The Safety & Data Fraud Iceberg in the exploration industry – Part IIIa of Root Causes
Posted by BK Lim
Independent Geohazards Specialist
Friday, October 29, 2010
As the blame game continues and the truth trickle out little by little, many will be left wondering how the disaster will play out and the imminent threats of future disasters. It is blatantly clear beneath the dog and pony shows, such mega disaster could not have happened if the checks and balances in place had been functioning as they should. It is fortuitous that all of them should expediently fail one after another. More likely, the checks and balances had long been subverted and broken. It is an industry speeding down the highway with its driver drunk with greed and power. If the “drunken speedster” is not stopped in time, the result can only be a big bang when the road runs out.
The answer to the second question is dependent on how the perpetrators of this crime of mass destruction are handled. This disaster was no “unexpected accident”. Anyone who is not blinded by corruption can see that. At the very least BP’s exploration managers knew trouble was brewing and did nothing to avert it. They should be prosecuted for willful negligence.
At worst, with prior knowledge that such environmental disasters are inevitable, BP invested heavily into researching “deplorable means” of harvesting windfalls from such “accidental natural disasters”. Connect the dots behind The-Gulf-Blue-Plague.
Is it morally right to invest millions into searching for a “profitable” cure when a tiny fraction could have been better spent in advancing prevention techniques? Is prevention not better than cure? Although less environmentally friendly and more devastating; the Cure is preferable for its profit potential and numerous windfall opportunities for the privileged few. Prevention on the other hand offers no such windfall opportunities.
Most dirty tricks of insiders’ trading have already been tried out, exposed and prosecuted. As disasters are still perceived to be accidental, no one will be prosecuted for insider’s trading, even though the massive shares sellout by BP’s directors, Goldman Sachs and several more insiders, were unmistakably linked to the privileged few. See A Pattern Of Massive Shares Sell Off By BP Directors Prior To Expected Disasters. The fact that SEC is still sitting on the matter shows how untouchable they are.
Unbelievable it may seem, the reported safety lapses and violations, system malfunctions and cost-cutting corners are only a tip of the Safety & Data Fraud Iceberg. Unscrupulous profiteering, corruption, data frauds, falsified calibration, inspection and installation certification are widespread and not only confined to third world countries. The Safety Farce Iceberg has completely engulfed the oil exploration industry. Even professional regulatory bodies and heads of governments dare not stymied their growing power and influence. The BP’s mega oil spill disaster is that arrogant display of corruptive power of giant multinational corporations.
At the end of the day, it is about the corrupted business strangle-hold that is going to tilt the world into an Environmental Armageddon. It is already happening. The recent Toxic Dam Spill in Hungary and BP’s Mega Oil Spill in the Gulf of Mexico are Crimes of Mass Destruction propagated by unscrupulously greedy multinational corporations. It is about the struggle between Good and Evil. It is about the brave few struggling to bring out the truth behind all these mega disasters that is destroying Mother Earth.
Does the world care? Are we fooling ourselves with half measures and deceptions that are meaningless to the survival of this planet? Even after more than 6 months, the world has still not awoken from BP’s hypnotizing deception of capping the wrong well. The capped well (Well A) was drilled down to only 5000ft bml; 13000 ft short of the targeted reservoir. While the world was mesmerized with the pony and dog shows at the wrong well, the actual well (S20BC, 720ft NW of well A) was openly gushing more than 50,000 barrels of oil per day into the gulf. Is the world awake yet?
Sadly, BP is not the only guilty multinational corporation and US is not the only first world country plagued with this problem. Documented evidence of criminally liable unethical practices ranging from falsified calibration reports and certificates, fraudulent authorization of globally banned environmental-hazardous installations to pure data frauds, will be presented to press home the point that the safety violations, defective critical fail-safe equipments, willful negligence and ignorance which surfaced recently in the investigation of BP’s disaster are industry-wide; not the exceptions.
