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Deepwater Horizon report

Back in June (this blog does not in any way aim to be a timely reporter of news), Transocean released their report on the Deepwater Horizon disaster. I found it interesting, and read most of it; it seems like primarily an honest effort to get to the bottom of the disaster, not an exercise in blame-shifting and ass-covering. (I am not involved in the industry, so might be being a bit naive here, but at least have the miserable excuse that I am unbiased.) There is only one place, described below, where I noticed the report getting weaselly. Otherwise, the bad decisions were quite plainly BP’s, both as a matter of law (they being the “operator” who was in control) and as a matter of fact; so Transocean didn’t need to indulge in evasiveness, but could just plainly state what happened, and what should have been done better.

The main thing I was interested in was what had happened with the blowout preventer. Back during the disaster, there was all sorts of speculation about it. After dragging the 150-ton device up from the deeps, they indeed have figured out what happened — and it was none of the scenarios regarding hydraulic failure or electrical failure that were voiced in the press. All the mechanics of the thing had worked: batteries provided current; valves opened; hydraulic accumulators provided hydraulic power; rams closed and were locked closed by massive steel wedges. The engineering seems to have been, throughout, the sort of thing that one does if one wants a device to work very reliably. There are minor questions regarding some pieces of it (one relay in one of the dual-redundant electrical boxes seems to have been goosey somehow), but those weren’t why it failed. Why it failed, to summarize the whole sequence of things that went wrong, is that it was a blowout preventer, but what they needed was a blowout interrupter. The fast, high-pressure flow through the device, carrying not just fluids but pieces of abrasive rock, was something it had never been designed or tested to control. The report comes with a good video showing the whole sequence of failures, which does a better job of describing it than the report does, or that I can do here — so I won’t try.

The place where I noticed the report getting weaselly was in the following language:

The investigation team is aware that some sources suggest that the various activities during final displacement constituted inappropriate “simultaneous operations,” which may have interfered with the monitoring of the well. Tasks such as repairing a relief valve or dumping a trip tank commonly are performed on an offshore rig and would be considered normal in the course of operations — not simultaneous operations. … The investigation team determined that after the fluid transfers to the Bankston were completed at 5:10 p.m., the activities of the drill crew were completed in a sequential manner, and “simultaneous operations” were not present.

As to what exactly constitutes “simultaneous operations”, I’ll leave that to the lawyers. My sympathy goes out to the people in the industry who must labor under rules defined so imprecisely. Hopefully, on a fifty-thousand-ton drilling rig with 150 people on board, at least some of them are allowed to walk and chew gum at the same time. But whatever the rules might be, the physics issue here is that the most reliable way of monitoring flow out of the well was by measuring the levels in the tanks (the “mud pits”) it was flowing into; there were other flow sensors on board, but none nearly as accurate. But in this case, at the same time that mud was flowing from the well into mud pits, it was being pumped from them overboard into the auxiliary ship Damon B. Bankston. So the operators couldn’t simply determine the amount of fluid coming out of the well by looking at how much had accumulated in the mud pits.

This sort of thing was a large part of why the disaster occurred: if they’d noticed the well “kicking” earlier, by observing that it was sending out a lot more fluid than they were pumping in, they’d have been able to shut it down before the flow got too great for the blowout preventer to stop, and before gas emerged onto the deck, exploded, and turned the rig into an inferno. Since this part of the rig’s operations was largely or entirely the responsibility of Transocean, it is no wonder that their report gets a bit weaselly — which is not to suggest that anything stated is untrue; indeed, their defense on grounds of timing is a good one. The disaster struck much later in the day: gas exploded onto the deck at 9:45 p.m., after having started flowing into the bottom of the well at a time estimated as “sometime between 8:38 p.m. and 8:52 p.m.”. So probably no serious discrepancies in flow happened during the time before 5:10 p.m. during which they were pumping mud out to the Bankston. (As to why they didn’t notice the later discrepancies, the investigation was hampered by the fact that most or all of the people who should have noticed died in the disaster.)

