Just Because a Catastrophe is Unlikely ...

Disasters like the Deepwater Horizon blowout and oil spill are high-impact, low-frequency possibilities that few think about ahead of time. Or, they are dismissed as too improbable to worry about. And they disappear from our consciousness. Until they happen.

Looking back, we discover that we were warned. We ponder why we dismissed the warnings.

Six weeks after the big Gulf spill began, BP CEO Tony Hayward said his company was unprepared for a deepwater oil leak. "What is undoubtedly true is that we did not have the tools you would want in your toolkit," Hayward told the Financial Times.

It wasn't for lack of knowledge that such a leak could occur and that closing it off would be fraught with difficulty. Here's an intriguing passage from an environmental assessment of a Shell oil drilling project in half-mile-deep water off the Louisiana coast:

"Although not a new potential source of spills, the likelihood of spills from loss of control (blowouts) in deep water may be different from the risk of spills in shallow water. Further investigation is required before the consequences of blowouts in deep water can be fully evaluated. Of particular concern is the ability to stop well control loss once it begins, thus limiting the size of a spill. Regaining well control in deep water may be a problem since it could require the operator to cap and control well flow at the seabed in great water depths (in this case, over 2,958 feet) and could require simultaneous firefighting efforts at the surface."

There's more: "In the event that a subsea blowout occurs, the intervention that would most likely be employed to regain control of the well would be the drilling of a relief well. Drilling an intervention well could take anywhere from 30 to 90 days." The rate of the flow from the blowout could be "sizable" - 35,000 barrels, or 1.47 million gallons, every day.

That prescient passage came from the Minerals Management Service's 2000 assessment of Shell's proposed "Brutus" project, located some 165 miles southwest of New Orleans. MMS issued a "finding of no significant impact." Oil and gas production from Brutus began in 2001. The what-if spill scenario described in the environmental assessment's Appendix D has not occurred at Brutus.

It has, however, at Deepwater Horizon. The spill and BP's flailing efforts to stop it have reached a point at which serious talk has emerged of the nuclear option -- sealing off the well with a nuclear weapon. The environmental and geopolitical consequences of such a desperate measure boggle the mind.

A few days ago, the North American Electric Reliability Corp., which is charged by federal law to develop and enforce electric grid reliability standards, released a report about high-impact, low-frequency events that could lead to widespread, long-lasting electric power outages. The report received very little media attention, but it brought to mind the oil industry's shortcomings in responding to deepwater oil spills.

The report reviewed natural and man-made events that could bring down the grid. For example, a geomagnetic storm set off by intense solar flares could, if the storm reached a plausible intensity, fry grid components that are not manufactured in the U.S. and take a year or two to procure.

The utility industry and federal energy agencies are fully aware of the issue. The question is whether steps will be taken to plan for those high-impact, low-frequency contingencies. Lack of planning can bite. Just ask Tony Hayward.