BP’s Catastrophe


Deep water horizon catastrophe

Stop! Watch this video to see the results of BP’s awful decision making on the Deepwater Horizon.

                On the evening of April 20, 2010 a series of explosions rocked the Deepwater Horizon, an offshore oil-drilling rig operated by BP in the Gulf of Mexico. With gas unexpectedly rising in the Macondo well, flames shot 250 feet into the air as the blowout preventer designed to seal the well in case of emergency failed to function properly.  As workers crammed into lifeboats or jumped off the rig into the water, ships nearby were forced to come to aid. However, sadly, 11 people died that night while numerous others were injured (Roberto, 1).

This disaster became the largest oil spill in U.S. history. The spilling of oil into the Gulf of Mexico for three months caused catastrophic damage to both the US economy and the environment. As you can see in the video, the oil spill impacted the entire Gulf Coast. Hundreds of thousands of individuals and businesses lost their jobs, while hundreds thousands of marine animals and fish were killed (NC, 90).  The public soon turned to BP as responsible for the damage. Soon after, the National Commission investigation revealed that the blowout occurred because of oversights, risk factors and mistakes that combined to overthrow the safeguards meant to protect the rig in emergencies like this one (NC, 90). However, “most of the mistakes and oversights at Macondo can be traced back to a single overarching failure—the failure of management” (NC, 90).

Although BP contracts out much of the oil drilling process, they still remain responsible to manage the rigs operations. Specifically, as the operator, BP had the overall responsibility to promote a culture of safety on the rig.  However, throughout the drilling process BP ignored the experts they hired from Halliburton and Transocean to boost profit through cutting corners and costs. They disregarded common industry practice and merely fulfilled the minimum requirements. According to virtue ethics, BP’s cutting corners mentality holds them responsible for the incident. From the purchasing the Macondo well in 2008, BP’s decision making revolved around increasing profit rather than creating an organization that supports ethical behavior; as a result, BP caused the largest oil spill in US history.

The Macondo well blowout is not an isolated incident for BP. BP’s history is full of repeated disastrous work place occurrences. In 2003, a gas line ruptured on BP’s Forties Alpha platform in the North Sea and released methane throughout the area. Although BP got lucky that a spark did not ignite, they still admitted to breaking the law by allowing pipes to corrode and paid a 250,000 fine (NC, 219).  Then in 2005, an explosion occurred at BP Texas City refinery killing 15 people and injuring over 170 (Dickenson, 7).  Investigators later discovered that the Texas City management consistently ignored warning signs and did not take coercive action when signals of danger arose (NC, 221). Soon after in 2009, a major leak infiltrated BP’s Prudhoe Bay oil pipeline which became the largest oil spill on Alaska’s North Slope leaking over 200,000 gallons of oil (Roberto 6). In that same year, the Occupational Safety and Hazard Administration fined BP $2.4 million due to safety violations at an Ohio refinery stating that “it is extremely disappointing that BP failed to learn the lessons of Texas City” (Roberto, 6).

Texas City Oil Refinery Explosion

Despite the numerous incidents, BP continued to foster an unsafe environment on the Deepwater Horizon rig.  A few weeks before the Deepwater Horizon blow out, a survey was taken on hundreds of employees concerning safety management and culture. This survey revealed the that 46% of the workers feared reporting unsafe conditions to management and 15% felt that they were understaffed (NC, 224).  Many crew members complained that the safety manual was “not written with the end user in mind” and the front line members are not always informed about the true hazards they faced (NC,224).

This lack of safety culture resulted mainly from BP caring more about profit than about the workers. In the investigation of the blowout, the national commission discovered that many of the mistakes and oversights were caused by BP’s emphasis on increasing production and cutting costs. For example, BP ” shaved $500,000 off its overhead costs by deploying a blowout preventer without a remote-control trigger-a fail-safe measure required in many countries” (Dickenson, 7). In addition, when BP decided which production casing to install in the well, BP chose a “long string” system that is known to be riskier but less expensive than other options. Compared to other oil drilling companies, BP uses this cheap well piping 35% of the time in their deep-water wells, which is much higher than their competitors. BP also made the decision to use only 6 original centralizers to stable the long string casing instead of the recommended 16 because it was cheaper and as the head BP engineer said, they will “probably be fine and [they] will get a good cement job” (Roberto, 9). Despite the industry standards, it is evident that BP believes that the safety of workers and the environment is less important than cutting cost on the production casing.

