Other countries are learning the lesson from BP’s 2010 oil spill in the Gulf of Mexico.

In recent months, offshore disasters around the globe have prompted swift and stringent response from regulators.

After a 3,000-barrel spill from a deep-water well off Rio de Janeiro in November, in which no one was killed or injured, Brazil’s environmental regulator fined the rig’s operator, Chevron, and its owner, Transocean, about $34 million. That number likely will rise because it hasn’t specified an amount for a third fine levied late last month.

It also suspended Chevron’s drilling operations in late November and denied it access to new offshore fields.

While local politics figures into the response, it shows how regulators no longer trust the industry’s reassurances that it can contain – let alone prevent – a major deep-water disaster.

Then there’s Norway. Last week, its offshore safety agency slammed BP for a platform fire in July. No one died in the accident, caused by an overheated crane motor, but an investigation by the Petroleum Safety Authority yielded some familiar findings. It determined breaches related to “lack of maintenance, deficient maintenance management, inadequacies in risk identification and deficient barrier management.”

It ordered BP to overhaul its safety practices by Feb. 1 – something BP supposedly already did after the Deepwater Horizon disaster.

Both the findings of the investigation and BP’s response that it is “committed to learning from incidents such as this and to improving our performance” sound painfully familiar. The latter has been said by so many BP spokesmen so many times that it sounds more broken than BP’s safety record.

In some of the hottest oil plays around the globe, BP’s U.S. disaster has increased the burden of doubt on Western oil companies.

“What happened here is a factor,” said Jim Smith, an attorney specializing in energy issues with the Houston law firm Porter Hedges. “The industry has that much more incentive to be that much more careful. The ramifications are potentially global.”

Findings are on appeal

Meanwhile, in the U.S., BP and its associates in the Macondo project have appealed Interior Department findings that the company violated drilling regulations. The department notified BP of the violations in October, a year and a half after the accident, and issued more just last month.

Given the complexity and the magnitude of the Deepwater Horizon accident, a slower response than that of Norway or Brazil is understandable. In the meantime, though, the Interior Department lifted an industrywide moratorium on new drilling, and BP led the charge back into the Gulf. Even before it was notified of the violations, BP laid out a plan with the regulators for developing a portfolio of new deep-water wells.

U.S. regulators have steadfastly refused to consider BP’s sorry operating history, here and abroad, in considering its applications for new permits.

Instead, its moratorium treated all companies the same, and the new rules it enacted remain more prescriptive rather than the performance-based regulations adopted by Norway or Brazil.

What has BP learned?

Despite 22 deaths at its Texas City refinery since 2004, despite 11 deaths aboard the Deepwater Horizon, despite a couple hundred injured workers, and despite reciting the “lessons learned” excuse so many times it’s become a cliché, BP has failed to demonstrate that it has learned anything from its sordid history.

Instead, it’s ready to move on, to negotiate down the regulatory repercussions and resume its operations in the waters it despoiled less than two years ago.

Other countries are learning the lessons of the Deepwater Horizon disaster. Are we?

Loren Steffy is the Chronicle’s business columnist. His commentary appears Sundays, Wednesdays and Fridays. Contact him at loren.steffy@chron.com. His blog is at http://blogs.chron.com/lorensteffy. Follow him on his Facebook fan page and on Twitter at twitter.com/lsteffy.

Eoin O’Cinneide  Upstream 10 January 2012 10:08 GMT

Such high investment is expected to continue “until at least 2014” although there will be a move away from exploration and appraisal (E&A) projects to development, according to industry consultancy Wood Mackenzie.

Some £7.5 billion ($11.6 billion today) in capital investment was pumped into the UK upstream oil and gas sector last year, a figure which represented “an all time high”, the research outfit’s latest report claimed.

“Wood Mackenzie expects investment to stay consistently high until at least 2014, as new fields are brought into development and incremental projects on existing fields are moved forward, including over £2 billion ($3 billion) expected investment in 2012 in the West of Shetlands area,” it wrote.

The company did, however, say that E&A drilling activity fell last year compared to previous years. It explained that this was due to many North American companies shifting their focus away from E&A work in favour of developing existing assets, as well as moving away from the UK to other parts of the world.

