risk management plan - deepwater oil rig deployment

DEPLOYMENT OF A DEEPWATER OIL RIG - INITIATIVE

RISK MANAGEMENT PLAN TO: ENERGY-POWER COUNCIL

October 4, 2011

Taylor & Thomas Construction, Ltd

DDR Project

Deborah Obasogie, Project Manager

Table of Contents

Introduction .................................................................................................................................................. 1 Sources of Construction Project Risk ........................................................................................................... 2 Systems to Address Construction Project Risk ............................................................................................ 2

Technology ............................................................................................................................................... 2 People ....................................................................................................................................................... 3

Management Team ............................................................................................................................... 3 Planning .................................................................................................................................................... 4

Risk Identification.................................................................................................................................. 4 Risk Responsibilities .............................................................................................................................. 5 Risk Assessment .................................................................................................................................... 6 Risk Response ........................................................................................................................................ 6 Risk Mitigation ...................................................................................................................................... 7 Risk Contingency Planning .................................................................................................................... 7 Tracking and Reporting ......................................................................................................................... 8 Processes to Address Immediate Unforeseen Risks ............................................................................. 8

Catastrophic Failure Fault Tree: Spill – Loss of Life ..................................................................................... 9 Discussion of Catastrophic Fault Tree.......................................................................................................... 9

Risk Management Strategy .................................................................................................................... 10 Smaller Risks Impacts ................................................................................................................................. 10

Smaller Risks: Fault Tree One - Well integrity failure ........................................................................... 10 Smaller Risks: Fault Tree One Discussion .............................................................................................. 11 Smaller Risks: Fault Tree Two - Well control failure ............................................................................. 11 Smaller Risks: Fault Tree Two Discussion .............................................................................................. 11

Conclusions ................................................................................................................................................. 12 References .................................................................................................................................................. 13 Appendix A ................................................................................................................................................. 14 Appendix B.................................................................................................................................................. 15 Appendix C .................................................................................................................................................. 16 Appendix D ................................................................................................................................................. 17 Appendix E .................................................................................................................................................. 19 Appendix F .................................................................................................................................................. 20 Appendix G ................................................................................................................................................. 21 Appendix H ................................................................................................................................................. 22 Appendix J .................................................................................................................................................. 23

D1eepwater Horizon 1

Deployment of a Deep Water Oil Rig

Introduction

Deepwater Horizon was an ultra-deepwater dynamically positioned, semisubmersible offshore oil drilling rig.

Built in 2001 in South Korea by Hyundai Heavy Industries, the rig was commissioned by R&B Falcon, which later

became part of Transocean, registered in Majuro, Marshall Islands, and leased to BP (formerly British Petroleum)

until 2013. In September 2009, the rig drilled the deepest oil well in history at a vertical depth of 35,050 ft (10,683

m) and measured depth of 35,055 ft (10,685 m) in the Tiber field at Keathley Canyon block 102, approximately 250

miles (400 km) southeast of Houston, in 4,132 feet (1,259 m) of water.

On April 20, 2010 an explosion tore through the Deepwater Horizon, an oil rig operating in the Gulf of

Mexico owner by BP. The disaster happened as workers were finalizing the drilling of the exploratory Macondo

well, forty miles off the cost of Louisiana. BP probably had had tragedies on rigs before, so a failure of that type was

understood as a potential risk. BP understood the risks involved with offshore rigs and was capable of handling the

initial event, including the tragic loss of life, but BP was completely underprepared for the environmental risk that

became the largest tragedy of its kind. The explosion killed 11 men working on the platform and injured 17 others

and caused extensive damage to marine. Eight U.S. national parks were threatened. More than 400 species that lived

in the Gulf islands and marshlands were at risk, including the endangered Kemp's Ridley turtle, the Green Turtle, the

Loggerhead Turtle, the Hawksbill Turtle, and the Leatherback Turtle. In the national refuges most at risk, about

34,000 birds have been counted, including gulls, pelicans, roseate spoonbills, egrets, terns, and blue herons. A

comprehensive 2009 inventory of offshore Gulf species counted 15,700. The area of the oil spill includes 8,332

species, including more than 1,200 fish, 200 birds, 1,400 mollusks, 1,500 crustaceans, 4 sea turtles, and 29 marine

mammals. As of November 2, 2010, 6,814 dead animals had been collected, including 6,104 birds, 609 sea turtles,

100 dolphins and other mammals, and 1 other reptile.