Furthermore, BP’s management ignored their guidelines that stated the cement needed to extent 1,000 feet above the reserve. Instead, BP directed Halliburton to extend the column only 500 feet above the hydrocarbon reserve. To make matters worse, BP chose to use a lighter type of cement that the company rarely uses. Halliburton warned BP that the cement job was “against [their] best interest”. However, BP decided to ignore the cement experts and proceed anyways because they were still within acceptable industry standards. Then, when they performed the negative pressure test to examine the reliability of the cement wall and casing, BP cut corners once again. To perform the test, BP displaced mud in the well and then pumped a “spacer” that consisted of leftover material into the well. Using this  unusual spacer allowed BP to easily dispose of hazardous material that has strict regulations if disposed on land. Once preparations were finished, they ran the negative pressure test and the results came back negative, which suggested a leak. However, BP deemed the test successful because the backup system seemed to function properly (Roberto, 13). After the negative pressure test, BP displaced the mud and spacer to officially cap the well. At 9:30 p.m., the Deepwater Horizon experienced the first explosion that caused the worst oil spill in US history.

Choosing profit over ethics, BP consistently put their employees and the environment in harm’s way. According to Virtue ethics, BP acted without integrity and chose an immoral path that led to the Macondo oil spill. BP could have chosen to spend a little extra money to ensure safety, yet it is apparent through their decisions that they chose to value money over human life. Looking through the virtue ethics approach, you can see the alternative options that BP overlooked.

The virtue ethics approach focuses on “the whole hearted acceptance of a certain range of considerations for action” (Rosalind). Specifically, virtue ethics considers a virtuous person to be a morally good or admirable person who acts right (Rosalind). However, it also takes the actors character, motivations and intentions into consideration. A virtuous individual or actor must intend to be a good person and try to better others and themself as moral agents through virtuous decision making (Trevino, 46). Therefore, a person can only be considered an “honest person” when they choose to tell the truth not because honesty is the best policy or because they might get caught in a lie; rather, an honest person tells the truth because to do otherwise would be dishonest and therefore, immoral (Rosalind).

Satellite image of Macondo oil spill

But who determines the virtues of a person or organization? One way virtue ethics answers this question is through the actor’s relevant moral community: a community that holds you to the highest ethical standard and supports your intention to be a virtuous person (Trevino, 47). Therefore when analyzing a decision, one must think about the community the decision maker operates in. In BP’s case, we can look at BP’s contractors and the other oil drilling companies in the industry to analyze BP decisions through virtue ethics.

First, the virtue ethics approach views BP’s decision to choose the cheaper long string system as ignoring the virtue of loyalty. As the operator, BP needed to be loyal to their employees and protect their lives at all costs. Knowing the riskiness and unfamiliar geology of the Macondo well, “the long string casing greatly increased the difficult of securing a stable cement job, which was the direct cause of the blow out” (NC, 115). According to virtue ethics, BP would have chosen the liner cement job, a more complex and secure casing, because doing otherwise would be immoral because BP is not being loyal. In addition, looking at BP’s relevant moral community, other large oil companies used the long string design much less frequently than BP. BP used the long string casing about 35% in its Deepwater wells while Shell used 8% and Chevron used it about 15%. As you can see, BP failed to meet the industry standards through consistently using the riskier casing; as a result, it was just a matter of time before BP caused an incident like the Macondo oil spill.

Secondly, virtue ethics views BP choosing profit over ethics when they ignored the experts and used less of a lighter weight cement for capping. Haliburton, BP’s cement expert, warned BP and admitted later that BP specifications were “not consistent with industry standards; however, they were within acceptable standards” (Roberto, 9). Here, BP’s contractor reveals how BP chose to not live up to their relative moral community; as a result, BP’s safety culture allowed mistakes and oversights on details that allowed the Deepwater crisis to occur.  If BP would have followed the virtue ethics approach, BP would have listened to their experts and followed other oil companies that practice ethical decision making, even if it costs more.