Wood Mackenzie’s lead analyst for the UK upstream sector Lindsay Wexelstein commented: “Companies have turned their attention away from E&A activity to developing fields for the time being as the stable, high oil price environment has offered them the opportunity to focus on progressing development projects to turn reserves into revenue.”

Although the consultancy expects E&A activity to pick up in 2012 on last year’s total of 47 spudded wells, the near-term focus will remain on development projects.

Wood Mackenzie also said that 2011 saw the most active deal market in the UK upstream sector since 2005, with $4 billion in assets traded.

“Our analysis shows that companies continued to consolidate interests in growth assets which will help push many of these developments forward.”

By Brett Bundell

It’s the dead of night in the middle of the North Sea. As gale force winds pound against an aging oil rig, its ramshackle moorings give way.Petrified crew members are hoisted from the oil platform, bobbing up and down in the pitch-black waters, to the safety of a chopper.

“It happened last winter,” Tony Hall, founder and CEO of Welaptega Marine Ltd., said Thursday. “If you’re working on an offshore floating platform during a storm, it’s good to know the company has done everything possible to make it safe.”

The Halifax company has developed advanced technologies to inspect aging offshore oil and gas platforms.

Welaptega Marine uses tools like underwater 3-D imaging technologies and remotely operated vehicles to generate data on the state of underwater rig components like mooring lines.

With a global client list including oil and gas giants Exxon, Chevron, Shell and BP, the Nova Scotia firm is helping transform the industry’s safety standards.

The push for improved safety is driven in part by demand from energy underwriter groups such as Lloyd’s Register Group and Det Norske Veritas, and in part by more stringent regulatory regimes.

“We’ve developed tools to allow these groups to understand empirically in a numbers sense the statistical importance of the condition of various pieces of equipment,” Hall said.

Oil and gas companies that don’t inspect their offshore infrastructure will face higher premiums, he said.

“Once underwriters understand the technologies that exist, they can be more specific in their requests for information from clients. Otherwise clients can expect their premiums to reflect higher risks.”

But demand for better safety measures also comes from Canadian oil and gas firms scooping up older rigs in areas such as the North Sea.

Hall said when the older platforms were developed, companies used fairly simple technologies that left up to a quarter of the available hydrocarbons untapped.

“Because in Western Canada a lot of our fields are quite small, we have become specialists at getting as many drops of that lovely stuff out of the ground as possible,” he said.

Yet, as Canadian firms take over what was once considered depleted infrastructure, Hall said they are realizing that the offshore platforms are “falling apart.”

“Some of them are very much so on their last legs,” he said, noting that they range in age but many are as much as 20 years old.

“There are a whole bunch of Canadian companies that have been dealing with the environmental consequences of basically deteriorating infrastructure.”

Hall said maintenance tends to be cut quickly when commodity prices drop.

But he said the risks of neglecting the safety-critical systems on offshore platforms are high for workers, the environment and the offshore industry’s reputation.

Welaptega Marine was on scene after the Deepwater Horizon drilling rig exploded and sank in the Gulf of Mexico.

The company built a high-resolution 3-D model to confirm the dimensions of the damaged wellhead, leading to a successfully installed cap.

“There has been huge downward pressure on maintenance expenditures and this has created a huge backlog of maintenance work,” Hall said.

“But we’ve seen the consequences and it’s unacceptable if we have technologies available to prevent problems.”

Thirty years ago, Tony Hall never envisioned where his career would eventually take him. An artist, carpenter, mechanic and self-described “jack of all trades,” Hall pursued an undergraduate degree in agricultural sciences and then went on to receive a master’s degree in marine biology before founding Welaptega Marine Ltd. in Halifax, Nova Scotia, Canada, in 1991.

His aim for the company was to quantify the organisms that grow on offshore oil and gas platforms in an effort to help the industry engineer better platforms. But although his focus was narrow, his approach to problem solving took a wide-angle view. Drawing from his mixed background, Hall studied an array of industries to glean new ideas for the firm. “From the very beginning, we have tried to find gaps in the market and then fill those gaps,” Hall says. “We ask questions such as, What doesn’t the industry understand about moorings? What is it about damaged pipelines that no one can seem to get a handle on? Then we think, What technologies can get us that information? And that’s where we start looking for headlines in other industries.”