The U.S. House of Representatives Energy and Commerce Committee released a letter to BP's Chairman

outlining five questionable decisions made by the company in its development of the well that has blownout. The

decisions include: use of a less robust well design; failure to anchor the well's casing using industry standard (best)

practice; not carrying out a "cement bond log" test cutting to ensure cement had properly bonded to the steel well

casing.

Investigations discovered four primary lines of inquiry and concluded that for the accident and its

aftermath to have occurred, the following critical factors had to have been in place: well integrity was not

established or failed; hydrocarbons entered the well undetected and well control was lost; hydrocarbons ignited on

Deepwater Horizon; the blowout preventer (BOP) did not seal the well.

In addition, eight key facts and causes underlying these critical factors were identified and include: the

annulus cement barrier did not isolate the hydrocarbons; the shoe track barriers did not isolate the hydrocarbons; the

negative-pressure test was accepted although well integrity had not been established; influx was not recognized until

hydrocarbons were in the riser; well control response actions failed to regain control of the well; diversion to the

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mud gas separator resulted in gas venting onto the rig; the fire and gas system did not prevent hydrocarbon ignition;

the BOP emergency mode did not seal the well.

BP was not prepared for the accident, project management mistakes were made during drilling,

communication mistakes were made by BP executives following the accident (although many good decisions were

also apparent), the impact on the environment and stakeholders will be far reaching, and the future of BP is at risk

from this single incident. Risk is defined as an event that has a probability of occurring, and could have either a

positive or negative impact to a project should that risk occur. All projects assume some element of risk, and it’s

through risk management where tools and techniques are applied to monitor and track those events that have the

potential to influence the outcome of a project. Risk management is an ongoing process that continues through the

life of a project. It includes processes for risk management planning, identification, analysis, monitoring and control.

Many of these processes are updated throughout the project lifecycle as new risks can be identified at any time. It’s

the objective of risk management to decrease the probability and impact of events adverse to the project.

This paper is to define a risk management plan for the deployment of a deepwater oil rig. The aim is to

identify and analyze the risks. The risk plan includes fault tree analysis within our overall risk assessment. Fault

trees are utilized to offer a listing of potential risks and impacts in the event of several failures. The catastrophic

failure fault tree depicts risks associated with the BP spill and the loss of life. Smaller risks: fault tree one depicts

critical factor: well integrity failure and its cause while smaller risks: fault tree two depicts critical factor: well

control failure and its cause. The legend in Appendix J is used for all fault trees.

Sources of Construction Project Risk

Taylor & Thomas Construction, Ltd. (T & T) have overall responsibility for managing project risk. Project

Manager, Deborah Obasogie is assigned by T & T as the person responsible for administering risk management

processes and activities for the Energy-Power Council (EPC) during the Deployment of a Deepwater Rig Initiative,

the DDR Project.

A risk is any event that could prevent the project from progressing as planned, or from successful

completion. When this occurs there may be an impact on the project cost, schedule or performance. Risk

identification consists of determining which risks are likely to affect the project and documenting the characteristics

of each. Information in this process includes historical data, theoretical analysis, empirical data and analysis,

informed opinions of the project team and other experts, and failures discovered from the Deepwater Horizon oil

spoil. Appendix A lists identified sources of risks.

Systems to Address Construction Project Risk

Technology

T & T service produces a perfected strategy and contingency plan for accessing the wellbore. This

approach enables us to model trips into and out of the well to determine the best deployment plan. Modeling can be

verified going into the hole and adjusted for actual hole conditions. All of this means you get the job done quicker

with fewer problems.

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With longer, deeper, and more tortuous wells becoming increasingly common, the management of financial

and time-sensitive risk is more critical, especially in high-cost operating environments. Often neglected during the

design phase of these more complex wells is the severity of the risk associated with wireline and slickline well

interventions. This inevitability results in the use of slow and high-cost alternative conveyance methods.

During the last decade, new technology has eliminated or mitigated the risk that jeopardizes safe and fast

wireline well intervention. We reduce deployment risk and, in some cases, reduce deployment applying lessons

learned from a knowledge base of best practices.

We offer:

Drilling Management Services

Drilling, Testing and Completion.

Well Design, Planning & Project Cost Estimation.

Subsea Design and Engineering.

Logistics and Procurement Services.

Production Technology.

Pore Pressure/Fracture Gradient Prediction.

Oil & Gas Services

Geological, geophysical, & reservoir engineering.

Equity participation.

Field development capability.

Accepted exploration & development Operator.

