OT: FOX News and the oil blowout

[Allan from Fallbrook]

Equalizer: I’d strongly recommend reading the Baker report following the Texas City blast. Note, I’m referring to BakerRisk Group and NOT former Secretary of State James Baker (who was brought in as part of post-blast panel). The report he turned out was largely worthless, but the BRG (BakerRisk Group) report is worth a read.

I want to be a little careful, because BP is a client of mine, but it bears mentioning that most folks in the oil/gas business don’t do a great job of risk analysis and risk management. The reason? PRODUCTION. That’s the name of the game in the business, and most of the companies are doing their level best to squeeze as much production out of older and, in many cases, substandard, facilities as they can.

You don’t see true risk management and risk analysis any more. What you do see is, “how do I keep myself and my company out of court and cover my ass?” risk management. That, combined with the need to squeeze as much production out of these facilities and make them cash-flow properly, has landed us where we are today. Aided and abetted by loose and/or fairly non-existent regulations, we are now seeing accidents occurring on a much more regular basis. Whether its the Tesoro refinery in Washington State, or the Massey Energy mine in West Virginia, we’re now reaping what we’ve sowed.

And don’t even get me going on the nonsensical standards and guidelines for blast mitigation in the Force Protection (anti- and counter-terrorism arena).

[patb]

The GOP line is this can’t be a corrprate problem,
so they want to blame Obama.

[patb]

The GOP line is this can’t be a corrprate problem,
so they want to blame Obama.

[patb]

The GOP line is this can’t be a corrprate problem,
so they want to blame Obama.

[patb]

The GOP line is this can’t be a corrprate problem,
so they want to blame Obama.

[patb]

The GOP line is this can’t be a corrprate problem,
so they want to blame Obama.

[eavesdropper]

[quote=Allan from Fallbrook] You don’t see true risk management and risk analysis any more. What you do see is, “how do I keep myself and my company out of court and cover my ass?” risk management. That, combined with the need to squeeze as much production out of these facilities and make them cash-flow properly, has landed us where we are today. Aided and abetted by loose and/or fairly non-existent regulations, we are now seeing accidents occurring on a much more regular basis. Whether its the Tesoro refinery in Washington State, or the Massey Energy mine in West Virginia, we’re now reaping what we’ve sowed. [/quote]

Very astute observation, Allan. I’m curious as to what they are teaching in today’s business administration curriculum. For several years, I watched the changes in the way companies handle risk management, and came to the realization that they don’t. They simply gamble, which seems to be the widely-accepted business credo. I think back to what I learned in my undergrad finance and management classes, and either age keeps me from accurately remembering curriculum content, or there’s simply no trace of the business practices taught in the 70s. I have no issue with progress – in fact , I heartily endorse it – but I cannot equate “gambling” with “management”.

And speaking of Massey, they should be a semester’s worth of study in themselves. If I wasn’t so repelled by Don Blankenship and his actions, I would probably be shaking my head in wonder and awe at what this guy has managed to pull off…with the complete cooperation of our leaders in Washington.

[eavesdropper]

[quote=Allan from Fallbrook] You don’t see true risk management and risk analysis any more. What you do see is, “how do I keep myself and my company out of court and cover my ass?” risk management. That, combined with the need to squeeze as much production out of these facilities and make them cash-flow properly, has landed us where we are today. Aided and abetted by loose and/or fairly non-existent regulations, we are now seeing accidents occurring on a much more regular basis. Whether its the Tesoro refinery in Washington State, or the Massey Energy mine in West Virginia, we’re now reaping what we’ve sowed. [/quote]

Very astute observation, Allan. I’m curious as to what they are teaching in today’s business administration curriculum. For several years, I watched the changes in the way companies handle risk management, and came to the realization that they don’t. They simply gamble, which seems to be the widely-accepted business credo. I think back to what I learned in my undergrad finance and management classes, and either age keeps me from accurately remembering curriculum content, or there’s simply no trace of the business practices taught in the 70s. I have no issue with progress – in fact , I heartily endorse it – but I cannot equate “gambling” with “management”.

And speaking of Massey, they should be a semester’s worth of study in themselves. If I wasn’t so repelled by Don Blankenship and his actions, I would probably be shaking my head in wonder and awe at what this guy has managed to pull off…with the complete cooperation of our leaders in Washington.