This path has led Welaptega Marine on a spectacular adventure through innovation–a journey with substantial risks but also sizeable rewards.

The first twist in the firm’s journey came when Hall began working with two major oil companies soon after Welaptega Marine was founded. Although the oil companies appreciated Hall’s ability to quantify organisms on their offshore platforms, there was something else they needed even more–the ability to measure chain. “I’d never thought about measuring chain in my life until they brought it and plunked it on me,” Hall says. “And I was just audacious enough to suggest that they both fund the development of the technology and allow me to file the patent.” Both companies agreed, and Hall developed an optical caliper system (known simply as Welaptega Marine’s Chain Measurement System, or CMS) that provides rapid data acquisition for inspecting moorings on semi-submersible rigs.

When fiber rope became popular throughout the industry, it was commonly assessed with remotely operated vehicles (ROVs) equipped with 2D cameras. However, these cameras weren’t supplying enough information about the operational condition of the rope. Hall and his team of engineers began speaking to manufacturers and operators, asking what they wanted in a tool. When they couldn’t find a commercial system that would allow then to meet these needs, they decided to design their own. The resulting tool, called the Rope Measurement System (RMS), uses high-resolution video cameras to identify potential damage to the interior and exterior of wire and fiber ropes and is now a core part of Welaptega’s business.

Welaptega captures underwater images to generate 3D models of a wellhead for damage assessment and other applications.

Since then, the firm has implemented or developed a number of other underwater technologies to measure and inspect moorings on floating production systems and solve other offshore problems. “It’s always about, ‘If I can’t do that, can I make a tool to do it? If I can’t make a tool do it, I wonder where I can get a tool to do that? How am I going to get that out of there? I’m trying to grind this thing down and get this out of that. What industry might use these?’ That’s always been the way I’ve worked,” Hall says.

Each twist and turn has fueled the company’s passion for its overarching mission: Find better ways to collect better-quality information.

A focus on innovation often involves taking risks with new technologies. Although the team at Welaptega actively seeks out opportunities to be on the “bleeding edge,” their enthusiasm is tempered by sound business principles. “We need to be able to show that our technology will end up giving information that has a traceable positive economic impact on whatever the business operations are, whatever the particular client is, what they’re doing and what they’re trying to achieve,” Hall explains.

Challenging assumptions and studying a range of industries often allows the firm to develop a solid business case for a new technology where other companies have failed. For example, when the team began exploring the use of 3D video as an underwater analysis tool, they discovered that most of the early adopters of 3D technology didn’t like it. Looking closer, the team learned that the technology wasn’t being used effectively. Hall believed the tool would be hugely beneficial for Welaptega’s purposes. “We live in a three-dimensional world, so 3D was just a natural place to go because we were trying to interpret something that was 3D from 2D cameras,” Hall said. “We were looking for sources of better-quality spatial information.”

By studying the application of 3D technology in industries such as mining, dentistry and even sports, the team at Welaptega gleaned ideas for how they could use 3D in their own operations. The firm also developed a close association with a university in Perth, Australia, that specializes in 3D capabilities. It wasn’t long before the company had developed its own proprietary 3D video system, composed of a number of different commercially available video systems. “We’re the world leaders in the game now for underwater 3D video because we know the game and we’ve watched things evolve,” Hall says.

Welaptega’s 3D video camera uses polarizing technology similar to that used by 3D IMAX to create real-time 3D images for underwater equipment assessment.

The firm has also applied its 3D expertise to modeling subsea components on offshore platforms and infrastructures using photogrammetric modeling techniques in conjunction with state-of-the-art software from Adam Technology. By taking a series of overlapping photographs–sometimes as many as 500 images–and assigning a discreet coordinate to groups of pixels, the team can compare those pixels to similar groups of pixels across the overlapped areas. From that comparison, the team is able to build polygon-based wireframes. The resulting surface elevation maps (SEMs) are geometrically accurate–to submillimeter levels in ideal cases–and make it possible to take direct measurements, calculate areas and volumes, and view damaged components.