We also use wireline forces modeling and wireline tension devices; wireline jars; high-strength wirelines;

releasable cableheads; openhole and cased-hole, low-friction roller standoffs; and advanced hole finders.

People

We offer a complete package for your well construction and field development with a diverse team of

geological, engineering and operations professionals utilizing the largest, most versatile fleet of mobile offshore

drilling units in the world. This combination of skills and expertise provides our clients with performance-based

solutions not available anywhere else in the global arena.

Management Team

Nathaniel Taylor Jr. - Managing Director

Nathaniel Taylor Jr., Managing Director since November 2008. In this role, Nathaniel is responsible for the

commercial and operational success of this new entity. With more than a decade of experience with T & T,

Nathaniel has a proven record of identifying and successfully managing projects that benefit T & T clients.

Nathaniel joined the company in 1996 and has held various engineering and operations management positions with

ADTI and CMI in the U.S. Gulf of Mexico and the North Sea, most recently serving as ADTI’s Vice President –

International. Nathaniel holds degrees in Petroleum Engineering from Louisiana State University and Business

Management from Louisiana Tech University.

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Matthew Thomas - Director of Marketing and Business Development

Thomas, Director of Marketing and Business Development, leads the initiative to demonstrate to potential

clients how they can benefit from the unique services of the group. Prior to joining T & T in 2004, most recently

serving as their Director of Business Development in the North Sea, Matthew held various senior Operations

Management, and Sales and Marketing positions with major service providers Halliburton and Schlumberger in the

North Sea, Libya, Norway, Italy, West Africa, Kuwait and Iraq. Matthew is a member of the Chartered Institute of

Marketing, Society of Petroleum Engineers, Petroleum Engineers Society Great Britain and IADC (International

Association of Drilling Contractors).

Omoruyi Hassen Taylor - Director of Exploration and Development

Omoruyi Hassen Taylor, Director of Exploration and Development for T & T is responsible for prospect

screening and facilitating project funding. Prior to being named to this role, he served as the Vice President Europe

Africa region for T & T. Omoruyi joined T & T in 2000 and was instrumental in the company’s growth beyond their

traditional Gulf of Mexico area of operations. Since beginning his career onshore Texas Gulf Coast with Texaco,

Omoruyi has directed exploration and development drilling programs in most basins of North America and parts of

West Africa with a number of independent upstream companies including Anadarko, Wainoco, Aberdeen American

and Apache. In the mid 1990s Omoruyi was the President of United Meridian in Calgary, and later was named the

President of UMIC Cote d’lvoire. Omoruyi holds a B.S. in Geology from the University of the Pacific and a M.S. in

Geology from the University of Rhode Island, and is a 30+ year member of the AAPG (American Association of

Petroleum Geologists).

Planning

Our risk management process involves the systematic application of management policies, processes and

procedures to the tasks of establishing the context, identifying, analyzing, assessing, treating, monitoring and

communicating risk. Our mission is to provide additional value to our clients through integrated exploration,

development and project management services. Below are processes and procedures that assist us in accomplishing

our goals and objectives. Appendix B depicts the risk management process flow.

Risk Identification

Throughout all phases of the project, a specific topic of discussion will be risk identification. The intent is

to instruct the project team in the need for risk awareness, identification, documentation and communication. Risk

awareness requires that every project team member be aware of what constitutes a risk to the project, and being

sensitive to specific events or factors that could potentially impact the project in a positive or negative way.

Risk identification consists of determining which risks are likely to affect the project and documenting the

characteristics of each. Investigations discovered four primary lines of inquiry and concluded that for the accident

and its aftermath to have occurred, the following critical factors had to have been in place: well integrity was not

established or failed; hydrocarbons entered the well undetected and well control was lost; hydrocarbons ignited on

Deepwater Horizon; the blowout preventer (BOP) did not seal the well.

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In addition, eight key facts and causes underlying these critical factors were identified and include: the

annulus cement barrier did not isolate the hydrocarbons; the shoe track barriers did not isolate the hydrocarbons; the

negative-pressure test was accepted although well integrity had not been established; influx was not recognized until

hydrocarbons were in the riser; well control response actions failed to regain control of the well; diversion to the

mud gas separator resulted in gas venting onto the rig; the fire and gas system did not prevent hydrocarbon ignition;

the BOP emergency mode did not seal the well. Appendix C depicts critical factors and the causes underlying these

critical factors.

