Study Of Bp Deepwater Horizon Accident Management
BP is an UK owned market-leader in Petroleum industry, producing 2352k barrels/day. Deepwater Horizon was an offshore oil-rig located in the Gulf-of- Mexico, owned by Transocean, leased by BP [75% owner] and deployed by Hyundai. An explosion that tore through the Deepwater Horizon drilling-rig on 20th April 2010, while the crew engaged in drilling the exploratory Macondo well, 5000feet deep under the Gulf of Mexico, caused a human, economic, and environmental disaster. The unrestricted flow of oil completely sunk down the rig in eight days and approx 65 barrels of oil leaked in next three months only when BP was able to completely cap the leakage. This paper aims to provide a background of the region and dependency of its people to the marine-ecology, analyze BP's strategy in the public perception, its ability to maintain balance between conflicting interests, discuss alternate solutions.
Louisiana, the coastal state is largely dependent on the marine ecology for its daily-life. Seafood which is a major source of income, contributes to 30% of U.S. seafood production, and commercial fishermen in the Gulf harvested more than 1 billion pounds of fish and shellfish in 2008 (Sylves and Comfort, 2012). The contamination brought the future of this seafood industry in peril, customers [e.g. restaurants, retail chain] cancelled orders; apart from this immediate effect mindset of this contamination prevent buyers in longer-period to prevent consuming seafood. Beaches were devastated and hence tourism suffered a lot; oil slick polluted shoreline from Louisiana to the beaches of Florida, coating plants, killing wildlife, and threatening wetlands. Hundreds of birds, turtles, and dolphins have been found dead in regions affected by the oil, and brown pelicans and other species remain covered in oil - this introduces a shock to local inmates and deters tourists from visiting these places.Strategy Literature Review
1000],A review on BP Strategy
BP's strategy in the context of Public perception
Analysis on BP's abilities to strike a balance
BP received strong public criticism for its role in the disaster and swiftly attempted image restoration strategies (Benoit, 2000). These strategies centered on describing what they were doing to correct the problem and compensate the victims, but didn't include strategies such as shifting the blame to the other companies involved nor admitting their own blame. Just after the accident, we notice, that BP try to aim on two strategies - a) devising approach to rectify the problem, and b) formulating the compensation scheme for the victims (Harlow et al, 2011). BP though indeed initially try to "shifting the blame" to its partner Transocean (by press releases between 21st April and 28th April) but this was limited, later BP demonstrated its commitment towards operational safety, responsibility and reliability (BP, 2010). The first press-release issued by BP after the incident lacks any detail on the severity of the spill and predominantly focused on the company's efforts to suppress it (NYTimes, 2010). BP has made its investigation team operational immediately in the aftermath of the accident, the information gathered initially were limited due to remote location of the oil-rig [which restricts information gathering by either reporters or investigators], scarcity of physical evidences, bad weather, and restricted access of relevant witnesses. Over time BP involved its partners in this process including SMEs from all relevant domains. At the beginning, due to lack of real-time and accurate data, agencies had to depend on BP provided estimated oil-leakage rate; BP estimated only 1000 barrels/day initially, which could be seen as its effort to minimize the damage in public-eyes. Only, in May, on government pressure BP released video-images of the incident (Hoffbauer, 2011). Later on BP officials admitted their awareness of technical troubles with the rig, e.g. lack of emergency controls, extensive modifications; still they allowed Transocean to continue with drilling which is a direct violation of US marine regulations, Hoffbauer (ibid). We can conclude that BP demonstrated lack of preparedness during such disasters and hence they took incoherent [ad-hoc] measures to address this oilspill. They also violated existing government regulations and continued operation on a problematic installation. Initial failure to cap the leakage added to the environmental damage caused by the continuous oil-leakage. BP was not prepared itself neither they fail to reach a consensus with all relevant parties on how to stop the leakage. Hence this lack of coordination between different stakeholders, the oilspill could only be stopped after 87 days; wasting approx 8,000 barrels/day of oil leaked the gulf-of-Mexico. BP was expected to restore their portfolio image, to sustain both their investors and customer's trust. The irreparable ecological damage caused by the oil, destroyed the planktons who are at the lowest layer of the food-chain- once they are contaminated and depleted the intern damages the entire food-chain. The local people who dependent on marine-lives, on tourism were affected- as beaches are covered with oil, tourism stopped introducing unemployment. From BP's point of view it should have aimed to - a) provide transparent actual facts to the investigators to assist in judging the accident impact, b) engage in reaching consensus with all stakeholders to capping and restoration approach, c) engage with media to portray the image restoration mechanisms [to gain back trust of investors and customers], d) invest on enhance its preparedness and devise operational disaster management procedure.