Thirdly, BP ignoring the negative pressure test’s warning signs of a leak directly conflicts with virtue ethics. Virtue ethics requires BP to listen to the warning sign despite the delay in production it may cause. BP needed to investigate whether there was a leak because that is what an ethical company would do. If they would have acted in accordance with virtue ethics, they would have noticed a malfunction in the casing and prevented the oil spill. Instead, BP ignored the warning signs and depended to solely depend on the kill line if something went wrong; as a result, BP once again overlooked malfunctions that allowed the oil spill to occur.

Overall, BP’s lack of a safety culture resulted from their decisions to ignore the virtues that oil companies are expected to uphold. Other oil drilling companies like Shell and Exon make a substantial profit while also adhering to appropriate guidelines and industry standards that protect the environment and employees. Although Shell and Exon have experienced oil spills in the past, they have  improved their safety regulations and come nowhere close to the number or extent of the catastrophes BP experienced.  Since 2007, BP has received over 760 citations for safety violations, while the rest of the oil industry combined has received a total of one (Dickenson, 2010). This negligent attitude towards safety resembles their lack of integrity in decision making. The only way BP can change their problematic safety culture is through adopting the mindset of virtue ethics that forces them to start doing what is right: prioritizing employee safety and environmental risks. Until then, BP management will continue to make decisions based on cost that result in incidents like the Deepwater Horizon catastrophe.

Deepwater Horizon sinking

Works Cited

Dickinson, Tim. The Spill, The Scandal and the President. Rolling Stone. June 21,2010. <http://www.rollingstone.com/politics/news/the-spill-the-scandal-and-the-president-20100608>.

Hursthouse, Rosalind, “Virtue Ethics”, The Stanford Encyclopedia of Philosophy (Summer 2012 Edition), Edward N. Zalta (ed.), <http://plato.stanford.edu/archives/sum2012/entries/ethics-virtue/&gt;.

National Commission. Deep water: The Gulf Oil Disaster and the Future of Offshore Drilling. January, 2011.<http://www.oilspillcommission.gov/final-report>.

Robert, Michael. BP and the Gulf of Mexico Oil Spill. Ontario: Canada, 2011.

Trevino, Linda, and Katherine Nelson. Managing Business ethics: Straight Talk about How To Do It Right. 5th. John Wiley & Sons, Inc, 2010. Print.

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Deepwater Disaster


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            Let’s face it the World is dependent on oil.  We use it for so many purposes in everyday life that I am sure this is not news to most of you.  From heating our homes, to fueling our cars, even the pavement we drive on consists of 2% petroleum.  Oil is arguably the most valuable natural resource in the world, and many countries will do whatever they can to get their hands on as much of this resource as they can.

The demand for oil related products are staunchly inelastic.   This is why companies can get away with charging exorbitant prices and why the purchase of these products is so heavily taxed.  People rely on oil; therefore they will buy it, period.  Unfortunately, oil is also a very volatile substance that can be toxic to both the environment and humans if handled incorrectly.  An example of the damage that poor safety management can cause can easily be seen in the BP oil spill case in 2010.

The BP oil spill; also known as the Deepwater Horizon oil spill, the BP disaster, the Gulf of Mexico oil spill, and the Macondo blowout; was arguably the largest and most detrimental oil spill to ever occur in the oil industry.  The Deepwater Horizon was a semi-submersible Mobile Offshore Drilling Unit (MODU) that drilled oil for the British company, BP, just off the Gulf Coast.  However, on April 20, 2010 disaster struck when this massive ship exploded killing 11 crewmembers and leaving the wellhead it was drilling from uncapped.  Because the wellhead was left uncapped oil began to immediately flow into the ocean itself.  Overall, it is estimated that 4.9 million barrels of oil was spilled into the ocean, which is equivalent to roughly 210 million gallons.  210 million gallons…how could BP let this happen?