[eavesdropper]

[quote=Allan from Fallbrook] You don’t see true risk management and risk analysis any more. What you do see is, “how do I keep myself and my company out of court and cover my ass?” risk management. That, combined with the need to squeeze as much production out of these facilities and make them cash-flow properly, has landed us where we are today. Aided and abetted by loose and/or fairly non-existent regulations, we are now seeing accidents occurring on a much more regular basis. Whether its the Tesoro refinery in Washington State, or the Massey Energy mine in West Virginia, we’re now reaping what we’ve sowed. [/quote]

Very astute observation, Allan. I’m curious as to what they are teaching in today’s business administration curriculum. For several years, I watched the changes in the way companies handle risk management, and came to the realization that they don’t. They simply gamble, which seems to be the widely-accepted business credo. I think back to what I learned in my undergrad finance and management classes, and either age keeps me from accurately remembering curriculum content, or there’s simply no trace of the business practices taught in the 70s. I have no issue with progress – in fact , I heartily endorse it – but I cannot equate “gambling” with “management”.

And speaking of Massey, they should be a semester’s worth of study in themselves. If I wasn’t so repelled by Don Blankenship and his actions, I would probably be shaking my head in wonder and awe at what this guy has managed to pull off…with the complete cooperation of our leaders in Washington.

[eavesdropper]

[quote=Allan from Fallbrook] You don’t see true risk management and risk analysis any more. What you do see is, “how do I keep myself and my company out of court and cover my ass?” risk management. That, combined with the need to squeeze as much production out of these facilities and make them cash-flow properly, has landed us where we are today. Aided and abetted by loose and/or fairly non-existent regulations, we are now seeing accidents occurring on a much more regular basis. Whether its the Tesoro refinery in Washington State, or the Massey Energy mine in West Virginia, we’re now reaping what we’ve sowed. [/quote]

Very astute observation, Allan. I’m curious as to what they are teaching in today’s business administration curriculum. For several years, I watched the changes in the way companies handle risk management, and came to the realization that they don’t. They simply gamble, which seems to be the widely-accepted business credo. I think back to what I learned in my undergrad finance and management classes, and either age keeps me from accurately remembering curriculum content, or there’s simply no trace of the business practices taught in the 70s. I have no issue with progress – in fact , I heartily endorse it – but I cannot equate “gambling” with “management”.

And speaking of Massey, they should be a semester’s worth of study in themselves. If I wasn’t so repelled by Don Blankenship and his actions, I would probably be shaking my head in wonder and awe at what this guy has managed to pull off…with the complete cooperation of our leaders in Washington.

[eavesdropper]

[quote=Allan from Fallbrook] You don’t see true risk management and risk analysis any more. What you do see is, “how do I keep myself and my company out of court and cover my ass?” risk management. That, combined with the need to squeeze as much production out of these facilities and make them cash-flow properly, has landed us where we are today. Aided and abetted by loose and/or fairly non-existent regulations, we are now seeing accidents occurring on a much more regular basis. Whether its the Tesoro refinery in Washington State, or the Massey Energy mine in West Virginia, we’re now reaping what we’ve sowed. [/quote]

Very astute observation, Allan. I’m curious as to what they are teaching in today’s business administration curriculum. For several years, I watched the changes in the way companies handle risk management, and came to the realization that they don’t. They simply gamble, which seems to be the widely-accepted business credo. I think back to what I learned in my undergrad finance and management classes, and either age keeps me from accurately remembering curriculum content, or there’s simply no trace of the business practices taught in the 70s. I have no issue with progress – in fact , I heartily endorse it – but I cannot equate “gambling” with “management”.

And speaking of Massey, they should be a semester’s worth of study in themselves. If I wasn’t so repelled by Don Blankenship and his actions, I would probably be shaking my head in wonder and awe at what this guy has managed to pull off…with the complete cooperation of our leaders in Washington.

[Allan from Fallbrook]

[quote=eavesdropper]

And speaking of Massey, they should be a semester’s worth of study in themselves. If I wasn’t so repelled by Don Blankenship and his actions, I would probably be shaking my head in wonder and awe at what this guy has managed to pull off…with the complete cooperation of our leaders in Washington.[/quote]

Eavesdropper: I don’t work on the mine side, which is largely regulated by MSHA (the mine version of OSHA). I will give Obama credit for appointing a former senior union mine worker as head of MSHA, but West Virginia is apparently bought and paid for by Blankenship and Massey.

There are curious parallels between risk analysis, risk modeling and risk management in oil/gas and Wall Street and largely in that neither particular model works, nor has either model been tested in the real world, until the events of summer/fall 2008 (Wall Street with Bear, Lehman, et al.) and 2009 and 2010 (Tesoro, Massey and BP).

