Business Incontinuity: “Surprise” Oil Spill Leads to Considerable Business Interruptions

Today’s the 25th anniversary of the Exxon Valdez spill which up until that point had been the worst oil spill in U.S. history. Unfortunately the Deepwater Horizon tragedy in the Gulf of Mexico in 2010 far exceeded the 11 million gallon impact that the Valdez had on Prince William Sound. The spill this past Saturday in Galveston Bay pales in comparison to what happened with those historic spills but the impact is and will be considerable for those affected.

Why is it relevant to business continuity? Because like so many other causes of business interruption it happened out of the blue. But more importantly it’s a relatively small event that’s having a significant direct impact on tens of thousands of lives and thousands of businesses because of its exact location (click on the map just below to enlarge). Which leaves me to wonder how many companies had a plan for this kind of interruption.

oil-spill-mapThe short version is that a cargo ship collided with a barge loaded with more than a million gallons of bunker fuel but luckily – for lack of a better word – only punctured one tank containing about 168,000 gallons. The rest of the fuel on the barge has since been transferred and secured, so the event could have been up to five times worse since the total capacity of the barge is around a million gallons. Another lucky aspect is that bunker fuel is thick and the bay water is still seasonably cool and both of those factors, along with mild weather and calm waters, contribute in a significantly positive way to containment and clean-up.

For Continuity Housing Principal (and my boss) Michelle Lowther, the spill really hits home. “As soon as I heard about the spill, my mind immediately went back to April of 2010 when I got a call asking how busy I was. I was driving at the time and remember pulling into a parking lot and scribbling notes as fast as I could. Little did I know that that phone call would result in a multi-year commitment where I’d be managing a team of 30+ on a single project. At its peak, we took care of more than 1,000 responders per night. We contracted with 70 hotels across 17 cities, which is a much larger scope than any of us imagined in the early days of the response. Although we’d been through deployments before, we really cut our teeth on that project and developed techniques that we still use today. I’d love to think nothing like that will happen again, and I hope that it doesn’t, but if it does, we’ll be ready.”

As I write this, a team of more than 400 people is working to contain this weekend’s spill, an event that the Coast Guard is referring to as “significant” – which I guess is better than “monumental” or “colossal.” But the direct and immediate if not long-lasting impact is substantial.

  • First and foremost, the Houston Ship Channel has been closed for several days, something that almost never happens, and will remain closed until they can ensure that no vessels will travel through tainted water and spread the oil. The impact of that alone is a lot more than significant. The Port of Houston is the 13th busiest in the world and the second busiest in the U.S. I’ve been far offshore and seen the tankers and cargo ships marshaled for miles and miles waiting their turn to get into the channel and up to the Port. And that’s on a regular day with no unexpected interruption to traffic.
  • The impact on the regional refineries will be costly, even if the channel fully reopens within a few days. Refinery efficiency depends on the flow of product both in and out. Will there be a negative impact on gasoline and other fuel prices?
  • Cruise ship operations were delayed quite a few hours on Saturday as returning ships were not allowed to enter the harbor and dock on the bay side of Galveston Island. The cruise industry in general has suffered a series of highly publicized setbacks in the last couple of years. The spill doesn’t help that any as the delay in operations affected the schedules of many thousands of passengers.
  • Fishing, both recreational and commercial, will suffer for a while. The oyster industry in particular will take a hit because of the location of the spill [reef map], the sensitivity of oysters to pollution and most importantly the lengthy half-life of public perception on what will and will not be okay to consume from anywhere in and around the bay. (The Deepwater Horizon incident had a massive impact on Gulf seafood commerce even though the spill affected only a relatively small part of the Gulf itself, something I know all too well from personal financial involvement in a seafood restaurant that no longer exists.)
  • Dozens of bait camps will be affected and those folks will mostly have to wait it out until public perception normalizes.
  • The Galveston-Bolivar Peninsula ferry was closed for several days and has now reopened but only for daytime running. For tens of thousands of people, when the ferry is closed, a 3-mile ferry ride that usually takes no longer than 15 minutes turns into a 120-mile drive.
  • The impact on the overall economy, especially relevant to tourism. I’ve witnessed the impact of several spills over the last 45 years and unfortunately, just as with the seafood situation, public perception everywhere else is usually much grimmer than the actual reality. Who wants to plan a seaside vacation where there might be spill damage?
  •  The damage to the ecosystem overall which so far has been minor but which will play out over months or even years.

It’s bad but it could have been a lot worse. At 618 square miles, Galveston Bay is massive and the spill is only affecting a very small part of it but it couldn’t have happened in a worse place relevant to Port access, ferry traffic and the perceived value of a region that so heavily depends on tourism for its economic viability.

In the end it all gets back to who was prepared – and for what – in the event of this, yet another unforeseen impact on so very many businesses. Your average bait camp can’t afford a comprehensive backup plan when calamity hits, but if you’re reading this the chances are that you can. The expense of preparation, as always, trumps the calamity of lack of preparedness.

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Continuity Housing helps companies enhance their business continuity plans by pre-arranging guaranteed housing and providing logistical support for mission-critical employees during disasters.  Subscribe to the Continuity Housing blog and follow us on Twitter, on YouTube, on LinkedIn and on Facebook.

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