Two PRTM energy consultants offer their take on the BP spill and its aftermath
The BP oil spill in the Gulf of Mexico has brought much of the world’s focus back to energy. Consulting sat down with two of PRTM’s energy consultants—Kate Fickle, Director of the Energy Practice and Shahid Malik, a Vice President in the Energy Business Group—to discuss what went wrong in the Gulf, the U.S. Government’s role, where we go from here, and what it all means for clients.
Consulting: How is the spill impacting your clients?
Fickle: First off, this incident was fundamentally an operations failure. The first thing this is doing is forcing the leadership in the oil and gas industry to go back and refocus on their operations and on their suppliers to really ensure that they have effective and safe operations. We’re seeing that among all of our clients in the oil and gas space.
Malik: I think it’s worth pointing out that the oil and gas industry has a good record of safe operations, but this incident highlighted some areas that failed. One was, like Kate said, operations. Another would be enterprise risk management. A lot of firms will take another look at their ERM practices to make sure they have a holistic approach so they look at it from a functional standpoint and an enterprise standpoint. In the ERM world, this is what we’d call a ‘black swan event,’ a rare event that causes extreme impact. This appears to be one of those events, and most would agree that it never should’ve happened.
Consulting: Did the industry get complacent?
Malik: I don’t think the oil and gas industry has even gotten complacent about safety. I think this is more about the response—was an appropriate process in place and was it followed? This event in the Gulf likely wouldn’t have happened if oil and gas industry had followed a nuclear template. The nuclear industry in the United States clearly learned from its own disaster with Three-Mile Island and changed its operations accordingly.
Consulting: Where does the industry go from here?
Fickle: The industry needs to improve its own
practices but also collaborate with other industries on standards. I think people are going to be looking for the degree to which the oil companies are willing to step up and own this solution. Again, the nuclear industry’s response—in terms of forming groups that police the industry—was very effective.
Consulting: What’s the future of regulation?
Malik: The government has to increase its own expertise either by hiring folks or consulting firms that understand this business better so they can promulgate appropriate regulation. In the U.S., we have tons of regulatory bodies. My guess is that we would end up with a more streamlined regulatory process, just as they are trying to do in the financial industry.
Consulting: Does this help renewable energy’s cause?
Fickle: This has been a very strong year for renewables. Clients in this space are taking a sideways glance at what’s happening in the Gulf because if
the U.S. government comes up with stronger policy positions in favor of renewable energy that will help, but they are also so busy right now that I don’t
think they are looking at this as an opportunity to grow the industry. Their industry was already growing. Their biggest challenge they have right now is scaling operations to meet demand.