BP and The Gulf of Mexico Oil Spill
Jose Roberto Dominguez
Dr. Ken Rossi
MGMT 6000 A (CRN: 1535)
September 20, 2015

Table of Contents Case Introduction and Background 3 BP or Industry Failure 4 Most Significant Flawed Decisions 5 Did BP lack the appropriate safety culture? 8 References 12

BP and The Gulf of Mexico Oil Spill
Case Introduction and Background This particular case study created an abundance of unanswered questions for me to consider and made me realize how poorly we are at regulating industries that continue to deplete our natural resources and yet don’t even prepare for when disasters strikes. The details of this case are alarming for a number of reasons and the most critical point that resonates throughout the entire paper, is that profit margins exceed any other concerns, to the point that even death could not convince them to make the changes to their company culture. The cycle of errors came to a complete pause, on the evening of April 20, 2010 when a “serious of explosions rocked the Deepwater Horizon, a mobile offshore drilling rig operated by BP in the Gulf of Mexico” according to (Roberto Pg.1) and one that saw a serious of catastrophically events, that would change the lives of many. That fateful night under the cover of darkness, eleven people died and several other encountered injuries that required medical attention and rescue. This occurred as direct fault of equipment, when the blowout preventer failed. The device is designed to “seal the well in case of an emergency” according to (Roberto Pg.1) and this caused for the oil spill that left many scrambling for their lives. The flames were so intense, they could be seen, by other ships located in the Gulf and they estimate the flames to be in the vicinity of at least 250 feet in the air. Their were many opportunities for BP to reverse the cycle of errors that could have changed the outcome of these tragic and avoidable chain of events that would forever make the drilling industry conscious of systems that need to be in place and standard operating procedures that need to be in place, but properly executed regularly, in order to be prepared. These types of Best Management Practices, need to be absorbed and made available to all employees, before being hired, during their orientation, time of employment and as part of regiment that would measure real time drills, with measurable data to express whether performance was acceptable or not. Creating an organization that inserts safety and not just in memos and signs on the walls, but one that seeks to standardize the practice for everyone associated with the oil-drilling rig. This should not be designed for the members of BP that conduct the work, but should be made company policy and procedure for all members from Accountants, Human Resources, Laborers, Engineers, Captains, as a means of connecting the dots for a common goal to keep everyone informed and alive. Further more lets explore, whether the events that occurred are BP’s Failures or perhaps those of an Industry longing for regulation?
BP or Industry Failure In looking at whom to point the finger too, or in this case to appoint a party that had the most accountability, we could say that evidence of failures can be found in both groups. We could start by first saying, that BP had a responsibility to manage the overall safety of the rig and to have contingency plans that could be executed for any environmental disasters, to avoid releasing more oil than is necessary in to the ocean. We can also, asks what parameters were set by the industry to help regulate and contain disasters if and when they occur. BP has shown their actions to be conducive in making poor choices with regards to testing and other protocols that can easily be dismissed by human error and are not evaluated to their full potential. What could have they learned, from past experiences with a spill that occurred in 2006 in Prudhoe Bay Alaska. The case mentions the leak, which “spilled over 200,000 gallons of oil from it’s pipeline and despite alarms ringing” according to (Roberto Pg.6) and the staff who ignored the alarms as defects in the electronics, could only point to a problem that sinks deeper into the companies practices of brushing off significant opportunities to correct their behaviors. The industry responded to the spill and fined them for their mistakes. BP’s main focus is on profit and this often leads to unnecessary risk taking and no real safety systems could stand strong to push capital away. It appears that they continue to push for deeper drilling, riskier methods of drilling and always wanting to be the forefront of the drilling industry. That leads everyone to the bottom of the ocean with regards to inserting greed instead of safety to their strategic planning. The industry has failed, with regards to regulation and for allowing for companies to begin drilling in our backyards in the hopes of attaining renewable sources of energies and to this I can applaud the efforts, however we need to ask what plans do they for disaster prevention and for disaster management. Here the industry needs to benchmark regulations and create training segments that are followed and practiced by all coastal drilling companies. Making it mandatory for permit renewals and safety inspections that will shut your operations down for failure to keep the mandatory training and systems checks in place. Doing so, can make the overall relations that much more rewarding and will introduce a collection of missions and strategies that will benefit both the internal and eternal environments. Lets consider why terrible choices were made and why couldn’t a properly executed plan take shape, among their management team.