The reason for this astonishing number is due to the fact that it took BP 87 days to recap the oil well (and there is still debate that the well may still be leaking).  87 days…that seems like an unusually long period of time needed to fix this problem.  In the course of these 87 days there was massive devastation to the ecological environment and the organisms that inhabited these areas.  I am sure you all remember the photographs of birds covered in oil.  The devastation was unreal.

So why is it that it took BP so long to respond to this devastating crisis, and more importantly what caused this crisis to occur in the first place?  While numerous sources have investigated the spill and come to a variety of conclusions, it is clear that the spill was caused by unethical decision making on the part of BP’s executives.  The BP executives, like the CEOs of most companies, wanted to make money (and in the oil industry you can make a lot of it) but at what cost?  The executives were well aware of the volatility of oil and the dangers offshore drilling, yet, they still chose to cut corners when it came to safety to make those extra bucks.

So what makes this case different from the Lehman Brothers case or the Enron case?  I would argue that due to the physical damage inflicted on both people and property, the decisions that lead to this event were even more reckless than what those that led to the collapse of Lehman Brothers and Enron—and the funny thing is BP is the only company out of those three that still exists. Yes, I will agree, it sucks to lose all your money, but at least you can still live/function physically.  The immense amount of physical damage is what sets the BP oil spill apart from other business disasters caused by poor decision-making.  This is your personal safety we are talking about here.  One can recover from a financial crisis, but what do you do if all of a sudden you contract a disease due to oil exposure.  Life threatening physical problems that are out of your control are much harder to recover from.  So I will end with this question:  Do you think that the BP oil spill was “more” unethical because it caused so much physical damage?  Or is it in the same league as the financial crisis?  Obviously these are two very different fields, but they can be compared because both occurred due to poor upper level management.

 

http://www.eia.gov/tools/faqs/faq.cfm?id=41&t=6

http://www.nwf.org/What-We-Do/Protect-Habitat/Gulf-Restoration/Oil-Spill/Effects-on-Wildlife.aspx

http://topics.nytimes.com/top/news/business/companies/bp_plc/index.html

Picture: www.socialnomics.net

BP: “Bitch Please”, you can’t regulate me.


                The largest offshore oil spill in U.S. history, British Petroleum’s (BP) Deepwater Horizon oil rig in the Gulf of Mexico covered the news for months. From scientists to national guards, companies and people repeatedly failed to stop the oil spill for months. As millions of gallons of oil spilled into the ocean, the government continued to rely on BP to clean up the ocean and save the environment. However, BP consistently downplayed their responsibility every chance they could. After 5 months and 206 million gallons of gasoline, the gushing oil was finally contained.

How could we allow such a catastrophic event happen when we know the dangers of oil spills?

The catastrophic event caught millions of people’s attention all around the world. The public was outraged at the negligence and the ignorance of BP’s practices, before and during the cleanup. However, many people failed to investigate the larger picture. People neglected to consider deregulation of the oil industry and both Bushes and Obamas offices assigning ex-oil industry leaders in charge of the departments responsible for safeguarding the environment from oil drillings. This deregulation and conflicting leadership assignment allowed BP to ignore the lenient environmental laws that we did have, while also creating a culture at BP that surrounded profit. This culture caused BP to focus on consistently make profit and ignore the multiple warnings of the tragic oil spill that occurred. BP’s history is full of tragic oil spills that they chose not to learn from because they were only focused on profit and had no one regulating them making sure they adhere to environment laws.

Like Lehman Brothers, Walmart, Nike, Apple, BP focused on making profit over ethics. Even though BP’s history revels numerous oil spills and environmental ignorance, the government and people chose to ignore their behavior because they wanted to maintain the status quo. BP’s chose to act unethically by drilling in a risky place, ignoring mandatory policies and downplaying their responsibility throughout the spill. As a result, millions of gallons spilled into the Gulf killing thousands of fish and birds and causing many people to lose their jobs and land (ruined beaches). Overall, BP’s unethical behavior resulted in a catastrophic event that could have been prevented through government intervention and a change in culture at BP.