BP and the Gulf of Mexico Oil Spill
Sham Flora 211557766
March 9, 2012
By delving into the BP Gulf of Mexico oil spill, one of the most profound and highly discussed environmental disasters in history, it becomes apparent that the contributing factors behind such a catastrophe stretch far beyond simply poor weather conditions. The case provides insight at great depth, which would support the fact that the most critical mistakes leading to the oil spill were in fact made at the corporate level. The behaviours of individuals and groups within BP, and subcontractor organizations Transocean and Halliburton, significantly increased the chances of unsuccessful and disastrous operations within the Gulf of Mexico. More specifically, critical flaws regarding management’s decision making, the lack of a well-established leadership role taken by certain executives and an overall failure of teams to effectively coordinate together would explain how “the largest offshore oil spill in U.S. history”1 occurred. Historical Context
BP, originally the Anglo-Persian Oil Company in the early twentieth century, was a prominent player in oil discovery from the very start of exploration in Persia. British government showed an immediate interest in ownership of the company, aware of the tremendous profits that oil reserves in the Middle East would result in. In spite of dominance by Shell throughout the twentieth century in offshore oil production in the Gulf of Mexico, BP eventually passed its competitor in oil production in the gulf by exploring deeper waters and bearing more substantial risks. As John Browne became CEO of BP in 1995 he strongly enforced meeting tough financial targets and encouraged deepwater exploration in regions “fraught with technological challenges and political risks.”2 Earnings per share rose by over 600 per cent and financially, BP was an industry leader. The significance of BP’s dominance and financial growth throughout the twentieth century is that it served as a strong motivator to bare increasingly greater risks in deepwater exploration. In addition, financial success may have led to a certain disregard for safety policies throughout the company. The company’s operations were placed under public scrutiny as numerous safety audits identified major concerns. For example, the March 2005 fire at the Texas oil refinery resulted in many fatalities which, as investigations revealed, could be explained by “a lack of operating discipline, toleration of serious deviations from safe operating practices and apparent complacency toward serious process-safety risks.”3 It was even criticized by former secretary of State and Treasury James Baker that cost cutting could have very well contributed to the lack of adequate safety policies. Clearly, the risks that company management were willing to take in deepwater exploration arose from extrinsic motivators, such as high profitability. BP may have continued flourishing from a financial perspective; however their ability to prioritize safety was dismal despite safety initiatives implemented during Browne’s tenure. Throughout the early 21st century, John Browne and BP’s head of exploration and production Tony Hayward held meetings to address safety concerns and overcome organizational errors. However, changes in performance lagged behind expectations as the Occupational Safety and Health Administration continued to allege severe safety violations on the part of BP. Historical context would explain that BP continued to risk the safety of the host environment and its employees in spite of efforts to prevent such occurrences. The company’s extensive goal in creating tremendous profits in previous oil discoveries was no different from their goal in the Gulf of Mexico. Decision Making Flaws
The various flaws in decision making made by management on the...