Still, even with it not being the cause of the disaster, not being able to monitor flow from the well was undesirable. At first glance, this seems to be a case where doing things right would impose serious delays, from doing things consecutively rather than simultaneously. But on consideration, there seems to be a way, in this sort of situation, to accurately monitor the fluid volume coming from the well while still simultaneously transferring it overboard. That would be to direct fluid coming out of the well to a mud pit that wasn’t currently being emptied, then when that pit filled, to switch the flow from the well to another mud pit and start emptying the first pit, alternating between the two (or more) pits as necessary. That way, the volume coming from the well could be accurately calculated by measuring levels in the pits, without any serious costs. It would mean a bit more activity (switching of valves and pumps), but little more in the way of costs. The report makes no mention of this as a possible alternative; perhaps they didn’t think of it, or perhaps there was some stupid little reason (involving, say, details of pipes and valves, or of control software) that it wouldn’t have been feasible. But there don’t seem to have been any big reasons: the rig had more than enough mud pits, and enough valves and pumps. As for the control software, with forethought they could even add a feature to do this procedure automatically, switching flow between pits and totalling up the rises in levels of the active pit(s) in order to get the total flow, then displaying that for the operator rather than forcing him to do the arithmetic.

The primary thing that went wrong, though, was the cement job at the bottom of the hole. The investigations found so many things done badly about the cement job that it’s hard to tell which of them was actually responsible for the failure. To pick just one error, they tried to leave drilling mud below the cement while it cured, with the drilling mud being lower density (14.17 pounds per gallon) than the cement (16.74 ppg), and with no barrier separating the two fluids, just a “reamer shoe” with an open orifice of about an inch and a half in diameter (to judge from the diagrams). How they could possibly have thought this would succeed is unclear: when you put a heavier fluid on top of a lighter fluid, they naturally tend to swap places. And in the place the cement would have migrated to (the 55-foot-long “rat hole” under the end of the casing), it would have been of no use at all. It wasn’t like the cement was particularly resistant to flowing (the report quotes its shear strength at 2 lbf/100ft2), or like it set particularly fast (the report speaks of setting times in hours). Also, as it dribbled out that hole, the mud that came in to replace it would then have proceeded to bubble up to the top of the cement column. And that was the critical piece of cement that failed: there was also cement outside the casing, which had its own issues; but in the disaster, the rogue flow came up the inside. With mistakes on this level (another was to make foamed cement with one of the ingredients being an anti-foaming additive), it’s not a question of just saying “be more careful next time”; people need to lose their jobs, if they haven’t already — and not just the people who originated these particular mistakes, but also their supervisors. Increased government regulation, as per the usual knee-jerk response, can’t fix a lack of clue in the industry itself.

Computer fan bearings

When I first got into messing with computer hardware, the received wisdom as regards fan bearings, for cooling fans on computers, was that there were two types, ball bearings and sleeve bearings, and that the tradeoffs were that ball bearings were noisier, but that sleeve bearings tended were less reliable, and tended to fail silently, likely letting the device they were cooling overheat and fail. Ball bearings get a lot noisier before they fail, and were thus the recommended solution for most purposes.

But these days, there are a variety of names for fan bearings. In Newegg’s list, today, of 120mm fans for sale, the various bearing types are described as follows (with each bearing type followed by the number of fan models that contain it):

  • Sleeve (43)
  • Ball (15)
  • 2 Ball (19)
  • 1 Ball, 1 Sleeve (2)
  • Fluid Dynamic (17)
  • Hydraulic (1)
  • Hydro Wave (7)
  • Nanoflux Bearing (NFB) (4)
  • Ever Lubricate (11)
  • EverLasting Quiet (1)
  • Rifle (2)
  • SSO (2)
  • Z-AXIS (1)

Besides ball and sleeve, the principal alternative in that list is “fluid dynamic”. To computer people, fluid dynamic bearings have a high reputation, as being the thing that replaced ball bearings in hard drive spindles, making them a lot quieter. Hard drives no longer make an annoying whine just from spinning, like they did prior to about five to ten years ago (depending on manufacturer).

I disassembled a fluid dynamic bearing from a failed Seagate drive, to see how it worked. (The drive had failed with a head crash; the bearing was still fine.) Disassembling it required grinding, because it appeared to have been welded together (with a tiny, exquisite weld). Revealed was the following (click on the image to see a 4x larger version):

Photo of Seagate fluid dynamic bearing

The main shaft of this bearing is an ordinary plain bearing (aka sleeve bearing): a cylindrical shaft rotating inside a cylindrical enclosure, separated by oil. Nothing special needs to be done to get the oil evenly-enough distributed to separate the two parts, since the shaft naturally drags the oil around with it. The trickery comes at the end of the shaft, where there is a bronze ring shrink-fit on to the shaft, to handle thrust (that is, loads coming from one end of the shaft or the other). This thrust bearing would, in the normal course of things, not have any sort of principle that would restore fluid to the interface; so the bronze ring would touch the steel enclosure. Although bronze and steel are a good combination for bearings, which gives relatively low friction and wear, still, spinning 24 hours a day, they’d wear out quickly if touching. To prevent this, the designers of this bearing have added a special pattern of grooves to the steel surfaces that would contact the bronze, as is visible in the photo; these re-direct fluid that would slip off an edge of the interface back into the middle of it. That way, the thrust surfaces touch each other only on startup of the hard drive spindle, a rare occasion and one during which it is not spinning particularly fast.