Risk communication involves bringing risk factors or events to the attention of the project manager and

project team. The project manager will identify and document known risk factors during creation of the Risk

Register. It is the project manager’s responsibility to assist the EPC and other stakeholders with risk identification,

and to document the known and potential risks in the Risk Register. Updates to the risk register will occur as risk

factors change. Risk management will be a topic of discussion during the monthly project meeting.

The project team will discuss any new risk factors or events, and these will be reviewed with the project

manager. The project manager will determine if any of the newly identified risk factors or events warrant further

evaluation. Those that do will undergo risk quantification and risk response development, as appropriate, and the

action item will be closed. At any time during the project, any risk factors or events should be brought to the

attention of the project manager using email or some other form of written communication to document the item.

The project manager is responsible for logging the risk to the Risk Register. Notification of a new risk should

include the following Risk Register elements:

Description of the risk factor or event, e.g. conflicting project or operational initiatives that place demands

on project resources, design errors or omissions, weather, construction delays, etc.

Probability that the event will occur. For example, a 50% chance that the vendor will not have staff

available to pour the cement.

Schedule Impact. The number of hours, days, week, or months that a risk factor could impact the schedule.

As an example, the fires which have resulted in level 3 restrictions are likely to delay installation of the

shelter and generator for 2 weeks.

Scope Impact. The impact the risk will have on the envisioned accomplishments of the project. Extreme

weather conditions may result in a reduction in the number of tower sites that can be

completed.

Quality Impact. A risk event may result in a reduction in the quality of work or products that are developed.

As an example, lack of funding caused by construction cost overruns may result in the purchase of only one

cooling unit rather than the planned number of two.

Cost Impact. The impact the risk event, if it occurs is likely to have on the project budget.

These elements can be in a Risk Statement and/or the Risk Register. Appendix D depicts the Risk Register, and H, a

Risk Statement.

Risk Responsibilities

The responsibility for managing risk is shared amongst all the stakeholders of the project. However,

decision authority for selecting whether to proceed with mitigation strategies and implement contingency actions,

especially those that have an associated cost or resource requirement rest with EPC. Appendix E depicts specific

responsibilities for the different aspects of risk management.

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Risk Assessment

Risk assessment is the act of determining the probability that a risk will occur and the impact that event

would have, should it occur. This is basically a “cause and effect” analysis. The “cause” is the event that might

occur, while the “effect” is the potential impact to a project, should the event occur.

Assessment of a risk involves two factors. First is the probability which is the measure of certainty that an

event, or risk, will occur. This can be measured in a number of ways, but for this project will be assigned a

probability percentage for 1% to 100%. A risk with no probability of occurring will obviously pose no threat, while

a risk of 100% means the risk event has occurred. Appendix F depicts risk likelihood definitions.

The second factor is estimate of the impact on the project. This can be a somewhat subjective assessment,

but should be quantified whenever possible. The estimated cost, the duration of the potential delay, the changes in

scope and the reduction in quality are in most cases factors that can be estimated and documented in the risk

statement and then measured using the standard project management tools (i.e. project plan, budget, statements of

work). Rather than detailed impact estimates the Risk Register contains three ratings for impact; High, Medium and

Low. This makes it easier to compare one risk to another and assign priorities. For each of the impact categories the

impact is assessed as follows:

Cost: This impact is usually estimated as a dollar amount that has a direct impact to the project. However,

cost is sometimes estimated and reported as simply additional resources, equipment, etc. This is true

whenever these additional resources will not result in a direct financial impact to the project due to the fact

the resources are loaned or volunteer, the equipment is currently idle and there is no cost of use, or there are

other types of donations that won’t impact the project budget. Regardless of whether there is a direct cost,

the additional resources should be documented in the risk statement as part of the mitigation cost.

Scope: Whenever there is the potential that the final product will not be completed as originally envisioned

there is a scope impact. Scope impact could be measured as a reduction of the number of BOPs or not

providing a back-up power source.

Schedule: It is very important to estimate the schedule impact of a risk event as this often results is the

basis for elevating the other impact categories (sources). Schedule delays frequently result in cost increases

and may result in a reduction of scope or quality. Schedule delays may or may not impact the critical path

of the project and an associated push out of the final end date. As an example, a road wash-out for a tower

site might delay completion of that site for 3 weeks, but if another site is scheduled to complete after

delayed site, the 3 week delay won’t impact the final end date.

Quality: “low cost replacements” are ways of reducing cost impacts. If not documented appropriately and

approved by the project sponsor, mitigation strategies that rely upon a reduction in quality can result in

significant disappointment by the stakeholders.

