Risk, Re-/Insurance and Future Thinking

There is an excellent guest post on the Oil Drum with an easily accessible (to the layman) explanation of what went on and what is going on.

It’s good on the nature of the ‘leak’ and presents this pretty graphic image of the ferocity of the escape:

Factoid: If you assume that there is over 5,000 psi of downhole pressure at the BOP–and everything I have heard indicates it is probably substantially higher than that–then a 1/4 inch diameter hole is large enough to “leak” 5,000 barrels a day. That “leak” would probably cut off your arm if you passed it in front of itB

He adds that the fact that there is almost certainly significant sand mixed in with the oil means that there is a ’sand-blast’ effect going on, too, constantly gouging away at the escape site and enlarging it. Not good.

Under the heading “The Politics” (though really it should be “Who’s going to be liable”), he considers who might be in the firing line:

Does BP have culpability because of trying to move too fast? At over $500 a minute, they certainly have the incentive to move fast. We don’t know – yet.

Is Transocean to blame for some sort of negligence in not properly monitoring the mud return or some other aspect of cementing process? We don’t know – yet.

Was Halliburton’s cement job faulty? We don’t know – yet.

Did Cameron International’s BOP fail due to manufacturing or design fault? We don’t know – yet.

Is a combination of one or more of the above? Quite possibly, but we don’t know – yet.

There are unsubstantiated reports that the kick registered over 30,000 psi. If the BOP stack saw that kind of pressure, it could be a important factor, both in determining what happened and how to prevent it from happening again.

I guess these are some of the issues that are going to play out over the coming months and years as people struggle to get to the bottom of the incident and what — and who — caused it.

Not a mention of insurance, though. But then it’s not top of people’s minds. Oh, and there is some perhaps surprising defence of lawyers in the comments to the article. Now that is unusual.