Black Swan comes home to roost

Anthony Watts at What's up with that blog has an excellent
essay with photos showing what happened at the Deepwater
Horizon, some of the best information about what happened out
there, when no one from BP has given any details about what
was going on at the time of the disaster, and I've given up on
speculating because I feel similar to after 9/11; it's hard to believe
such a big rig burned up and sank taking 11 men with it.

What is clear to me is this was a Black Swan. BP's emergency
response plan apparently said there was low risk of pollution and
low risk of a catastrophic accident. The definition
of a black swan is when one is operating in extremistan where large forces,
monetary flows or pent-up pressures are operating. Where on the frequency
axis, if you make an estimate of the rate of negative events you are probably
wrong, with disastrous results, and where the events are 'rare' enough that
we don't really know what the frequency distribution is, or if it has a shape at all.

Where those two axis' collide is the forth quadrant,
where it is dangerous to assume that a low frequency event will be rare
enough to not affect you, and when you are wrong people are killed,
giant structures are reduced to pillars of flame, economic systems destroyed,
cats and dogs sleep together. [This is all covered by Nassim Taleb in
The Black Swan, and more precisely in an essay called The Forth Quadrant,
which has to be one of the most important articles ever published for
free on the internet. I added the dogs and cats]







from NNT's
the fouth quadrant.












The wonderful thing about the oilfield is it is where economics and engineering
geology and mathematics are all applied to create money. There are no evil
shadow organizations needed, just the simple rule that if a project will make
more money than the discount rate plus some stated excess profit taking into
account the probability that you'll get nothing in return, the project is drilled.

...

Before anyone says that the operator (BP) or the rig owner was incompetent
or negligent, the problem doesn't come from the lack of hard work or oversite,
but of thinking that we can operate in the forth quadrant without getting burnt
occasionally. We will get hurt and accidents will happen as long as men dare to
sail the sea in ships, fly to the moon or drill the ocean depths.

.