Most risks will be assigned one category, but some might be assigned more than one, or all. Appendix G depicts risk

impacts definitions.

Risk Response

For each identified risk, a response must be identified. It is the responsibility of EPC to select a risk

response for each risk. EPC will need the best possible assessment of the risk and description of the response options

in order to select the right response for each risk. The probability of the risk event occurring and the impacts will be

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the basis for determining the degree to which the actions to mitigate the risk should be taken. One way of evaluating

mitigation strategies is to multiply the risk cost times the probability of occurrence. Mitigation strategies that cost

less than risk probability calculation should be given serious consideration. The possible response options are:

Avoidance – Change the project to avoid the risk. Change scope, objectives, etc.

Transference – Shift the impact of a risk to a third party (like a subcontractor). It does not eliminate it, it

simply shifts responsibility.

Mitigation – Take steps to reduce the probability and/or impact of a risk. Taking early action, close

monitoring, more testing, etc.

Acceptance – Simply accept that this is a risk. When choosing acceptance as a response the IMPD is stating

that given the probability of occurring and the associated impact to the project that results, they are not

going to take any actions and will accept the cost, schedule, scope, and quality impacts if the risk event

occurs.

Deferred – A determination of how to address this risk will be addressed at a later time.

The results of the risk assessment process are documented in a Risk Statement and summarized in the Risk Register

which will be reported on a monthly basis. Appendix H depicts a Risk Statement.

Risk Mitigation

Risk mitigation involves identifying the various activities, or steps, to reduce the probability and/or impact

of an adverse risk and creation of a Contingency Plan to deal with the risk should it occur. Taking early steps to

reduce the probability of an adverse risk occurring may be more effective and less costly than repairing the damage

after a risk has occurred. However, some risk mitigation options may simply be too costly in time or money to

consider. Mitigation activities should be documented in the Risk Register, and reviewed on a regular basis. They

include:

Identification of potential failure points for each risk mitigation solution.

For each failure point, document the event that would raise a “flag” indicating that the event or factor has

occurred or reached a critical condition.

For each failure point, provide alternatives for correcting the failure.

Risk Contingency Planning

Contingency planning is the act of preparing a plan, or a series of activities, should an adverse risk occur.

Having a contingency plan in place forces the project team to think in advance as to a course of action if a risk event

takes place.

Identify the contingency plan tasks (or steps) that can be performed to implement the mitigation strategy.

Identify the necessary resources such as money, equipment and labor.

Develop a contingency plan schedule. Since the date the plan will be implemented is unknown, this

schedule will be in the format of day 1, day 2, day 3, etc., rather than containing specific start and end

dates.

Define emergency notification and escalation procedures, if appropriate.

Develop contingency plan training materials, if appropriate.

Review and update contingency plans if necessary.

Publish the plan(s) and distribute the plan(s) to management and those directly involved in executing the

plan(s).

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Contingency may also be reflected in the project budget, as a line item to cover unexpected expenses. The

amount to budget for contingency may be limited to just the high probability risks. This is normally determined by

estimating the cost if a risk occurs, and multiplying it by the probability. For example, assume a risk is estimated to

result in an additional cost of $50,000, and the probability of occurring is 80%. The amount that should be included

in the budget for this one item is $40,000. Associated with a contingency plan, are start triggers and stop triggers. A

start trigger is an event that would activate the contingency plan, while a stop trigger is the criteria to resume normal

operations. Both should be identified in the Risk Register.

Tracking and Reporting

As project activities are conducted and completed, risk factors and events will be monitored to determine if

in fact trigger events have occurred that would indicate the risk is now a reality. Based on trigger events that have

been documented during the risk analysis and mitigation processes, the project manager will have the authority to

enact contingency plans as deemed appropriate. Day to day risk mitigation activities will be enacted and directed by

the project manager. Large scale mitigation strategies will be initiated by T & T. Contingency plans that once

approved and initiated will be added to the project work plan and be tracked and reported along with all of the other

project activities.

Risk management is an ongoing activity that will continue throughout the life of the project. This process

includes continued activities of risk identification, risk assessment, planning for newly identified risks, monitoring

trigger conditions and contingency plans, and risk reporting on a regular basis. Project status reporting contains a

section on risk management, where new risks are presented along with any status changes of existing risks. Some

risk attributes, such as probability and impact, could change during the life of a project and this should be reported

as well.