How can oil exploration be safe when international insurance companies, international accreditation organizations and government regulatory authorities in so many countries simply turned a blind eye to such improprieties? Have this safety lapse problem proliferated to the extent that it is already too big to solve. How did these multinationals managed to have such powerful strangleholds on these regulatory authorities? Why must the tail wag the dog?
Contrary to popular beliefs, more regulations do not translate into safer exploration. Being the most heavily regulated industry with stringent HSE standards, does not make it any safer unless enforcement is effective. More regulations mean higher costs, more corruption and cost-cutting opportunities to circumvent difficult to comply regulations. As witnessed in the BP’s disaster, compliance in form but not in spirit is meaningless. The increase in oil exploration costs also means insanely high wages for the industry workers. To avoid being caught in the severe cyclic oil crashes of the mid eighties professionals were taken off permanent employment and offered lucrative short term contracts. These freelance professionals can command from 500 to 5000 USD/day in various field positions. With such lucrative remunerations, it is difficult to go against oil companies or contractor’s vested interests. Safety and environmental considerations were the first to be thrown out the windows.
The high freelance wages also caused an aberration in the remuneration scheme where short-term contract field personnel earn many times more than their long term colleagues doing the same job offshore. As soon as new recruits can learn to walk, they move out of the contractors’ permanent employment to become freelance. Permanent salaried employees like the logistics, operation and technical managers (without their offshore allowances) earned a mere fraction of their freelance employees under their control. For example a senior professional with permanent employment contract in Australia earning AUD100 000 per year, can easily earn that amount in less than 3 months; offshore without tax. In the peak exploration years with oil prices above 50 USD/barrel, most freelancers had no problems finding work in excess of 200 days a year.
After the mid-eighties oil crash, most capable professionals opt to work offshore with the less capable or inexperienced filling in the office managerial positions. In the insane rat race, the price tag becomes the badge of honour. The common joke was; “you must have screwed up to be cooked up in the office”. Smart contractors’ managers formed “close alliances” with their oil companies’ counterparts. It is no secret that many in the oil companies receive lucrative pay-offs from “Body Shops” peddling “offshore professionals”. Some even secretly hold shares under their spouses’ name. With 30 to 60% cut on the daily chargeable rates to the oil companies, it was the sellers’ market especially when oil prices shot beyond 100 USD/day (courtesy of the Peak Oil theory). Greedy offshore professionals were no better than prostitutes, selling themselves directly or through body shops to the highest bidder. Naturally, body shops did their best to sell inexperienced or incompetent professionals since they make the best margins on these unmovable products. The active third world exploration countries (Asia, Africa & Middle East) was choked with incompetent or inexperienced professionals who could not enter the exploration workforce in their own countries for lack of credentials. UK was the biggest exporter of such offshore professionals. Experience, unethical practices and improper training gained from the “rough and tumble” exploration of the wild and poorly regulated third world countries, might not be the best. But it is the numbers and years that count, not the quality. Worse, these unethical practices get transferred back to the first world countries in a process called “Reversed Technology Transfer”.
This unhealthy development is one of the many fundamental reasons for the reckless and aggressive competition among exploration and contractors’ managers in a volatile cyclic industry. It is not surprising short term gains and interests override long term sound and safe judgment. In the dog-eat-dog competition, true professionals who refused to yield their professional integrity were quickly edged out by those who would.
Disasters do not occur on a daily basis not because cut-corners and imprudence are not practiced widely but because more than 80% of the exploration locations are in no immediate danger of any geohazards. In the remaining 20% with some geohazards risks, geohazards disasters might not have ripened for explosion yet. As in the BP’s Macondo blowout, the timing is important rather than the luck. Most however, would not wake up to this realty.
If only special safety attentions are focused on these 20% high geohazards risk areas, it would be almost impossible for any major disaster to be blown out of control from any accidental human errors. This is where independent geohazards assessments can contribute significantly. In the next posting, we will examine how this first line of defence against geohazards disasters had been seriously compromised and monopolized by the world’s largest geohazards survey contractor, Fugro.