE) rules and policies are complied with. Lastly we have a system
of QC supervision on sites to ensure that the safety rules and policies are strictly adhered to and to snuff out any incidents
at sites before the situations spin out of control.

Sounds good but in the reality, our line of defence is badly broken due to years of cozy business relationship, vested
interest and unscrupulous profiteering and neglect. Hidden from public scrutiny, the geohazards industry was having an
easy ride on the waves of windfalls from the meteoric rise in oil prices. But the good times cannot last forever. Somewhere
down the line, the party has to end. Mega disasters like BP’s oil spills are inevitable consequences of the “Oil Bubble” and
its past exuberance just like the global financial meltdowns from the housing bubble, credit crunch and Ponzi schemes.

The offshore oil industry is often thought as being infallible with stringent HSE regulations and strict code of conduct, all in
the name of safety and preservation of the environment. The BP’s Oil Spill disaster busted that myth and confirmed our
worst fears. BP’s Oil Spill disaster publicly confirms what many professionals in the industry had long known and feared in
silence.

Although there are whistleblower policies and ground feedbacks in most HSE procedures, these appear to apply only to
minor infringements and violations in the field. More damaging as we see in most disasters, are the imprudent
management decisions that circumvent legal regulations; scandalous decisions that are clouded with technicalities with
the sole aim of improving the bottom line. These are root causes of the disasters, not the minor abuses, infringements and
improprieties committed at site that are being paraded out now in the aftermath of the disaster.

The mixture of imprudent business greed, geohazards and our broken line of defence, is a potent recipe for disasters, not
only in the Gulf but in every region around the world where oil is actively being explored or produced. Part II of this report
explains how the Macondo Well was destined to blow even with the best safety standards, drilling technology and well
designs. Part III describes the rot that had set into the industry, rendering our geohazards site surveys as ineffective as
searching for a needle in a haystack.

BP’s oil spill disaster is another warning sign that the worst is yet to come. Given the many unreported problems of
production wells sited dangerously at the (shelf) edge (pun intended), the next oil spill disaster need not necessarily be
triggered by a drilling mishap. So far very few in the oil industry recognized the potential disasters that could result from
induced or natural occurrence of giant submarine subsidence, landslides and earthquakes in the vicinity of the production
platforms. If an oil giant could teeter on the brink of financial collapse, what hopes do poor third world countries have in the
face of a massive oil spill disaster? More booms, anybody?

1 BK Lim, 12 June 2010 National Geoscience Seminar KL. The need for post survey independent QC to check the high failure rate of
geohazards predictions. (in publication, Geo Soc Malaysia bulletin)

Root causes of BP-style disaster & imminent threats of more - part 1 - by BK Lim (hydrocomgeo@gmail.com)
 BK Lim, Tim Pugh & Fiona Fitzpatrick (RPS) 25th March 2010 Australiasian Oil & Gas Exhibition and Conference, Perth. The need
for QC on Geophysical Interpretation of Geohazards and Engineering Site Surveys.

BK Lim and Wong S C, 1990 BTJT-A Platform Location, BT-105 Post-drill Analogue And Digital Site Survey, Report no. XTS/1 –
PSS.SB.14. Topographical Department, Sarawak Shell Bhd.

BK Lim and Wong S C, 1994 BAJT-F 1991 Digital Seismic Site Survey (Proposed BAJT-F/4 location) and Correlative Study of
Digital Seismic Data And Boreholes, Report no. XTS/1 – PSS.SW.35. Topographical Department, Sarawak Shell Bhd.

JP Velasco and Wong S. C, 2000 Survey report on the Offshore rig location site survey At the Bungong Seulanga 1 location,
Offshore North Sumatra, Indonesia. Report No. S0956/02. LASMO KRUENG MANE LIMITED

SF Yap, YT Tan, BK Lim & Jack Fitzsimons, 2003, Trans Thailand Malaysia (TTM) Project Gas Pipeline, Pre-Engineering Survey
Report, Offshore Section (from KP 0 to KP 262). Report no: ED.A-0303.08-010-001. SAIPEM.

Mohamad Kodri Aziz and HJ Ang, 2006 Final Geophysical Report for the Proposed Aster-4a, Aster-4b and Aster-4 (modified) Well
locations In Bukat Block, Offshore East Kalimantan, Indonesia. Report no. S1797/02. ENI KRUENG MANE LTD.

BK Lim and John Worthington, 2008 Report On Contractor’s Performance, Deep water site investigation surveys at Krueng Mane
PSC, offshore north Sumatra and Maura Bakau PSC, Offshore East Kalimatan, Indonesia by Fugro (M/v GeoSurveyor & M/v
Voyager) for Eni Krueng Mane Ltd.

Graham Macdonald Bell, HJ Ang and Agus Norman Bin Abdul Rahman, 2008 Onboard Preliminary Report on the Provision Of Deep
Water Sea Bed Survey Services, BSN-1, Offshore North Sumatra, (M/v GeoSurveyor & M/v Voyager). KRUENG MANE PSC

BK Lim and David Waugh, 2008 Report On Contractor’s Performance, Site Investigation Surveys at Calauit 2, Block SC50, offshore
Palawan, Argao 1 & Bahay 1, Block SC51,offshore Cebu by Fugro (M/v Baruna Jaya 1) For NORASIAN Energy Ltd, Philippines
(operated by OTTO Energy Ltd).

Root causes of BP-style disaster & imminent threats of more - part 1 - by BK Lim (hydrocomgeo@gmail.com)