In a conversation with a Civil/Structural engineer at an unnamed oil company, he said that risk analysis “works until it doesn’t”. Sounds kind of goofy, but that is the prevailing attitude: “We’re comfortable with our risk analysis and risk management posture, until such time as the shit blows up”. Like I said, the parallels between Wall Street and the oil/gas companies are eerie. Both sides count on lawyers and lobbyists and highly paid engineering (or mathematics, in the case of Wall Street) consultants to come in and argue that these various companies did everything possible to analyze and mitigate risk and then they count on endless years spent in court, fending off plaintiffs.

[Allan from Fallbrook]

[quote=eavesdropper]

And speaking of Massey, they should be a semester’s worth of study in themselves. If I wasn’t so repelled by Don Blankenship and his actions, I would probably be shaking my head in wonder and awe at what this guy has managed to pull off…with the complete cooperation of our leaders in Washington.[/quote]

Eavesdropper: I don’t work on the mine side, which is largely regulated by MSHA (the mine version of OSHA). I will give Obama credit for appointing a former senior union mine worker as head of MSHA, but West Virginia is apparently bought and paid for by Blankenship and Massey.

There are curious parallels between risk analysis, risk modeling and risk management in oil/gas and Wall Street and largely in that neither particular model works, nor has either model been tested in the real world, until the events of summer/fall 2008 (Wall Street with Bear, Lehman, et al.) and 2009 and 2010 (Tesoro, Massey and BP).

In a conversation with a Civil/Structural engineer at an unnamed oil company, he said that risk analysis “works until it doesn’t”. Sounds kind of goofy, but that is the prevailing attitude: “We’re comfortable with our risk analysis and risk management posture, until such time as the shit blows up”. Like I said, the parallels between Wall Street and the oil/gas companies are eerie. Both sides count on lawyers and lobbyists and highly paid engineering (or mathematics, in the case of Wall Street) consultants to come in and argue that these various companies did everything possible to analyze and mitigate risk and then they count on endless years spent in court, fending off plaintiffs.

[Allan from Fallbrook]

[quote=eavesdropper]

And speaking of Massey, they should be a semester’s worth of study in themselves. If I wasn’t so repelled by Don Blankenship and his actions, I would probably be shaking my head in wonder and awe at what this guy has managed to pull off…with the complete cooperation of our leaders in Washington.[/quote]

Eavesdropper: I don’t work on the mine side, which is largely regulated by MSHA (the mine version of OSHA). I will give Obama credit for appointing a former senior union mine worker as head of MSHA, but West Virginia is apparently bought and paid for by Blankenship and Massey.

There are curious parallels between risk analysis, risk modeling and risk management in oil/gas and Wall Street and largely in that neither particular model works, nor has either model been tested in the real world, until the events of summer/fall 2008 (Wall Street with Bear, Lehman, et al.) and 2009 and 2010 (Tesoro, Massey and BP).

In a conversation with a Civil/Structural engineer at an unnamed oil company, he said that risk analysis “works until it doesn’t”. Sounds kind of goofy, but that is the prevailing attitude: “We’re comfortable with our risk analysis and risk management posture, until such time as the shit blows up”. Like I said, the parallels between Wall Street and the oil/gas companies are eerie. Both sides count on lawyers and lobbyists and highly paid engineering (or mathematics, in the case of Wall Street) consultants to come in and argue that these various companies did everything possible to analyze and mitigate risk and then they count on endless years spent in court, fending off plaintiffs.

[Allan from Fallbrook]

[quote=eavesdropper]

And speaking of Massey, they should be a semester’s worth of study in themselves. If I wasn’t so repelled by Don Blankenship and his actions, I would probably be shaking my head in wonder and awe at what this guy has managed to pull off…with the complete cooperation of our leaders in Washington.[/quote]

Eavesdropper: I don’t work on the mine side, which is largely regulated by MSHA (the mine version of OSHA). I will give Obama credit for appointing a former senior union mine worker as head of MSHA, but West Virginia is apparently bought and paid for by Blankenship and Massey.

There are curious parallels between risk analysis, risk modeling and risk management in oil/gas and Wall Street and largely in that neither particular model works, nor has either model been tested in the real world, until the events of summer/fall 2008 (Wall Street with Bear, Lehman, et al.) and 2009 and 2010 (Tesoro, Massey and BP).

In a conversation with a Civil/Structural engineer at an unnamed oil company, he said that risk analysis “works until it doesn’t”. Sounds kind of goofy, but that is the prevailing attitude: “We’re comfortable with our risk analysis and risk management posture, until such time as the shit blows up”. Like I said, the parallels between Wall Street and the oil/gas companies are eerie. Both sides count on lawyers and lobbyists and highly paid engineering (or mathematics, in the case of Wall Street) consultants to come in and argue that these various companies did everything possible to analyze and mitigate risk and then they count on endless years spent in court, fending off plaintiffs.

[Author]

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