Most Significant Flawed Decisions To effectively answer the question on the most significant flawed decisions, we need to step back and look into the root cause of the inadequate and shared duties to conflict resolution. We can’t simply ignore the many errors made by BP’s employees without extending the blame to the many contractors involved in the daily operations of the rig. BP’s was leasing the Deepwater Horizon rig from Transocean in order to drill in the Macondo well. They were behind schedule by six weeks and this led to the many issues they faced and that ultimately proved fatal. The first mistake, was using the “long string system to reach the pay zone” and one that is “riskier, but less expensive” according to (Wall Street Journal NP) that is used even less then other drilling companies. So taking this risk could have been changed with one that has a better track record. The next issue, is shared by both BP and Halliburton for allowing only six centralizers to be used, instead of the required 16 and to make matters worse, the test results indicated that this, “ would raise the probability of severe gas problem” according to (Roberto Pg.9) and yet did nothing to stop BP or contact the EPA or regulatory commission to prevent them from pursuing the next phase of drilling. The two engineers disagreeing over the concrete molds and use a “risk/reward equation” to resolve a conflict that should have been addressed by an upper management person. The two opposing views on setting fixed standards, only shows no one is, available to mediate the conflicts that are ongoing on a daily basis. This type of mismanagement and poor communication is in part, a result of their inability to agree to making things right. Upper management was coming down hard on the employees and the gable was being used to move the project along as quickly as possible. They used cement results that had failed testing and here we see how Halliburton failed to advise BP regarding the 1st failed test. Next, they hired a site leader, Bob Kaluza who had no experience in deep water drilling to man the operation as his testing lab in a place he could gain experience. Another missed opportunity to hire a competent crew to handle the million dollar operations. We can see how the pressure gauges, designed to give them a clear reading, on whether an issue existed or not, were overlooked as a potential failure on the gauges and no further action was taken. Additionally they used lighter cement that never was fully tested for these conditions. BP even went against it’s own specifications and designed the column at only 500 feet instead of 1000 feet and again, Halliburton did not contest their actions. Apparently, it’s a reoccurring theme that whenever someone notices problems, they all agree that it will work itself out and no relevance exists.

BP History and Culture
Here we can look at the history of BP and the origins for the culture of doing things fast, cheap and now. The war in 1973, signal for change as, “OPEC initiated an embargo for our support of Israel” according to (Roberto Pg. 3) that helps us understand the culture that was embedded by the industry as a means of attaining independence from the over inflated cost of oil. The Mineral Management Service (MMS) was created in 1982 to help regulate safety and keep the environment from accidents, also were in conflict within their own goals of creating a profit for the Federal Government could also be a culprit in the way, thought processes were developed. They are introduce with a problem, whether logical or not, they start looking at ways to cut corners without taking into considerations and negative repercussions involving accidents. The expectations to deliver on time and produced savings, is a fine line to thread and we see “an imbalance between production and protection” according to (Detwiller NP) that clearly shows us a culture based on profit and nothing else matters. This leads to the fact, that drilling had gone over by six weeks and the total cost were in the vicinity of $58 million passed the budget. This will literally force everyone to run, making everyone feel on the edge versus taking their time to calm everyone’s worries, they were allowed to run about making all sort of excuses towards achieving faster results and never taking into consideration of safety. The rush to the front of the line made this possible for BP, to institute a culture of getting their first and not worrying about anything in between point to a lack of risk management and could only promote systems failures to continue, have time to grow “close the competitive gap” and improve bottom-line performance” according to (Detwiler NP) that will serve as the measuring stick. BP’s and it’s partners understood the government agencies were not properly equipped to regulate them, therefore no oversight, made their culture more vulnerable.
Did BP lack the appropriate safety culture? It’s evident with all the multiple accidents and track record for failing to keep it’s employees safe that creating and enforcing a safety culture holds no place in how BP operates. We read over and over, how profits could take the place of safety and the pure disregard for human life over profit is very difficult to understand. They collectively allowed for deviations in the day-to-day operations that accepted the errors and adjusted as necessary without documentation. How could they avoid the path that has failed them, yet they continue to embrace these mistakes without correcting them? They had plenty of opportunities to change, when the rig was damaged, they could have waited for the state of the art rig to be repaired and not take on a new rig without the preparation and training. They turned off the alarms, because they didn’t want to awaken the crew and that’s absurd because ultimately the alarms were off when the explosion occurred and this would have saved the lives lost. BP Hayward, openly admitted that, “we have leadership style that is too directive and does not listen well” according to (Roberto Pg.6) only shows that a system for communication was not in place. One that could open up the channels for saving time, creating safety plans, disaster planning and collaborative efforts to excel in all aspects of work safety was missing. The blame could also be that of the industry, “This raises questions about the industry's overall safety preparedness, the ability to handle the complexities of the deep-water operations, and industry oversight to approve and monitor well plans and operational practices and personnel competency and training” according to (Borenstein NP) that illustrate the lack of cultures and its origins. Big brother is not watching, so more risks is taken by everyone in the organizations, since no parameters have been established to mitigate risks and orchestrate a well lubricated team of conscious oriented individual who think and plan fore preventative measures versus reactive ones. The BP employees where confronted with making up lost time and took the risk in place of an expectation that if all goes well the rewards outweigh the risk for a small price in profit.