But the chances that anyone will ship such a beautiful piece of machinery inside an ordinary computer fan are pretty slim. Indeed, the computer fan bearings which I’ve taken apart, and which have been described as “fluid dynamic bearings”, operate on an entirely different principle. The shaft is the same sort of thing: a sleeve bearing. But the thrust is taken up differently. The following diagram, from a Scythe brand fan (which Scythe describes as having a fluid dynamic bearing made by Sony), is a good example:

Diagram of Scythe fan

Most of those parts are about the same as they would be on a sleeve bearing fan. The fan is held in by a plastic split washer that fits into a groove on the bottom of the fan spindle, as in an ordinary sleeve bearing fan. The porous bronze sleeve, filled with oil, is also usual in sleeve bearing fans. The difference is the “rotor suction magnet”, which takes the thrust load off the plastic split washer. The way computer fans are arranged, the force produced by the wind from the fan is trying to lift off the top of the bearing, on which the fan blades (not shown) are mounted. The magnet overcomes this force, replacing it with a force in the opposite direction, which gets taken on the bottom end of the shaft.

I can think of a couple of reasons why this might be better. One is that the bottom end of the shaft has a larger surface area than the groove which holds the plastic split ring, and so can handle the thrust force better. The flimsy plastic split ring also will bend a bit, likely making the surface area on which the thrust is taken even smaller. Another reason is that the magnet’s strength might be chosen so as to exactly counterbalance the wind force — although the wind force depends on a lot of things, including supply voltage and air pressures, and thus could never be exactly counterbalanced. In any case, the reason isn’t that the bottom end of the shaft sports any particular cleverness; when I took one of these bearings apart, there was nothing like the sort of oil flow channeling that the Seagate bearing had.

But whatever the reason, a lot of companies make such fans, using different names. Of the above fan bearing names, besides “Fluid Dynamic”, the “Nanoflux Bearing” and likely the “Ever Lubricate” bearings use this principle of having a magnet to take up the thrust force. In some designs, the magnet is put below the bottom of the shaft, to magnetically attract the steel end of the shaft. It is thus also sometimes called a “magnetic bearing”, a term which suggests the sort of ultra-expensive magnetic levitation bearing that Iraq was once trying to get hold of for their gas centrifuges for uranium. Such is marketing. As for what the generic name for such devices should be, I suggest “thrust magnet bearing”; it’s reasonably terse, and sort of conveys what the thing is. It won’t wildly excite marketing people, but I don’t think it’ll make them wince, either.

In other fans, ordinary sleeve bearings are described as “fluid dynamic bearings” — which in a sense they are, since sleeve bearings do involve fluid dynamics. The “Hydro Wave” bearing that I took apart was an ordinary sleeve bearing. This seems misleading, but not necessarily in any serious way: on the forum at silentpcreview.com, there seems to be a consensus that sleeve bearings are better than was traditionally thought. My guess is that this is because the denizens of that forum tend to operate their fans at low speeds, where there isn’t much thrust force. Also, even without any additional magnets, the magnetic field loop that is used to turn the fan provides a restoring force against thrust. In some sleeve bearing fans, the fan hub can be pulled out a few millimeters against that force before one hits the split washer that retains it. In those fans, especially in low-speed ones, adding thrust magnets is likely superfluous.

As for “rifle bearings”, the term is strange enough that I’ve ordered a couple of fans with them to see what they are; but one (marketed as an “air rifle bearing”) was just an ordinary sleeve bearing fan, and the other just a magnetically-counterbalanced bearing. The name suggests that either the shaft or its bearing would be rifled, but I don’t see what the point of doing either would be; it could pump all the oil out one end of the bearing, but that doesn’t seem sensible.

That pretty much exhausts Newegg’s list of names, although a couple of oddballs are left. Of course, as I hope was apparent, this article is not intended to be authoritative or up to date; that would be actual work and would cost actual money. It is just the result of having occasionally ripped apart a fan or two, over the years.

Against state pension funds

For all the talk, these days, of the problems that state pension funds are getting into, I haven’t seen anyone argue against their existence. But the case against them is simple and strong.

