A champion of green projects passed away suddenly August 7th.  Matt Simmons, well known for his views on peak oil in his book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy apparently drown after suffering a heart attack.  Here in Maine, however, he was best known for championing green energy projects (Green By Definition from our book). He had big plans for some big projects, particularly trying to harness the ocean’s energy.  He founded The Ocean Energy Institute in Rockland, Maine, whose grand opening was in July, a “think tank” focused on tidal energy.  It is both a not-for-profit research facility coupled with a for-profit venture capital enterprise to fund the alternate energy.

From an article by Michael Corkery in today’s (Aug 9th) Wall Street Journal Blog, Matt Simmons is quoted as saying that, “When it comes to alternative energy, wind is perfectly commercial today. But when you try to scale it, it just doesn’t work. I suspect the cost of solar will finally come down, but you’ll never have solar be anything more than an intermittent source of electricity.” To him, the ocean was the logical place to capture energy.  In the same article he is quoted as saying “The Gulf Stream is essentially the largest river in the world … and there are devices being developed that are anchored in a current and end up having a rotor that turns because of the current. It might be perfectly viable to create a floating dry dock. Or you combine the water in a boiler with ammonia, and once you have boiling you have steam, and steam powers a turbine and creates electricity. This doesn’t sound nearly as complicated as creating fuels cells, for instance, which is still a real bugaboo.”

Matt believed that “Oceans are the last energy frontier, yet we know so little about how to harness them. The Ocean Energy Institute’s mission is to quickly fill this knowledge void and let our oceans supply us the energy that fossil fuels have provided for the last hundred years,” a direct quote.

A press release today from the Institute indicated that the work of the Institute will continue.  We hope so.  We didn’t know him personally, but he was on our list of “get to knows” because of the potential projects he was involved with.  We’ll be watching the work of the Institute, that’s for sure.  Matt Simmons was 67.

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This sounds like a joke, but it isn’t:

What’s 10 stories high, a football field wide, almost 4 football fields long, cruises the oceans, and can suck in 21 million gallons of seawater a day?

The answer: A Whale.

No, not the mammal, but a Taiwanese-flagged vessel called “A Whale” which is the latest in the series of project “workarounds” for the Gulf /Deepwater Horizon/BP oil disaster.

“In many ways, the ship collects water like an actual whale and pumps internally like a human heart,” Bob Grantham, a spokesman for TMT Shipping, told the Associated Press news agency.

This story from BBC has a nice video with some of the details.

From a project management perspective, this continues to illustrate the magnitude of the workarounds – actually we could say families of workarounds that BP has used to deal with the triggered risk of the Deepwater Horizon.

We know about the planned risk responses (for example, the blowout preventer) and the series of other risk responses (top hat, junk shot), and the long -term workaround (the relief well), and the Ocean Therapy boats, but this one is a BIG one.  Testing is taking place as this blog post is being written.

It will be interesting – and important – to see whether this will work, although this, like most of the responses are going after the impact of the threat (the spilled oil), not the probability of the spill in the first place (as a relief well would).

Given the magnitude of this disaster – it’s not surprising to see gigantic workarounds like this!

UPDATE: for those who would like an excellent animated ‘history’ of the Deepwater Horizon oil disaster, click HERE to see a 22-slide slideshow which is a very well-produced summary of how it happened and what actions have been taken to date.

Look on the right.

You see that man?  That’s Tony Hayward, CEO of BP.

Does he look happy?   No, he’s not happy.

Does he look comfortable?  I don’t think so.

He’s being grilled by the US Congress.

One of the reasons?  He – or his company – or perhaps his whole industry – doesn’t seem to understand a simple equation which most project managers know by heart.

RF = P * I

Risk Factor is the product of Probability and Impact.

In any uncertain situation, you should be able to determine how much effort is required to spend in responding to a risk (a threat in this case) by understanding the Risk Factor (some call it Risk Score).

In this case, the probability may be very, very low.  But the impact is so astronomically high, that the product – the Risk Factor demands a huge risk treatment or response.

The impact in this case is a combination of very tangible things, like a $20B escrow fund, some mildly tangible things, like the health of one of the world’s most delicate ecosystems and the livelihood of hundreds of thousands of people, and the intangibles, such as the reputation of a multinational corporation which has just spent oodles (our own very technical financial word) of dollars to make their image a very green and friendly one.  How’s that working out for you, BP?

So – in that equation, I think we can all agree that no matter how low “P” is, “I” is very, very, high.  So the Risk Factor is going to be worth considering.

And yet.

And yet…

Just before the explosion of the Deepwater Horizon rig, BP sent home a crew from Schlumberger who was going to do a cement bond log.  What is that, you ask?  It’s a “representation of the integrity of the cement job, especially whether the cement is adhering solidly to the outside of the casing. The log is typically obtained from one of a variety of sonic-type tools. The newer versions, called cement evaluation logs, along with their processing software, can give detailed, 360-degree representations of the integrity of the cement job.” Seems like a good thing to do – and good assurance that your bond will hold.  Right?  The cost of this would have been $128,000.  This is only one of five decisions being raised at what can only be called the grilling of Tony Hayward.  The questions, coming from Republicans and Democrats, from oil states, and states that grow corn, all seem to be going after the companies acknowledgment of the Risk Factor equation above.