Although 3D capabilities are quickly becoming standard for measurement applications, the high-end 3D software used by Welaptega was a speculative buy when the firm first invested in it. “We didn’t know how to use it, but it just seemed to be so good that we just took a risk with it,” Hall says, noting that the firm also invested in the training and technology to apply it correctly. “Now it’s a mainstay of our business.”

Of course, technology never stands still. For any company that seeks to remain on the leading edge, the key, says Hall, is to never stop evolving. “How you control that evolution determines how you carve out your niche. I think that’s what we’re really good at,” he says.

Welaptega has conquered the innovation game by learning to apply new developments to existing technologies in order to get the most out of them. Few technologies used by the firm are truly “off-the-shelf.” Welaptega works closely with equipment manufacturers, software developers and its own engineers to fine-tune existing technologies and create new solutions.

The approach is far from easy. But as in any successful, forward-thinking business, the mindset of the people involved makes a big difference. As a general rule, Hall doesn’t employ individuals looking for a stable, comfortable position. Most of the people at Welaptega have an edgy, creative personality that drives them to think outside the box. Hall likens the atmosphere to an ad agency and says he encourages everyone at the firm to take an active role in bringing new ideas to the table. He notes that all of the employees have a stake in the ownership of the company, which motivates them to always be looking for crucial information, technologies and innovations. “Everybody here is enthusiastic,” he says. “We try to keep the information flowing all the time and have a very flat management structure. It’s amazing what comes back.”

Because of this enthusiasm, the firm doesn’t encounter many hurdles it can’t overcome. “We don’t see any technology as being something that’s too much for us,” Hall says. “We always have a ‘can-do’ attitude. If we see value in it, we want to learn how to use it, get the most out of it and track how it’s going to evolve over time.”

3D photogrammetric modeling of chain links accurately characterizes the material loss geometry.

Equally important to Hall is the transfer of knowledge from individuals who understand how to use a specific tool and have seen the technology evolve to individuals with no experience. Training and building a knowledge base are a vital part of the firm’s operations. Hall takes pride in being able to have someone new join the company and, within a couple of days, be able to build complex 3D models. “You need to have effective ways of bringing people up to speed with this rapidly evolving technology, and I think that’s a big part of our strength–not being afraid to take those things on,” Hall says.

A boldness to pursue the path less traveled is rare in the precision measurement field, particularly in the oil and gas industry, where old-school attitudes still prevail. “I think it’s because a lot of companies have got feelings of ‘If you screw up, you wear it,’ and so people are a little bit disinclined to stick their necks out unless they’re really, really sure,” Hall says.

However, with the easy availability of information, the next generation of men and women holds a promise of change. “They want responsibility, they want to bring their energy and their innovation and have it recognized, have it integrated, and see some outcome from it,” Hall says. “With the amount of knowledge they’re acquiring, no technology is out of reach, no innovation is too complicated.”

Welaptega is not a surveying firm–at least, not in the traditional sense. What the company does focus on is data management and the ability to give clients measurements of unprecedented accuracy underwater. Both within that space and on dry land, Hall is convinced that 3D is here to stay. The next evolution, he believes, will be the combination of 3D imaging with robotics to make virtual reality a commercial reality. But even as he watches those developments take place, Hall is already looking for the next bend in the road.

“We never take our eyes off the technology development and innovation cycle,” Hall says. “We’re always looking for the next solution to address the next problem, to make it a little bit better.”

One year ago today,  the Deepwater Horizon drilling rig exploded and sank in the Gulf of Mexico, leading to the worst environmental disaster in US history.

It took lives – 11 workers died.

4.9 million barrels of oil leaked from the BP Macondo well, causing extensive damage to marine, air and land-based wildlife, and the fishing and tourism industries. It was 86 days before the spill was stopped.

Welaptega Marine helped with the solution. We built a high-resolution 3D model to confirm the dimensions of the damaged wellhead. A cap was successfully installed on July 15, 2010.

