Risk in the oil industry

"Averting Disaster" (August 2010) is a timely reminder of the benefit of quality and risk management systems. But the article assumes these practices are either unknown or not practiced in the oil industry. The major oil companies have recognized the need to prevent spills in the marine environment for many years and created the Oil Companies International Marine Forum in the late 1960s after the loss of the tank ship Torrey Canyon.

Today, the monetary liability associated with oil spills is staggering. To help manage the risk, companies have developed and improved protocols over the past 14 years that address operational inspection of ships and terminals, and create marine-based quality management system (QMS) standards.

For their part, major oil companies have ISO-inclusive quality and environmental management systems in place. They also employ many contract companies worldwide for exploration, drilling, production, maintenance, shipping and refining. These contract companies are sought for their expertise and availability but are also chosen based on their management systems.

In the case of Transocean, the company’s quality policy statement, posted on its website, addresses the need to manage systems and processes, and to facilitate continuous improvement. Companies such as BP want to ensure contract companies perform in a manner consistent with its own objectives. As a result, contract companies can expect to undergo periodic second-party management system audits to help ensure conformance to requirements.

No small effort has been expended over the years with respect to safety in the offshore oil field. Semi-submersible oil rigs such as the Deepwater Horizon are regulated, built and held to classification society standards. For example, the American Bureau of Shipping publishes "Rules for Building and Classing Offshore Mobile Drilling Units."

The requirement to comply with such rules and regulations is often written into company policy and is process-managed as part of an overall QMS. In addition, a first-edition ISO standard—ISO 13624-1:2009—has been developed to address the design, selection, operation and maintenance of marine riser systems for floating drilling operations. Clearly, the drilling industry sees the need to build and operate with flawless results in mind.

If industry partners have a standards-led QMS in place, can it be assumed risk assessment is addressed? With respect to risk management, what becomes the acceptable level of risk when an operation is pushing the boundaries of exploration and delivery? I believe the various analytical approaches mentioned in the article are all worthy, yet I also believe risk is assessed based on historical results of operations with similar equipment under similar conditions. Certainly, failure was not anticipated.

The investigation into this fatal accident will no doubt lead to a comprehensive report that will likely identify root causes of the accident. It may point out that, as the article suggests, a "functioning" quality system was not in place. Or, given the considerable amount of dollars that can be gained or lost daily based on contractual obligations, inappropriate decisions were made in spite of available factual information.

John F. Hess
Portland, ME

Ignorance isn’t bliss

Reading "Averting Disaster" amazes me in how egg-headed quality professionals can be about their work. BP certainly has plenty of quality and safety procedures, and the workers on the rig knew them well. The disaster occurred due to smart people who knew better but acted stupidly anyway. "You can’t fix stupid" is a tag line a local radio broadcaster always uses. Thinking you can is just as stupid.

Donald A. Koppy
St. Louis

Where does data rank?

Many QP readers remember W. Edwards Deming’s advice to abolish ranking. So, in a society in which it seems everyone is obsessed with ranking everybody else, how can ASQ be of help?

One of the ways is to start a column with ranked data reconstituted into a control chart. The statisticians ASQ has as members could easily complete these calculations and be of great service to members and, hopefully the public.

One example is the airline rankings published on a regular basis ("Quality Reports: Airlines Improve Performance in 2009," June 2010). As a person who is a frequent customer of airline services, I would be interested to know the answers to a few questions: Is there any special cause variation among the airlines? Is the perceived difference between airlines really common variation?

I am a career public school educator who has witnessed the harm caused by ranking schools. Recently, while working in Nebraska, I was informed that rankings needed to be carried out to six decimal places to comply with the demand from the U.S. Department of Education to identify the lowest-performing 5% of the schools. So, by the luck of a decimal point, some schools were declared losers, and some were declared winners. Such a travesty.

Another way of looking at this is through the eyes of elementary school mathematics. A typical assignment for children in first grade is to place a set of numbers in order from smallest to largest. Six-year-olds have trouble with 36 and 63; they look like the same number at first. Also, 98 and 102 are problematic; one numeral has 9’s and 8’s and the other one only has 1’s, 2’s and 0’s.

Eventually, the 6-year-olds grasp basic number fundamentals and move on to more complicated mathematics. This makes me wonder how many million-dollar decisions are made or influenced by adults relying on first-grade mathematics. Could the officials mandating higher expectations from a multitude of organizations, including schools, use math beyond what first graders know?

Getting back to my initial point, it seems as though a monthly column that reprints a ranking from the national media with a control chart adjacent to it would be helpful to ASQ members. These articles could be sent to many others in our society who have never heard of special and common cause variation.

Lee Jenkins
Scottsdale, AZ

Working together

"Past Is Prologue" (August 2010) is an excellent overview and a very helpful summary. After reading it, it occurred to me that in a given organization, we see the three models of quality coexisting, depending on the quality arena.

The process manager remains most interested in control, the line worker remains most interested (motivated by) improvement, and top management strives to achieve breakthrough. In a well-integrated company, none of these models competes with the others, but rather results in a dynamic synergy, like a well-tuned engine in which each component fulfills its designed function at peak performance.

Jon Fadely
Lindale, TX

Money matters

"Two in One" (August 2010) is a great article about risk management. I believe it is missing one important aspect, however, especially for top management. When it comes to risk and risk management, I think it is critical to include financial data to catch management attention. I would definitely add financial impact and loss to the graphs, and what the expected expenditures are to mitigate these risks.

Sulaiman Al Neyadi
Alain, United Arab Emirates

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