There is one point in the dialogue where Hayward seems to recognize the equation – however fleetingly:

“It gets to that point, though, that you have to question every assumption, especially when your entire company and its solvency are on the line.”

…and that equation leaves out the 11 dead, the ecological damage and the fact that the Gulf provides a livelihood for so many people as well as food for the world.

So what’s our point?

Keep the equation handy.  Keep it in mind.

Don’t be so fast to save $128,000 when on the other side of the equation there is a tangible $20B, and an even greater list of intangible damages to consider.  Your numbers may be lower (hopefully on both sides of the equation) but you will face this same choice.  Think of that picture above.  Do you want to have to wear that expression?

You can track the actual questioning here.

As instructors in PM we are often asked to help students distinguish between Secondary and Residual Risk.

Let’s learn a little from the (ongoing) Deepwater Horizon oil situation.

As you know, the current efforts (risk responses or treatments) are all about surrounding the oil slick, attempting to shut off, or capture the flow of oil, and to disperse the oil with chemicals called dispersants.  This is to break up the oil into smaller globules and to give it the freedom to spread not only out, but down as well.  As it turns out, however, the chemicals used to do this may be at least as dangerous as the oil itself.

This is covered very well in the following article from Propublica.

Read the article, then come back here.

Welcome back.  You did read it, right?  If not, we’ll give you one more chance.

OK…really now, welcome back!

The treatment or response to the risk has caused a new risk.  This a textbook example of secondary risk.

It’s different from residual risk.  Residual risk would be the oil (or residue) that remains even after treatment.  Actually it’s a pretty good mnemonic .  Residue–> Residual.

Our sister site has blogged on this subject as well, in a posting which uses – of all things – falling out of an airplane – as an analogy.  It’s called “oh chute!”.  Check that out, too.

You’d think that the environmental protection or “Climate Bill” might be shored up (excuse the terrible pun) by the Deepwater Horizon oil spill, which will likely overtake the Exxon Valdez as the USA’s worst oil spill.  In fact, the latest news from the spill involves the shutdown of all fishing in the entire Gulf area (see this story from the Houston Chronicle).

“More than 6,800 square miles of federal fishing areas, from the mouth of the Mississippi to Florida’s Pensacola Bay were closed for at least 10 days on Sunday by the National Oceanic and Atmospheric Administration. NOAA Administrator Jane Lubchenco says government scientists are taking samples from the waters near the spill to determine whether there is any danger.”

So…all of this should help pass the Climate Bill, right?  After all, the Climate Bill is about alternative energy, right?  And after all, the Climate Bill is about protecting the environment, right?

Think again.

As it turns out – and this is politics, folks – the bill calls for new offshore drilling; this was one of the concessions made to help build consensus for the bill.  Project managers know that a hybrid of compromise and collaboration often are what’s needed to get things done – and that’s what happened here.

But in this case, the inclusion of new offshore drilling in the light of this catastrophe will probably end up killing the bill, which is already stalled, puttering, and nearly dead anyway.

A good story on this situation appeared in the wire services (AP) and you can find that full story here.

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*** FLASH *** Update 14-MAY-2010

May 14, 2010 – news story broken by NPR – see full story here.

The amount of oil spilling into the Gulf of Mexico is far greater than official estimates suggest, according to an exclusive NPR analysis.

At NPR’s request, experts analyzed video that BP released Wednesday. Their findings suggest the BP spill is already far larger than the 1989 Exxon Valdez accident in Alaska, which spilled at least 250,000 barrels of oil.

[Editor's comment: this means the Gulf oil spill is like one Exxon Valdez every four days]

Steven Wereley, an associate professor of mechanical engineering at Purdue University, analyzed videotape of the seafloor gusher using a technique called particle image velocimetry.

A computer program simply tracks particles and calculates how fast they are moving. Wereley put the BP video of the gusher into his computer. He made a few simple calculations and came up with an astonishing value for the rate of the oil spill: 70,000 barrels a day — much higher than the official estimate of 5,000 barrels a day.

The method is accurate to a degree of plus or minus 20 percent.

UPDATE 21-MAY:

The update above still was too conservative; the estimates are much larger.  BP has been forced to admit that the 5,000 gallon-per-day rate was far off, because they are siphoning 5,000 gallons per day and the camera still shows huge plumes billowing out.

There is now a “SpillCam” on the US Government DOE site:

http://globalwarming.house.gov/spillcam

However, it’s been down almost since inception because of bandwidth problems (seems like a lot of people have an interest in this!)  You can still get a view of what’s going on down there from Senator Bill Nelson’s site, which captured some of the video and put it up on his site.