This document presents a decision tree approach to analyzing risks and making optimal decisions to prevent future oil spills. It summarizes the 2010 Deepwater Horizon oil spill, current risk analysis procedures used by BP, and proposes a new risk mitigation procedure using decision trees. Sensitivity analysis on the decision tree shows waiting for cement bond logs and centralizers before drilling would have reduced risks of hydrocarbon channeling and spill from 5% to 0.5%, preventing the disaster.

1. “Preventing Future Oil Spills”
– A Decision Tree Approach
Goh Peng Yang Davy
Deepa Radhakrishnan
Corina Ilmaniar
Somnath Kansabanik
Daniel Ilteris
Soumyak Sen
Phei Yee Tan

2. Agenda
• Overview of the disaster
• Aftermath of the disaster
• Events & Decisions leading to the disaster
• Current Risk Analysis Procedure
• Proposed Risk Analysis Procedure
• Optimal Decision & Sensitivity Analysis
• Conclusions
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3. Overview of the Disaster
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4. Aftermath of the Disaster
• Largest marine spill in history
• 11 casualties &17 more injuries
• 3 months to plug the leak which released 4.9 million barrels of crude oil
into the ocean
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5. Basics of Well Drilling
Fresh water • Centralizer design & cement
chemistry are estimated prior to
drilling
• If cement chemistry and centralizer
Shale design are improved after obtaining
real-time drilling logs, the probability
Salt water of desired cement setting improves
Hydrocarbo from 60% to 95% & probability of
n/Oil good centralization improves from
55% to 95%
If cement does not set,
90% chance of
hydrocarbon channeling Without proper centralization
90% chance of hydrocarbon
channeling
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6. Decisions & Events Leading
to the Disaster
• On April 19, Jesse Gagliano, the Halliburton
cementing engineer, informed the BP engineer
Brian Morel that compressive strength analysis
(Cement Bond Log Test) for cement job has not
been completed
• Decision to be made on Apr 19, 2011:
 Wait for 3 additional days for centralizers
to arrive?
 Wait for total 5 days for complete lab test
result?
BP did not listen to Halliburton’s recommendation to wait for more centralizers
and Cement Bond Log (CBL) test results
Brian Morel wrote an email to colleague Brett Cocales, saying:
"Who cares, it's done, end of story, we'll probably be fine".
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7. Decisions & Events Leading
to the Disaster Small, Minor or Major Oil spill
with 30%, 31% & 39%
chances of occuring
Failure of Well Control leads
to Emergency Response with
65% success rate
Failure of BOP will activate
Gas Detection. Well Control
success rate is 60%
BOP can prevent leak with
80% reliability
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8. Current Risk Analysis
Procedure
Mitigation Plans:
Risk Management Plan:
1) BOP pressure test will be done.
BOP will help to prevent
hydrocarbon channeling
2) Gas Detection System will alert in
case BOP of failure. Well Control
can be done
3) Emergency Response Plan in
place to reduce severity of
catastrophic incident
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9. Proposed Risk Analysis
Procedure
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10. Risk Mitigation Procedure
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11. Complexity of the Decision
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12. Optimal Decision
95.0% 90.25%
0 -7500000
TRUE Chance
-3000000 -14803857.01
• Wait for Centralizers
• Wait for Cement Bond Log 90.0%
0
5.0% Hydrocarbon Channeling
0 -153577140.3
10.0%
-1,000,000
95.0% Decision
0 -14803857.01
TRUE Chance
-4500000 -21592521.17
10.0%
0
25.0% Hydrocarbon channeling detected
0 -649537290
90.0%
0
90.0% Chance
0 -166696822.5
75.0% 3.375%
-1250000 -5750000
5.0% Hydrocarbon Channeling
0 -150577140.3
10.0% 0.5%
-1000000 -5500000
Decision
-21592521.17
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13. Sensitivity Analysis
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14. Sensitivity Analysis
98% Reliability!
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15. Sensitivity Analysis
• Further sensitivity analysis keeping BOP reliability at 95%
• Probability of Emergency Response to control fire needs to improve by 20%
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16. Insights for Oil & Gas Industry
• Opportunity to improve the current business decision framework:
 From “gut feel” decision making to a more structured framework that “forces” the
decision maker to consider all factors and quantify the risks/damages and
rewards/profits (Expected Monetary Value) associated with the decisions
• Reduce NPT (Non-productive time)
 Improve Reliability of BOP from 80% to 95%
– Possible Action includes improving design of BOP, improving maintenance schedule
 Improve success rate of Emergency Response to control fire from 65% to 85%
– Possible actions include training for personnel, conducting fire-drill exercises, etc
• The framework is a good starting point for the industry to start collecting real data hence
improving the accuracy of the probability set for each variable over time
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17. References
• BP’s Investigation Report (Accessible at
http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/gom_response/STAG
ING/local_assets/downloads_pdfs/Deepwater_Horizon_Accident_Investigation_Report.pdf)
• US Govt Report on GOM Disaster: “REPORT REGARDING THE CAUSES OF THE APRIL
20, 2010 MACONDO WELL BLOWOUT” (Accessible at
http://www.boemre.gov/pdfs/maps/DWHFINAL.pdf )
• http://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill
• http://techcrunch.com/2010/06/21/bp-brand-value/
• http://www.deepwater.com/fw/main/BOP-Video-1079.html
• http://www.c-spanvideo.org/program/295154-107
• http://www.youtube.com/watch?v=xi2K_BCPUec
• http://www.youtube.com/watch?v=hj_r8vs2vmU
• http://www.youtube.com/watch?v=zE_uHq36DLU
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18. MERCI!
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