5-31. Suppose you (the manager of the Toledo refinery)

had just received a memo from corporate headquarters that your plant operating costs were over budget. Would that affect your answer? On April 20, 2010, the Deepwater Horizon, a drilling rig operating in the Gulf of Mexico, exploded, killing 11 workers and injuring another 17. Investigators determined that the likely cause was a column of methane gas that rose through the borehole under extremely high pressure, expanded on reaching the surface, and then ignited, with catastrophic consequences. After burning for 36 hours, the rig collapsed and sank into the Gulf. It triggered one of the worst environmental disasters in recent U.S. history, devastated the tourism and fishing industries throughout the Gulf Coast, and raised serious questions about the efficacy of government regulation and the safety of deepwater drilling.

The Deepwater Horizon was owned and operated by Swiss-headquartered Transocean. Under contract to BP, it was in the final stages of completing an exploratory well in mile-

deep water in the Macondo Prospect. Halliburton, an experienced oil well service company, had just finished cementing in the well. Later testimony indicated that the rig technicians had failed to react to a buildup of gas pressures in the well; they also ignored a critical test of the cement job itself. A few days after the explosion, Coast Guard officials noticed that oil was leaking from the drill site. Initial estimates provided by BP officials were 1,000 barrels a day; over time the estimate progressively rose to between 35,000 and 60,000 barrels per day. In total, about 5 million barrels of oil leaked into the Gulf before BP finally capped the well after 87 days on July 15.