To define what is being argued against: state pension funds pay the pensions of retired employees of the state government. Without pension funds, states would be paying these pensions directly out of tax revenues. With pension funds, the government plays the markets, investing tax revenues in stocks, bonds, and such, and then later selling them and using the proceeds to pay pensions to retirees.

If you were to ask anyone of pretty much any ideological stripe whether it’d be a good idea for the government to play the market in the service of any other obligation, he’d likely ask whether you were crazy. The idea that, for instance, maintaining roads should be done by investing money in the stock market, then using the dividends to do the actual road maintenance, would be laughed at — and not just by small-government advocates who doubted the government’s ability to choose winners in the stock market; socialists, from their point of view, might question why you were giving money to the capitalists on Wall Street in the first place, and whether you really could have any hope of getting it back from those lying pigs. But somehow for pensions the political situation in the US is the opposite: at the state and local level (but at least mostly, not at the federal level), pension funds are taken for granted; there is much controversy about some of their details, but generally all parties accept that they should exist. Yet the situation that everyone would laugh at and the situation that is generally accepted are really one and the same: when state money is sent to Wall Street, the official reasons why it is sent make little difference; all that really matters is the amount and the timing. Whether the name on the account be “pensions” or “roads”, the funds used for investing come out of the same pot of money and the proceeds go into the same pot.

Plenty of private companies have pension funds; so it’s easy to think states should, too, especially in this era of much talk about how government should try to imitate the private sector. But for private companies, there is a potent rationale for pension funds: companies often fail; a pension fund is a way to promise that pensions will be safe even if the company ceases to exist. States don’t cease to exist, except via war or troubles that verge on war; and when a state disappears via such events, its pension funds are extremely unlikely to survive the tumult.

The biggest attraction of state pension funds has no doubt been the extravagant promises they make, as to returns. I’ve seen in several sources (Michael Lewis’s recent article on California’s financial troubles being one) that state pension funds generally expect returns of about 8% per year. To illustrate the impact of this, suppose that any given piece of money spends about twenty years in the pension fund. That is the length of a short government career, and also a common length of time spent in retirement, and thus is a reasonable figure for the average interval of time between when a pension obligation is incurred by employing someone, and when that obligation finally comes due and the money is withdrawn from the fund to cover it. Twenty years’ compound interest, at 8%, multiplies the initial amount of money by a factor of 4.6; or if we figure that the 8% is just in nominal dollars, and subtract 2% to adjust for inflation, the multiplying factor is 3.2. So by assuming that 8% yield, they can justify much larger pensions than could be justified if pensions were to be paid directly out of tax revenues: in particular, the pensions can be around three times larger. A modest pension of $20,000 a year can turn into $60,000.

When the market fails to deliver that 8% increase, the result is what many states have now: an “underfunded” pension plan, where even when an 8% return is assumed for the future, the fund won’t be able to meet its obligations. The conventional way of regarding this is to be horrified at it, as a harbinger of state bankruptcy. But if one regards state pensions as things that should just be paid out of tax revenues, without any resorting to Wall Street to amplify money, then the pension fund is a nice big fat asset, and the only thing its “underfunding” is a harbinger of, is a switch to a system of accounting where future pension obligations are not counted as present-day liabilities. There would be nothing dishonest about such a switch; other future obligations, such as schools and roads that will predictably need repair, are not counted as present-day liabilities. As for the promises made, both as regards returns the pension fund would make, and as regards the size of the eventual pensions that would be paid to retired state employees, those were always just fantasies that could never be delivered for long. (For how fantastic some of those pensions have gotten, see this article, as well as Michael Lewis’s above-linked article.)

If an attempt were made to reduce pensions, lawsuits would no doubt be filed; promised pensions have a certain legal standing, as contractual obligations. But it’s not enough of a standing to give them absolute priority over the basic rule of elected government that no legislature can bind its successors. To force a state government to pay pensions that bankrupted the state would be an especially bad violation of that rule. Of course there is never any guarantee that judges will see it that way, especially if the bankruptcy is several years in the future. Still, any judge who tried to enforce payment of every dollar promised would, sooner or later, run into all the usual difficulties of getting blood from a stone. Would he force taxes to be raised? Which taxes? Force cuts in other spending? Which spending? Legislatures don’t have an easy time deciding such things; and judges would find it even harder, especially with the public screaming at them for usurping the legislature’s proper role.

