July 2010 Vol. 237 No. 7

Editor's Notebook

Watershed Moments

When I was a wee little lad many years ago, I celebrated my birthday going to see a campy cult classic movie entitled “The Blob” starring Steve McQueen in his first starring role. The Blob was this jello-like goop that fell from outer space in this town where the voracious entity gradually swallows up everything in its path.

This was a bit too much for my sensitive nature. I bolted from the theater, raced home and threw myself under the bed, upchucking and bawling hysterically until Mom reassured me that all was OK in the world.

If I had stayed till the end, I would have seen that McQueen, his date and a band of teenagers heroically saved their town and ultimately, civilization, by figuring out that the Blob hated the cold. So, he grabbed a CO-2 extinguisher, borrowed a few more from the high school and beat it down until they could scoop the remnants into a tidy package that the Air Force dropped at the North Pole. Of course, if you take global warming seriously, we may not be as safe as we think.

If only this Mother of all Oil Spills could be fixed so easily.

I’ve covered the oil and gas industry for 20 years and can assure you this: this is a life-altering game-changer for the industry. The ramifications are too enormous to speculate politically, economically, and from an image perspective. Even in their testimony before Congress, the CEOs of the other majors – while trying hard to distance themselves from BP – said little except that in all likelihood their companies would not have experienced such an event because of the safety precautions they deploy.

There may be much truth to that, but we also learned that their disaster-response plans are little different from BP’s. Nor would they have been in any better position to plug the well if it were theirs because the best minds in the entire industry haven’t been able to devise a solution.

When I researched The “Oil Makers, An Insider’s Perspective of the Petroleum Industry,” there were several constant themes. Few executives had qualms about regulations as long as they knew what the rules were. That’s understandable. Another comment was that taking care of the environment made “good business sense”. This is troubling because it indicates that safety and the environment are important IF this can be developed as a revenue stream rather than standing alone as a core value.

The late Dino Nicandros, the farsighted CEO of Conoco, was an exception. In 1990, soon after the Exxon Valdez disaster, he created a set of voluntary environmental initiatives that went well beyond any legal requirements. Even his staff had no idea how far he had actually gone.

“At Conoco, we encourage each individual to be an environmentalist. We also added environmental performance to each manager’s compensation criteria. We are making it clear that protection of the environment is just as important as safety, and as the discovery and production of oil and gas,” he told me.

On June 20, the Dallas Morning News wrote that ExxonMobil had spent $180 million by 2006 trying to drill the world’s deepest offshore well but quit when engineers decided it was too risky. They were following a stringent safety program created after the Exxon Valdez accident. Today Exxon’s Operational Integrity Management System (OIMS) is rigidly followed by everyone who works for them, or they don’t have a job.

Or, as the paper quoted Glenn Murray, Exxon’s manager of corporate safety, when asked if a cost-analysis study had ever been done on OIMS.

“That’s like thinking ‘what’s the cost of breathing?’ You’ve got to breathe and you’ve got to do the Operating Integrity Management System to stay in business. I don’t know how we’d operate a facility without it. It would be like building a house without studs in the walls. You can’t do it,” he said.