“Preventing Future Oil Spills” – A Decision Tree Approach

Goh Peng Yang Davy

Deepa Radhakrishnan

Corina Ilmaniar

Somnath Kansabanik

Daniel Ilteris

Soumyak Sen

Phei Yee Tan

Agenda

• Overview of the disaster• Aftermath of the disaster• Events & Decisions leading to the disaster• Current Risk Analysis Procedure • Proposed Risk Analysis Procedure• Optimal Decision & Sensitivity Analysis • Conclusions

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Overview of the Disaster

3

Aftermath of the Disaster

4

• Largest marine spill in history• 11 casualties &17 more injuries• 3 months to plug the leak which released 4.9 million barrels of crude oil

into the ocean

Basics of Well Drilling

5

Without proper centralization 90% chance of hydrocarbon channeling

Fresh water

Shale

Salt water Hydrocarbon/Oil

If cement does not set, 90% chance of hydrocarbon channeling

• Centralizer design & cement chemistry are estimated prior to drilling

• If cement chemistry and centralizer design are improved after obtaining real-time drilling logs, the probability of desired cement setting improves from 60% to 95% & probability of good centralization improves from 55% to 95%

Decisions & Events Leading to the Disaster

6

• On April 19, Jesse Gagliano, the Halliburton cementing engineer, informed the BP engineer Brian Morel that compressive strength analysis (Cement Bond Log Test) for cement job has not been completed

• Decision to be made on Apr 19, 2011: Wait for 3 additional days for centralizers to

arrive? Wait for total 5 days for complete lab test

result?

BP did not listen to Halliburton’s recommendation to wait for more centralizers and Cement Bond Log (CBL) test results

Brian Morel wrote an email to colleague Brett Cocales, saying:

"Who cares, it's done, end of story, we'll probably be fine".

Decisions & Events Leading to the Disaster

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BOP can prevent leak with 80% reliability

Failure of BOP will activate Gas Detection. Well Control success rate is 60%

Failure of Well Control leads to Emergency Response with 65% success rate

Small, Minor or Major Oil spill with 30%, 31% & 39% chances of occuring

Current Risk Analysis Procedure

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Mitigation Plans:Risk Management Plan:

4)BOP pressure test will be done. BOP will help to prevent hydrocarbon channeling5)Gas Detection System will alert in case BOP of failure. Well Control can be done6)Emergency Response Plan in place to reduce severity of catastrophic incident

Proposed Risk Analysis Procedure

9

Risk Mitigation Procedure

10

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Complexity of the Decision

Optimal Decision

12

95.0% 90.25%

0 -7500000

TRUE Chance

-3000000 -14803857.01

90.0%

0

5.0% Hydrocarbon Channeling

0 -153577140.3

10.0%

-1,000,000

95.0% Decision

0 -14803857.01

TRUE Chance

-4500000 -21592521.17

10.0%

0

25.0% Hydrocarbon channeling detected

0 -649537290

90.0%

0

90.0% Chance

0 -166696822.5

75.0% 3.375%

-1250000 -5750000

5.0% Hydrocarbon Channeling

0 -150577140.3

10.0% 0.5%

-1000000 -5500000

Decision

-21592521.17

• Wait for Centralizers• Wait for Cement Bond Log

Sensitivity Analysis

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Sensitivity Analysis

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98% Reliability!

Sensitivity Analysis

• Further sensitivity analysis keeping BOP reliability at 95%• Probability of Emergency Response to control fire needs to improve by 20%

15

Insights for Oil & Gas Industry

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• Opportunity to improve the current business decision framework:

From “gut feel” decision making to a more structured framework that “forces” the decision maker to consider all factors and quantify the risks/damages and rewards/profits (Expected Monetary Value) associated with the decisions

• Reduce NPT (Non-productive time)

Improve Reliability of BOP from 80% to 95%– Possible Action includes improving design of BOP, improving maintenance schedule

Improve success rate of Emergency Response to control fire from 65% to 85%– Possible actions include training for personnel, conducting fire-drill exercises, etc

• The framework is a good starting point for the industry to start collecting real data hence improving the accuracy of the probability set for each variable over time

References

• BP’s Investigation Report (Accessible at http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/gom_response/STAGING/local_assets/downloads_pdfs/Deepwater_Horizon_Accident_Investigation_Report.pdf)

• US Govt Report on GOM Disaster: “REPORT REGARDING THE CAUSES OF THE APRIL 20, 2010 MACONDO WELL BLOWOUT” (Accessible at http://www.boemre.gov/pdfs/maps/DWHFINAL.pdf )

• http://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill • http://techcrunch.com/2010/06/21/bp-brand-value/• http://www.deepwater.com/fw/main/BOP-Video-1079.html • http://www.c-spanvideo.org/program/295154-107• http://www.youtube.com/watch?v=xi2K_BCPUec • http://www.youtube.com/watch?v=hj_r8vs2vmU • http://www.youtube.com/watch?v=zE_uHq36DLU

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MERCI!

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