Wider needs and expectations
There were multiple stakeholders with conflicting interests and that this fact has important to maintain right balance between them. Once disaster of huge impact [like this] happens the first blame goes to them [BP in this case]. We can associate five potential audiences can with this situation- a) BP, which of-course, eager to assuage the concerns of the victims, the environmentalists, b) opinions of its stockholders are important, if they are aware of the controversy, c) Governmental regulators may fine or otherwise sanction the company, d) customers may decide to boycott the company because of its failure to manage the disaster properly, thus they are a potential audience, d) Local-people [e.g. fishermen, tourism-dependents] who are directly affected by the environmental-damage caused by the oil-spill, could conceivably pass laws restricting the company's operation in that region. The interests of these groups differ widely and contradict with each-other. Media attention, boycott activity have a direct negative impact on the stock-price of the firm, Benoit (ibid); BP stock-price declined from a $623,20 [March-'10] to $318,90 [Jun-'10]. We can argue that, denial and shifting the blame, are not considered to be as appropriate/effective as an image-restoration strategy by direct victims of this incident - families of 11 died and the local people who were dependent on the marine-lives and tourism [the entire ecological system devastated for years causing irreparable damage]. Though BP didn't try to push the responsibility to others but at the sametime they didn't accept the failure of their own, Harlow et al (ibid). One week since the accident, media coverage of the disaster intensified and continued to increase over the following eight weeks. During this time, oil made its first landfall, coating coastal wildlife and discoloring of beaches, first time gives an actual insight of the actual impact of devastation Hoffbauer (ibid). This can be attributed to the prioritised attention of US President. Symbolic power (Tsoukas, 1999) of BP shattered in the public-eyes as their lack of preparedness and reaching in consensus for a working solution to cap the leakage [over next several months]. People forms and judges the symbolic power of firms through various ways. The dynamic capacity, of a firm, to intervene during any event, to influence other's actions, and to take steps/create events to restrict the damage [caused by the accident] form the symbolic image. Technical complexity of the event, skills and knowledge poses by the firm to address the event, and the legitimacy of the firm to be able to solve the damage all contributed to wider expectations, Tsoukas (ibid), which BP initially failed to meet. Time [of the event] and space [where] is much important in this context and any such disasters need to be analyses in the perspective of both these factors. Reflexivity is an intrinsic feature of humans; firms also need to show this during critical times. We can argue that every activity of firms are being monitored and examined by the society - it is an ongoing process by which society forms their image about a firm and how it acts during crisis. Referring table-1, Sylves and Comfort (ibid) we can argue that every disaster [like this] contributes to evolution of relevant laws/policies, government-agencies needed to look-back their effectiveness [in the context of complex technical failures] and implement stringent measures in this area.
We can conclude that a) the huge oil-leakage could have been prevented if firms were prepared for it, b) the root-cause could be related to a series of identifiable failures from BP and its partners -Halliburton, and Transocean, c) lack in proper risk management process's existence.
It was clear that neither the firms nor the government agencies were adequately prepared for such huge scale technical failures of the complex installation.
To ensure safety of human-life and environmental protection, regulatory oversight of
leasing, exploration, and production require reforms. But alone regulatory controls won't be sufficient in providing adequate safety, industry itself need to take its own, unilateral steps to increase safety throughout the industry, including self-policing mechanisms that supplement governmental enforcement. Scientific understanding of environmental conditions in sensitive environments in deep Gulf waters, along the region's coastal habitats, and in areas proposed for more drilling, such as the Arctic, is inadequate. Together we can minimize the effect of any such future oil-spill on human-life and environment.
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