Organizational Design for Spill Containment in Deepwater Drilling Operations in the Gulf of Mexico: Assessment of the Marine Well Containment Company (MWCC)

Resources for the Future Discussion Paper No. 10-63

64 Pages Posted: 1 Feb 2011

See all articles by Robert Cleve Anderson

Robert Cleve Anderson

affiliation not provided to SSRN

Mark A. Cohen

Vanderbilt University - Strategy and Business Economics; Vanderbilt University - Law School; Resources for the Future

Molly K. Macauley

Resources for the Future

Nathan D. Richardson

University of South Carolina - School of Law; Resources for the Future

Adam Stern

affiliation not provided to SSRN

Date Written: January 12, 2011

Abstract

The Deepwater Horizon oil spill in the Gulf of Mexico in April 2010 led to the deaths of 11 workers, a six-month moratorium on deepwater drilling in the Gulf, and nearly three months of massive engineering and logistics efforts to stop the spill. The series of failures before the well was finally capped and the spill contained revealed an inability to deal effectively with a well in deepwater and ultradeepwater. Ensuring that containment capabilities are adequate for drilling operations at these depths is therefore a salient challenge for government and industry. In this paper we assess the Marine Well Containment Company (MWCC), a consortium aimed at designing and building a system capable of containing future deepwater spills in the Gulf. We also consider alternatives for long-term readiness for deepwater spill containment. We focus on the roles of liability and regulation as determinants of readiness and the adequacy of incentives for technological innovation in oil spill containment technology to keep pace with advances in deepwater drilling capability. Liability and regulation can significantly influence the strength of these incentives. In addition, we discuss appropriate governance structure as a major determinant of the effectiveness of MWCC.

Keywords: oil spill, containment, industry R&D, liability, regulation, governance, innovation

JEL Classification: Q4, Q55, K3

Suggested Citation

Anderson, Robert Cleve and Cohen, Mark A. and Macauley, Molly K. and Richardson, Nathan D. and Stern, Adam, Organizational Design for Spill Containment in Deepwater Drilling Operations in the Gulf of Mexico: Assessment of the Marine Well Containment Company (MWCC) (January 12, 2011). Resources for the Future Discussion Paper No. 10-63. Available at SSRN: https://ssrn.com/abstract=1744205 or http://dx.doi.org/10.2139/ssrn.1744205

Robert Cleve Anderson

affiliation not provided to SSRN ( email )

Mark A. Cohen

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States
615-322-0533 (Phone)

HOME PAGE: http://https://business.vanderbilt.edu/bio/mark-cohen/

Vanderbilt University - Law School

131 21st Avenue South
Nashville, TN 37203-1181
United States

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
202-328-5000 (Phone)

Molly K. Macauley (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Nathan D. Richardson

University of South Carolina - School of Law ( email )

Main & Greene Streets
Columbia, SC 29208
United States

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Adam Stern

affiliation not provided to SSRN ( email )

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