Project Failure: Deepwater Horizon and the Bp Oil Spill

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The Deepwater Horizon rig sank on April 22, 2010, two days after the Macondo well blowout and explosion that killed 11 workers. The Deepwater Horizon accident, also known as the BP Oil Spill, was a project failure of immense proportions. It went from an oil exploration “project” to a massive program with portfolios of projects related to dealing with the families of those killed on the oil rig, stopping the oil leak, capturing the oil (from the well and from the ocean), cleaning the environment (seashores, wetlands, Gulf of Mexico), saving and cleaning wildlife (underwater and on shores), responding to human needs (fishermen, economically impacted families), dealing with the public (PR campaigns), dealing with shareholders and employees, and dealing with governments(state and federal). The mission and scope changed and grew significantly over night. It changed from a $500 million oil prospect development project to over a $100 billion program with global reach and hundreds of projects. In addition, the inability of BP to stop the flow in a timely manner, communication problems by BP management, and long lasting negative media coverage of the slow reaction to the spill have resulted in serious negative consequences for BP, subcontractors on the project and the oil exploration industry as a whole. Additionally, the US federal government responded to the accident with poor organization and leadership.

Analyzing the chain of events, some of the lessons from the failure become very apparent including the facts that BP and Transocean risk management plans were inadequate, BP was not prepared for the accident (or any accident for the most part), project management mistakes were made during drilling of the well, communication blunders were made by BP executives following the accident, the impact on the environment and stakeholders were underestimated, and the future of a company can be at risk from a critical failure of this magnitude. The DeepWater incident was largely a result of poor initial project planning, inadequate project risk management, poor project management execution including decision making and communication, and unprepared crisis management on the part of BP and the US government in the event of project failure. This paper will analyze the series of events leading up to the April 20, 2011, disaster, the decisions and lack of actions which compounded the possibility and severity of project failure and the mishandling of the crisis that ensued after the failure of the well. Background

On March 19, 2008, BP acquired the federal lease for Mississippi Canyon Block 252, located in 4,992 feet of water 50 miles southeast of Venice, Louisiana for just over $34 Million from the Minerals Management Service (MMS). BP was highly confident in the seismic data and the presence of oil that the company proceeded to implement the project of drilling a $100 Million well named, Macondo. BP hired Transocean to supply the crew and the oil drilling rig to drill the well. On October 7, 2009, drilling began on the Macondo well using Transocean’s Marianas semisubmersible oil rig. The Marianas operated to a depth of 4,023 feet below the mudline, or 9,000 feet below sea level before it was damaged on November 9, 2009, by Hurricane Ida. Work on the Macondo well was suspended until January 31, 2010, when the Deepwater Horizon rig was delivered to the site. The Deepwater Horizon was a 33,000 ton semisubmersible oil rig which was controlled by a satellite guided dynamic positioning system and had a series of thrusters to keep it afloat. The Deepwater rig was extremely technologically advanced and viewed by many in the oil industry as having superior technology that was foolproof to error. On February 8, 2010, the Deepwater crew placed a blowout preventer on the well in 5,067 feet of water and used remotely operated vehicles to guide the preventer to the latching collet on the well head using video feeds. Once the...
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