Processes to Address Immediate Unforeseen Risks

The individual identifying the risk will immediately notify the project manager who will assess the risk

situation. If required, the project manager will identify a mitigating strategy, and assign resources as necessary. The

project risk manager will document the risk factor and the mitigating strategy.

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Catastrophic Failure Fault Tree: Spill – Loss of Life

Discussion of Catastrophic Fault Tree

The fault tree depicts an oil spill, the Deepwater Horizon, which flowed for three months. It was the largest

accidental marine oil spill in the history of the petroleum industry. The spill was the result of a succession of

interrelated well design, construction, and temporary abandonment decisions that compromised the integrity of the

well and compounded the likelihood of its failure. The explosion killed 11 men working on the platform and injured

17 others and caused extensive damage to marine and wide life habitats and the Gulf fishing and tourism industries.

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The above drawing represents the catastrophic failure fault tree, spill – loss of life. The spill was in the lost

of life state when the BOP failed to seal the well and the explosion and fig fire. The BOP failed to seal the well due

to BOP emergency mode failure, the Well Control event (detailed in Smaller Risks: Fault Tree Two) and the annular

preventer failure event. The explosion and the rig fire was due to Well control failure (influenced by the well

integrity not establish, detailed in Smaller Risks: Fault Tree One) and vapor ignition event. There are some overlap

of some of the smaller critical factors and causes which contributed to the catastrophic fault tree failure. See

Appendix C for summary of critical factors and related key findings.

Risk Management Strategy

Our risk management strategy seeks to minimize the impacts of risk through the use of policies, procedures

and processes which provide the project team with the guidance to objectively address this type of failure and

determine how these risks can be avoided, mitigated or reduced to ensure the successful completion of this project.

The risk management process is outlined in the planning section and the result is the risk register. See Appendix D

for the Risk Register listing risks and strategies.

The column likelihood has three levels, high medium, and low. High means that there is means that the risk

is highly likely to occur and controls to stop this risk from happening will be ineffective. The medium likelihood

level means there is a likelihood of this risk happening though there are controls in place to mitigate the risk from

happening. The low likelihood level means that these risks lacks the capability of occurring and the controls in place

can either prevent this risk from occurring. See Appendix F for risk likelihood definitions.

The risk impact column can be seen as high, medium and low as well and the definitions for the

risk impact are in Appendix G. This information helps management to determine what actions need to be taken

when assessing risks.

Smaller Risks Impacts

Smaller Risks: Fault Tree One - Well integrity failure

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Smaller Risks: Fault Tree One Discussion

This branch depicts well integration failure. Well integrity was not established or failed when the cement

barrier failed and hydrocarbons entered the well bore. When the cement foam failed channeling or the cement was

unstable contamination, the cement barrier failed. Either failures, shoe track or casing seals, cause hydrocarbons to

enter the well bore. Well integrity not established is also a subtree branch that is used elsewhere in the tree (transfer

in). This event is found in smaller risk: fault tree two.

Smaller Risks: Fault Tree Two - Well control failure

Smaller Risks: Fault Tree Two Discussion

This branch depicts well control failure. Well control was lost when the well control response failed, the

negative pressure test was incorrectly accepted, and hydrocarbons entered the riser. Flow diverted to MGS and

annular preventer leaks caused the well control response to fail. The well control event and the branch, Well

integrity not established, caused hydrocarbons to enter the riser. Well control lost is also a subtree branch that is

used elsewhere in the tree (transfer in).

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Conclusions

Research concludes that the accident of April 20 was avoidable and resulted from clear mistakes, failure to

create and implement a program of regulatory oversight that would have properly minimized the risk and systematic

failures in risk management that they place in doubt the safety culture of the entire industry. BP appears to have

elected to not follow industry best practices or even standard practices in its rush to complete the well. BP’s risk

plan should have been developed to with safety and risk management their most urgent priority.

Risk is inevitable in everything we do. The good Project Manager will constantly assess the risks and take

action as needed. Our process for managing risks is to:

identify all realistic risks

analyze their probability and potential impact

decide whether action should be taken now to avoid or reduce the risk and to reduce the impact if it does

occur

where appropriate, make plans now so that the organization is prepared to deal with the risk should it occur

constantly monitor the situation to watch for risks occurring, new risks emerging, or changes in the

assessment of existing risks.