The spill propelled the issue of subsea integrity to the top of the political agenda in the US, and suddenly words like subsea safety, blowout preventers and underwater integrity were on the tongues of everyone, including the President of America.

In January 2011 the presidential panel investigating the spill found that it was the result of preventable corporate and regulatory failures. Another such accident would be inevitable, unless changes were made, it warned.

Changes have happened in the industry. There is a new regulatory agency to replace the old Minerals Management Service. There are new regulations on drilling and safety in offshore operations. BP has a new CEO and integrity is a new buzzword.

But has a the fabled “new culture of safety emerged” in the industry?

Time will tell.

There is always going to be risk in offshore drilling and production operations. Accidents will happen.

The capability does exist to significantly reduce the risk of environmental disaster and loss of human life in offshore operations.

But these capabilities must be taken seriously by the industry. The new culture safety will require investments in safety technologies and protocols. It will require education, stricter industry self-regulation and yes, stiffer policing by regulators.

Safety must be part of the business model of offshore operations. If not we will see a repeat of the Gulf of Mexico oil disaster.

Gail Lethbridge is a founder and director of Welaptega Marine which provides subsea safety technologies and data to the offshore oil and gas industry.

Coupled with the catastrophic impact of the Gulf of Mexico oil spill, the sector is now under a greater deal of scrutiny than ever, and it is essential that organisations learn how to leverage a company’s most valuable asset to drive growth, manage risk and maximise production.

As well boosting growth, managing risk and retaining margins, efficient knowledge and information management in the oil and gas sector can give firms the skills they need to strategically manage human capital, bring about organisational change and transform the enterprise, and one company which has realised this early is PETRONAS.

The oil giant PETRONAS recently said it expects the oil and gas industry to remain highly “competitive and challenging”, but the company is positioning itself towards a “new reality” through cost optimisation, robust growth strategies and operational excellence, placing a major focus on knowledge and information management.

A statement made by the Malaysian company noted that the current industry environment was “fraught with high costs, elevated trend and volatility of oil prices, and the prospect of margin erosion”.

However, it asserted that it had put in place strategies in all of its business segments to deliver a “sound performance” in the financial year.

In the statement, PETRONAS reported quarterly results for the first time, posting a net profit of MR12.3 billion ($2.5 billion) in the April to June period, the first quarter of fiscal year 2010-2011, which was up by nearly 60 per cent on that seen in 2009.

According to the company, the rise was led by higher oil and gas prices and sales volumes for all products, including refined oil products, petrochemicals, gas and LNG.

The organisation has revealed that upstream costs were trending higher due to the escalation of material and service costs and increasingly complex developments.

In addition, there was also greater scrutiny on deepwater operations arising from BP’s oil spill in the Gulf of Mexico, which PETRONAS acknowledged made the operating environment tougher.

The company said that it “will continue as a global player but with a greater emphasis on domestic deepwater and unconventional plays to arrest domestic production declines”.

Petronas also revealed that it planned to undertake several measures to ensure long-term security of gas supply for the nation, including the proposed construction of the new LNG terminal in Peninsular Malaysia.

Although in the short term there was an oversupply in the LNG market, PETRONAS expected it to re-balance earlier than 2015 amid growing demand.

In its report, PETRONAS revealed that its downstream segment generated a revenue of MR5.8 billion, up 23.2 per cent on last year, with operating profits of MR2.01 billion, down 10.3 per cent from the 2009 year.

According to PETRONAS, the higher revenue reflected greater realised prices as well as a higher sales volume, but operating profit fell due to reduced inventory gains and weakened refining margins.

The company predicted that, with an increased focus on operational excellence driven by improved knowledge and information management, it can drive growth.

It expects to refine margins to trend lower in the coming months as new capacity will come onstream and plants will return from turnarounds.

PETRONAS is also planning to review its business portfolios to enhance its strategic competitiveness, with one of the options being to realign the downstream business into focused sectors.

One thing is clear as PETRONAS sets its sights on further growth – capturing, maintaining and leveraging knowledge will be vital as companies emerge from the effects of the downturn and the Gulf of Mexico spill and drive profits in the right direction.