Indeed, to some extent, my whole argument here is merely a justification for what inevitably will be done anyway, barring economic miracles. There is little political will for levying the huge tax increases that would be necessary to restore pension funds to being fully funded, and no short-term downside to leaving them underfunded; simple neglect and inertia would leave them underfunded until they ran out completely, at which point the only things to be done would be to fire the staff administering their investments, and adjust the size of pensions to whatever could be borne out of tax revenue. But to accept that this was actually the goal, rather than just drifting along in that direction, would open up other possibilities. For one thing, the assets in the pension fund could be sold to wipe out other debts of state government, so that the government was no longer, in effect, borrowing money and using it to play the market with. For another, the pension fund administrators could stop trying for unrealistically high returns (something which David Goldman has blamed for their recent losses in mortgage-based investments). Also, the sizes of pensions paid out could be adjusted before the final crunch actually hit; the transition could be a smooth one, rather than an abrupt emergency measure.

Thus far, I’ve focused on the effects of pension funds on government finances; but that’s not all, and likely not even the most important part. When pension funds buy corporate stocks, they get an ownership interest in those companies. They can vote in corporate elections; and they control such large blocks of stock that their votes carry serious weight. Even if they were to abstain from voting, their large purchases have big effects on companies’ stock prices, and thus on how easily those companies can raise more capital. Bond purchases, too, affect what companies do: in many cases, if bonds can’t be floated for a proposed venture, it won’t be done. So for the government to own large quantities of stocks and bonds is a big step towards Marx’s dream of the “workers” (via the government) owning “the means of production”. Not that a Marxist conspiracy to take over the economy is even vaguely possible: today’s Marxists are not intelligent enough to put together a decent conspiracy. Petty corruption is more of a danger, as are politicized investments. But although pension fund scandals and politicization of investments have often made the news, in the grand scheme of things they are minor and occasional problems; the big problem is the everyday mediocrity of the oversight that government pension funds apply to their investments. I have made no particular study of the quality of that oversight; but unless state governments miraculously do it much better than they do everything else, state pension funds must be a large contributor to what might be called the Dilbert-ification of corporate America, in which companies are taken over by people who chase after management fads, while the people who can actually do useful work struggle with silly orders from above, trying to construe them into something sensible. The cartoon of course exaggerates; but the phenomena it mocks are quite common, and a tremendous problem.

Most of what has been said above applies not only to state pension funds but also to those of local governments. The exception is that local governments sometimes do cease to exist: there are plenty of ghost mining towns out West, whose population evaporated when the mine closed. In such a case, just as the mining company may want to promise pensions which will survive the closure of the mine, so may the town government want to promise pensions which will survive the abandoment of the town. But for that, explicit measures would be needed to put the pension fund in some hands that would administer it honestly after the town was defunct as a political entity — a difficult enough proposition that giving control to the payees themselves, via 401(k) plans or the like, is likely better than establishing any sort of collective pension fund. (Not that corporate pension funds are immune from getting hijacked as the company fails; far from it. But politics has a nastiness all of its own.)

There may even be a few cases like this at the state level, where it might be forseen that, due to some economic factor, the population and tax base will diminish drastically. The oil boom in North Dakota might be one such factor: at some point that oil will be exhausted, and people will leave. In such rare exceptions, state pension funds might be justified. Such a justification would, of course, involve a very different attitude from the sort of giddy optimism that assumes that an 8% return will always be available. Also, for the justification to work, the decline would have to be local rather than general; in a general decline, good investments are no more common elsewhere than they are locally — so instead of trying to pick global winners in the market (and distorting it in the process), the government can take the easier and more certain approach of just letting the local winners emerge, and taxing them. In a decline that was national but not worldwide, investments in a foreign country which still had a growing economy might seem attractive — but the catch is that that country might decide, with the newfound power that economic growth brings, that it didn’t care to pay back the money.

In any case, even considering pension funds as an evil, they’re one we’re stuck with for a while, since arguments like this never prevail quickly. Even when everyone with good sense agrees immediately, that still leaves the majority unconvinced. Even if by some miracle this argument did prevail quickly, selling off pension funds’ investments would best be done slowly, so as not to unduly depress the markets and make the sale yield less than it should. And that scenario isn’t so different from what is happening today, since when a pension fund is “underfunded”, it uses up its capital at an increasing rate. Even as regards the effects of pension funds’ oversight of corporate America, that has been a slow process, and can’t be reversed quickly. Good oversight doesn’t magically appear when lousy oversight is destroyed, but rather takes time to build. For the moment, the hope and the threat of it will have to do.

Update: Alexander Volokh, a law professor, has written a nice overview of the legal rules surrounding pension funds. It falls short of considering what might happen when things really get bad, but that’s sort of inherent in legal analyses: they cover precedents (court rulings), not situations that are unprecedented.

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