Compared with many other industries, the deepwater oil rig is subject to more risks due to the unique

features of construction activities, such as long period, complicated processes, abominable environment, financial

intensity and dynamic organization structures. Hence, taking effective risk management techniques to manage risks

associated with variable construction activities has never been more important for the successful delivery of a

project. Our project Risk Management Plan specifies how risk management will be conducted in the project, and we

integrate it with other project management activities and processes.

The project risk management process helps organizations like yours make informed decisions regarding

alternative approaches to achieving their objectives and the relative approaches to achieving their objectives and

relative risk involved in each, in order to increase the likelihood of success in meeting or exceeding the most

important objectives sometimes at the expenses of other objectives. Risk management encourages the project team

to take appropriate measures to:

Minimize adverse impacts to protect scope, cost and schedule (and quality, as a result).

Maximize opportunities to improve the project’s objectives with lower cost, shorter schedules, enhanced

scope and higher quality.

Minimize management by crisis.

Risk management is an investment in your investment. Let us help with your next successful deployment of a

deepwater oil rig. T & T is prepared and ready with processes to address immediate unforeseen risks.

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References

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http://www.bakerhughes.com/products-and-services/evaluation/openhole-wireline-systems/deployment-risk-

management-drm

Bureau of Ocean Energy Management, Regulation and Enforcement. (n.d.). Technology Assessment & Research

(TA&R) Program. Retrieved September 15, 2011 from, http://www.boemre.gov/tarprojects/319/319AA.pdf

Drake, J. M. (8 September, 2010). A Case Study of the BP Accident Investigation Report. Google Docs. Retrieved

September 15, 2011 from,

https://docs.google.com/viewer?url=http%3A%2F%2Fsection1518.asqquality.org%2Fpresentations_2011%2

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KawYearBook. (April 20, 2010). Deepwater Horizon Risk Assessment. www.kawyearbook.org, Retrieved

September 15, 2011 from, http://web.engr.oregonstate.edu/~koopmans/DH_risk_assessment.pdf

MIDE Technology Corporation. (n.d.). Deep Water Drilling Risk Reduction Assessment. Google Docs. Retrieved

September 15, 2011 from, https://www.boemre.gov/tarprojectcategories/PDFs/RiskReductionAssessment.pdf

Oil Spill Commission. (11 March 2011). BP Deepwater Horizon oil spill and offshore drilling. Retrieved September

15, 2011 from, http://www.oilspillcommission.gov/media/

Pells, D. L. (2010). Deepwater Horizon: Lessons from the recent BP Project failure and environmental disaster in

the gulf of Mexico – Part I. PM World Today, XII, (VII). Retrieved October, 4, 2011, from

http://www.pmforum.org/library/editorials/2010/PDFs/july/Editorial-Pells.pdf

Transocean. (n.d.). Transocean solutions. Retrieved October 3, 2011, from

http://www.deepwater.com/fw/main/Transocean-Solutions-608.html

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Appendix A

Identified Risk Sources

Source Description

Poor Management

An organization's in ability to identify potential risks. This may be through implementing better

technology and hired staff.

Risk management is generally approached in an ad hoc manner.

This would not enable early risk identification, not continuous measurement and monitoring to

assure risky issues are managed effectively within the enterprise.

Engineering

The application and improvement of technology and processes of well designs and

constructions. This may include, but is not restricted to: reduced downtime. Improved

efficiency, maximized production, and performance ratings.

Quality

Risks associated with quality control and order. It ensures that the construction process takes

place within the framework of a quality management system. It also deals with the determination

of quantitative or qualitative value of risk as well as manage change.

Safety Risks associated with operational efficiency, and facility safety. It also explores

the exposure to a hazard .

14

http://en.wikipedia.org/wiki/Quantitative_property

http://en.wikipedia.org/wiki/Qualitative_data


Appendix B

Risk Management Process Flow

15


Appendix C

Summary of Critical Factors and Related Findings

I. Well integrity not established

Cement barrier fails

Hydrocarbons enter well bore

II. Well control lost

Well control response fails

Negative pressure test incorrectly accepted

Hydrocarbon enters riser

III. Explosion and rig fire

Well control lost

Vapor ignition

Explosive vapor sent inboard to MGS

Fire system fails to prevent ignition

IV. Blowout Preventer (BOP) fails to seal well

BOP emergency modes fails

16


Appendix D

Risk Register

Risk Likelihood Impact Note Strategy

Risk Management

and Communication

High High Fault tree indicates failure to

properly assess, manage and

communicate risk. For example,

BP did not properly communicate

to the drill crew the absence of

adequate testing on the cement or

the uncertainty surrounding

critical testing and procedures

used to confirm the integrity of

the barriers intended to inhibit the

flow of hydrocarbons into the

well. The actions of the drill crew

reflected their understanding that

the well had been properly

cemented and successfully tested.