The US Interior Department said today it gave final approval for Petrobras to use the first ever deep-water floating production storage facility in the Gulf of Mexico.

The facility will be used when the company begins oil and natural gas production at its Chinook-Cascade project in the near future, the department said.

The floating facility has a daily production capacity of 80,000 barrels of oil and 16 million cubic feet of gas, Reuters reported.

It can be disconnected and moved in the event of a hurricane or tropical storm, preventing a long-term disruption in supply due to a major storm.

“These regulatory approvals pave the way for safe, new production of oil and gas resources in the Gulf of Mexico,” said Michael Bromwich, who heads the department’s agency that oversees offshore drilling.

Petrobras’ Cascade-Chinook project is located 165 miles off the Louisiana coastline in 8200 feet of water.

The project will use the floating BW Pioneer vessel, which will process the oil and gas, store the oil in onboard tanks and offload it on to shuttle tankers that will take the oil to shore. Natural gas processed by the facility will be moved to shore by a pipeline.

The BW Pioneer is one of 16 floating production and storage vessels owned by BW Offshore.

From Harvard Business Review Blog

A potentially catastrophic technological problem, an incomplete crisis response plan, misleading early information, divided private and public authority, ineffective initial actions.

This could describe the current situation at the Fukushima Daiichi nuclear power plant and its six reactors. But, it also describes what happened after the April 20, 2010 explosion of the Deepwater Horizon oil rig in the Gulf of Mexico.

These two unprecedented events are stark reminders that effective crisis management involving complex science and technology is wholly dependent on well-thought-out — and actively practiced — crisis response plans. Of course, such plans will have to adapt to actual events, but without a robust plan, “seat of the pants” crisis management won’t work. This is a lesson of vital importance to business and government in a host of technological activities that are potentially dangerous but economically significant. It is of even greater importance if a major act of terrorism involving nuclear, chemical, biological or cyber weapons occurs, either in private sector facilities or public spaces that impact private employers.

The fact that many of the problems relating to crisis response and crisis management recurred in Japan, with the Gulf spill still freshly in mind, shows how easy it is to talk the talk on these matters of crucial importance, and how difficult to actually execute in the turbulence of low probability but high consequence events.

Although the Japanese nuclear event is not yet a week old and information is impressionistic and fragmentary, it bears a striking resemblance in a number of dimensions to the Gulf spill which occurred almost a year ago and has since been carefully analyzed (see, for example, the Report of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, January 11, 2011):

Response Plan. Neither the Gulf spill nor the problems at the Japan nuclear plants were unthinkable. The possibility of a well blow-out was explicitly addressed by systems, processes and technology. Planning for the possibility of a severe earthquake and a subsequent tsunami were part of Japanese reliance on nuclear power. Yet, neither BP and the U.S. government nor Tokyo Electric Power Company (TEPCO) and the Japanese government had response plans which addressed the sequence of events that, though remote, were arguably foreseeable in environments where dangerous technology was located and which, in particular, addressed the additional issues outlined below.

Public or Private Responsibility? The U.S. government initially left many dimensions of crisis management and response to BP. But, the Gulf spill was a national issue, which required governmental direction, responsibility and accountability. The BP Commission properly criticized the federal government for failing to assume leadership soon enough or to act effectively in coordinating the private sector and public sector (federal, state and local) actors. In Japan, although the government has taken the lead on many aspects of the post-earthquake/tsunami crisis, there has been confusion about who is in charge at the nuclear plants. Where is the central government? Where is the nuclear regulator? As Michiyo Nakamoto pointed out in the Financial Times, the government inititially left many decisions to TEPCO (before forming a “joint” task force) , and then criticized the utility even though this is now a national emergency requiring the exercise of national authority.