Evaluation of Courses of Action
Tony Hayward’s Actions The actions of a CEO during a crisis are virtually the foundation for the next steps towards recovery. Mr. Hayward’s overall plan was not executed from the moment he took over BP, to help bring it bag from the refinery accident in Texas that resulted in a fine of $87 million and the Alaska pipeline leak that resulted in fines of $20 million. These two indicators could have served for a new model that focused on safety strategies and embedding the necessary assumptions into the company, to regain control and make everyone in the company aware of the ownership that guides them revolves around safety and wellness. He continued to downplay his role, by pointing fingers at the subcontractors Halliburton and owners of the rig Transocean as a means of deflecting the blame and using others for the purpose of shaming them for the accidents. After receiving a phone call regarding the explosion, four after the incident occurred, rather than jump in his private plane and head for the disaster zone, he opted to collect his team of top management and watch the tragedy unfold on national news. His lack of presence and support of the company he ran, discredits he overall lack of leadership and only solidified that profit over lives mattered. He is completely disconnected from the processes that if properly implemented would have eliminated the prospects of disaster and enhanced the companies safety record by promoting the climate as noted in Dr. Rossi’s PPT, that explains “what leaders should be paying attention to, measure and control” that were not part of the mechanism that promote control and effective leadership.

What He Should Have Done The opportunities available to Mr. Hayward were many and the belief that he could allow for so many accidents to occur by not implementing the value of culture development. Seems to me, at the top of his mistakes and other questionable facts relating to his safety implementation that only measure the reduction in slips and falls, while not taking into account the larger problems that creates the attitude that masking problems for the world to see is common practice within the BP company. While reading this case study, I continued to ask several questions on why could so many disruptive acts take place and not one single individual stood up as a whistle blower or to command change from the management team. Repeating the mistakes over and over and not properly asserting authority and accountability is one of his biggest failures. As the CEO, he should have made the effort to create a working environment for the men on the Oil Rigs and the men on the shores that could mirror the practices of promoting a healthy safety plan that takes into account each member of the organization life and inverts the thought process that would make each person responsible for the person next to them. Strategies could have been formulated to give the public a view of what safety measures are in place, they could have shown the world how transparent they are instead of hiding in London, and why couldn’t he assemble meetings that include all levels of the organization so that each voice could have the floor to speak on issues that are representative of real time events that would have made a difference in the way performance is measured and how profit is achieved without loosing lives. He should have ultimately stood for the safety of the employees and the removal of speeding up the work. Focusing on money alone forced the culture to be driven by profit margins and this ended up costing him his reputation and the lives of eleven men. He was responsible and could have kept the men alive, by simply providing them with the necessary stability and safety systems.
Conclusions
The BP case study, gave me a whole new way towards responding to crisis and how managing risks need to have plans that are in place to effectively execute procedures for immediate response in times of disasters. I pride myself in having a high degree of safety culture and my ability to reduce monthly expenses for my Condominium is what works for me. I make safety part of my daily routine and during my walks around the building, should I see an employee doing something unsafe, I remind them right away on the importance of safety. I have implemented a new monthly safety plan that gives me the chance to discuss several safety topics from fire, electrical, ergonomics and proper bending postures as a way to connect them to their overall wellness and instilling the beliefs that safety means they get to go home healthy everyday and in the background, I get the reward and satisfaction in accomplishing my goal. It does make a difference in the overall premiums we pay and the prestige I receive for having an accident free year, however it’s morally important that my staff life is the number goal and keeping them safe in the workplace is always my number one objective. BP, should have followed this very simple and yet very effective plan to conduct walk around inspections, meet and greet with members of each department as a means of allowing communications to be heard from all levels. This strategy could promote safety incentives to teams that make the most progress during the week without incident and by simply assigning a group leader (they can change every quarter) each department and subgroups could be accountable for brining not only safety ideas but complaints that could help close any gaps in their safety program by simply inserting the trust and development of each employee from the lower level person all the way to the CEO, that connects them all together, would have made them more successful. My concepts may seem trivial in nature, but they hold great volumes in their effectiveness and have provided me with a reputation of holding a record of zero deficiencies in various organizations I successfully managed.
References
Gerken, J., & Borenstein, S. (2011, December 14). BP Oil Spill: Engineering Experts Attack Industry Safety Culture. Retrieved September 22, 2015, from http://www.huffingtonpost.com/2011/12/14/bp-oil-spill-safety-culture_n_1148412.html
Kelly Detwiler, P. (2012, November 28). BP Deepwater Horizon Arraignments: A Culture That "Forgot to be Afraid" Retrieved September 22, 2015, from http://www.forbes.com/sites/peterdetwiler/2012/11/28/bp-deepwater-horizon-arraignments-a-culture-that-forgot-to-be-afraid/
Roberto, M. (2011). BP AND THE GULF OF MEXICO OIL SPILL. IVEY, W11366, 1-19.
Rossi, K. (2015, September 17). Foundations of Teamwork and Leadership. Lecture presented at MGMT 6000.