Design and implement risk

management plan.

Implement project planning,

monitor and control procedures.

Communication must be

addressed within these

procedures.

Design and implement

environment risk plan.

Well Design and

Construction

High High Without the failure of the cement

barrier, hydrocarbons would not

have entered the well or reached

the rig. The production casing

design was of minimal quantity,

left little margin for error, and

was not tested adequately before

or after the cementing operation.

Further, the integrity of the

cement may have been

compromised by contamination,

instability and an inadequate

number of devices used to center

the casing in the wellbore.

Improved technical assurance

For thorough cement testing &

well design testing.

Examine total

overhaul/replacement.

Risk Assessment

and Process Safety

High High Inadequate assessment procedures

or prepared Management of

Change documents to address

cement testing and adequate risk

assessments. Resulting in adverse

effects on personnel and process

safety.

Design and implement

adequate risk assessment,

change management and

quality assurance processes

and procedures.

Operations High High Negative Pressure Test: The

results of the critical negative

pressure test were misinterpreted.

None of the individuals

monitoring the well detected the

influx. The well became

underbalanced during the final

displacement, hydrocarbons

began entering the wellbore

through the faulty cement barrier

and a float collar likely failed to

convert.

Well Control: Given the death of

the members of the drill crew

and the loss of the rig and its

Take proper actions to improve

business practices and to focus on

developing a skillful workforce.

Emphasize maintain pressure

integrity, well maintenance, and

procedures supporting 24/7

monitoring, in-flow testing, well

cleanup & other well activities.

Implement quality control and

performance measures.

Redesign HVAC system to

prevent hydrocarbons from

reaching potential ignition

17


monitoring systems, the drill crew

did not detect a pressure anomaly.

By the time actions were taken,

hydrocarbons had risen above the

blowout preventer and into the

riser, resulting in a massive

release of gas and other

fluids that overwhelmed the mud

gas separator system and released

high volumes of gas onto the aft

deck of the rig. The resulting

ignition of this gas cloud was

inevitable.

Blowout Preventer (BOP):

Although the Deepwater Horizon

BOP was properly maintained and

operated, it was overcome by the

extreme dynamic flow, which

prevented the BOP from

completely shearing the drill

pipe and sealing the well.

sources.

Develop and implement test,

maintenance, backup and

recovery processes and

procedures for well. Force

majeure events must be addressed

within these procedures.

Redesign emergency methods

(BOP) due to the potential

weaknesses in the testing regime

and maintenance management

system.

18


Appendix E

Risk Activity Responsibilities

Risk Activity Responsibility Risk Identification All project stakeholders

Risk Registry Project Manager

Risk Assessment All project stakeholders

Risk Statements Project Manager, EPC

Risk Response Options Identification All project stakeholders

Risk Response Approval EPC

Risk Contingency Planning Project Manager

Risk Response Management Project Manager

Risk Reporting Project Manager

19


Appendix F

Risk Likelihood Definitions

Risk Likelihood Impact

Low (10) Medium (50) High (100)

High (1.0) Low

10 x 1.0 = 10

Medium

50 x 1.0 = 50

High

100 x 1.0 = 100

Medium (0.5) Low

10 x 0.5 = 5

Medium

50 x 0.5 = 25

High

100 x 0.5 = 50

Low (0.1) Low

10 x 0.1 = 1

Medium

50 x 0.1 = 5

High

100 x 0.1 = 10

20


Appendix G

Risk Impact Definitions

Risk Impact Impact Definition

High This impact has a high probability of happening and having a high loss of assets and

resources.

Medium This impact has a medium probability of happening and could cause a medium risk of

loss of assets and resources.

Low The low impact level could possibly have a low risk of losing assets or resources.

21


Appendix H

Risk Statement

RISK STATEMENT

____________________________________________________________________________________________

Risk ID: ______ Title: __________________________________ Status: _______________

Date: __________ Category: ______________________________ Probability: _____________

Owner: _____________________________ Schedule Impact: ____________

Description

Impacts Project Milestones

Schedule

Mitigation and Contingency Plan Mitigation

Estimated Mitigation Cost _____________________________

Contingency

22


Appendix J

Fault Tree Legend

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risk management plan - deepwater oil rig deployment

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