Confusing Information. A host of factual questions were raised by Gulf Spill: How much oil was flowing? How could the flow be stopped? Where was the oil going (surface/sub-surface)? How could it be contained or removed? How could damage to environment/people/property be eliminated or mitigated? But for a significant period of time, responses from the company and the government were confusing. The U.S. government needed a central authority which used expert working groups, and which made clear to the public what was known, what was unknown, what process was in place for improving knowledge, and when there would be regular updates on those issues. A similar set of problems bedevils Japan. There are critical questions about condition of the reactors; possible physical and chemical reactions in the reactor areas; actions being take to reduce those risks; radiation releases; health implications. Yet there has been a welter of voices from the government and industry which has left Japanese citizens — and the world — confused. Again, a single central authority needs to have seized control of the information flow and been as candid and explicit as possible about what is known, what isn’t known, and how information gaps are being filled.

Decision-Making Processes. As noted, there was substantial confusion for weeks after the Gulf spill about whether the company or different parts of government were making decisions. The decision-making processes on a host of crisis response issues (see preceding paragraph) were not set out clearly for the public — including comparision of options — and led to a perception of drift and lack of direction during a major national catastrophe. A similar concern appears to apply in Japan, where opaqueness prevails about who is making decisions about what options, with what parties at the table, and with which other parties advising (from around the world). This, too, contributes to the growing sense that the public and private authorities do not have the situation in hand (and, in fact, may be losing control).

Implementation and Resources. In the Gulf, there were also serious issues about which private and public sector actors would implement which decisions — and about what resources were necessary. Indeed, just the lack of resource preparedness increased the severity of problems of containment and damage mitigation. In Japan, it is very hard to tell at the moment who is responsible for carrying out which decisions at the nuclear plants as TEPCO has been shifting employees around the plant (leaving, at the moment, 50 heroic technicians to deal with four reactors in stress and two more at risk at the Fukushima Daiichi plant) — and it is far from clear if regulatory experts (from inside or outside Japan) are on or near the site at all.

These are issues which every company with potentially catastrophic processes, products, or plants needs to answer with a special team of “worst case” analysts. Such analysis then has to be transformed into a response plan. Where the issue involves government — and in most cases it will — the company needs to coordinate its planning with federal, state and local authorities. After 9/11,many companies analyzed these issues with respect to terrorist acts at their facilities or terrorist acts which, if not directed at the company, could still have significant impact on people, facilities, information and supply chain.

Yet, many experts in crisis response and crisis management would say that without practice, without simulations, these response plans merely gather dust and are not effective when the hundred-year event occurs. In the military, war games can be a vital tool for learning how to respond to crisis situations. We need a “war game” mentality in the private sector to address the severe conceptual and operational problems in crisis response and crisis management which the Gulf Spill and the Japan nuclear events so starkly illustrate.

Ben W. Heineman, Jr., GE’s former Senior Vice President for Law and Public Affairs, is senior fellow at Harvard Law School’s Program on the Legal Profession and Program on Corporate Governance and senior fellow at the Kennedy School’s Belfer Center for Science and International Affairs. He is author of High Performance with High Integrity (Harvard Business Press, 2008).

The cap was recommended by the Oil Spill Prevention & Response Advisory Group in the wake of the Macondo blowout last April in the Gulf of Mexico and is seen as a key element of the UK’s spill response contingency plans.

Containment of the spill that followed the blast at the BP well was stalled by the lack of an immediately available unit to cap the flow of oil from the hole, a scenario that the UK aims to avoid.

The new cap, commissioned by industry specialist Oil Spill Response Ltd, is being manufactured by Cameron and is due for completion this summer.

Industry body Oil & Gas UK said the modular cap currently under construction can be deployed from a multi-service vessel in a wide range of spill scenarios, including in the harsh environment West of Shetland, and can be attached to various parts of subsea equipment to seal off an oil leak.

The cap would be capable of capping a well flowing up to 75,000 barrels a day and in water depths of up to 1670 metres. It could be deployed in sea states of up to five metres.

Capping should be achieved within 20 and 30 days of the incident, depending on weather and well site conditions.

By comparison, the Macondo well was finally capped nearly three months after the spill started at a rate of about 62,000 barrels per day, resulting in about 4.9 million barrels being released into the US Gulf.

“Having such a contingency device in the UK is important as it allows a quick response in the unlikely event of a well blowout. Our overriding priority remains, however, to prevent such incidents from occurring in the first place,” said Oil & Gas UK’s chief executive Malcolm Webb.