Seminar: BP’s largest disaster – the Deepwater Horizon

Topic Number: 12

Principles of Business

2

Overview

BP, one of the largest global oil companies, has in the past been criticised for its lack of safety and sustainability practises, with high accident rates and a low employee safety record.

Its biggest accident in recent years occurred in 2010 when one of its deep sea oil rigs (Deepwater Horizon) had a blow out that lead to the largest marine oil spill in history. This resulted in huge ecological damage and a fine of $4.5 billion for BP.

This seminar will look at how BP initially look at the reasons why the accident occurred and understand how BP responded to it.

We will also look at BP’s approach to sustainability and how they are trying to make re-brand their organisation to mend some of the reputational damage that has been done.

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Learning outcomes of this seminar

• Determine and describe the main reasons for the Deepwater Horizon disaster

• Highlight how BP responded to the disaster

• Be able to articulate BP’s approach to sustainability

• Recommend ways for them to improve their reputation in this area

Agenda for this seminar

What is BP’s approach to sustainability?

Recommend ways for them to improve their reputation in this area

How did BP respond to the disaster?

What were the main reasons for the Deepwater Horizon disaster?

Structure for the session

You will have 15 minutes to

discuss each question

We will have a de-brief at the end of each 15 minutes to hear your thoughts on each area

Feel free to ask questions but please do not have separate conversations ‘we are all in

this together’!

An Introduction to BP

http://www.youtube.com/watch?v=Q4xwvKKE-fk

BP: Upstream

Source: www.bp.com

BP: Downstream

Source: www.bp.com

What were the main reasons for the

Deepwater Horizon disaster?

An overview of events

View video: http://www.youtube.com/watch?v=BrO87PQKTx0

Key Issues at the time

Cement did not set properly in the well

shaft

Abandonment sequence rushed/not

done properly

Negative pressure tests

ignored

Blow out preventers failed to

function

But does this tell the whole story?

Conducting a Why-Why Analysis gives us more insight into the wider issues

Inadequate regulatory environment coupled by increasing political pressure for further deep water drilling

Cement did not set properly in the well

shaft

Abandonment sequence

rushed/not done properly

Negative pressure tests ignored

Blow out preventers failed

to function

Cement tests undertaken resulted in

instable results (BP unaware)

Rushed to complete and not breaking

codes of conduct

Multi-tasking to complete job and non explainable

excuses made

BP sent Halliburton

home without final tests complete

Unprecedented bend in shaft caused failure

Lack of maintenance

Did not want to admit

failure to BP

BP did not feel the need to comply with standards of

safety

Need to complete the

job quickly

BP valued commercials over safety of

staff

Did not seek international best practise

Did not see the need to

maintain last line of defence

BP focused on small safety measures rather than process/operational safety measures

An issue with corporate culture?

StoriesJohn Browne’s

legacy of cost cutting

SymbolsBP’s

dominance Of the

Gulf of Mexico

Power Structures

Heave top-down culture

OrganisationStructure

Head office Decision-making

Control Systems

Lack of adequate controls to

manage safety

Routines & Rituals

Sending contractors home and

deviating from process

Cultural Web

How did BP respond to the disaster?

Initially was not willing to take liability

It was even underplayed

View video: http://www.youtube.com/watch?v=L10W8tgpPwc

After all there were many players involved

A countdown of events

However they eventually did take charge…

View video: http://www.youtube.com/watch?v=ON9luL-w8tE

What is BP’s approach to

sustainability?

An opportunity to re-invent themselves

Source: www.bp.com

Step 1: Why Change?

Poor Safety Record

£44bn lost on

its share price

45% reduction on mar cap

CEO change

Low employ

ee Morale

Brand tarnish

Source: www.bp.com

Step 2: What to change

Step 3: How to Change?

Recommend ways for them to improve their

reputation in this area

Source: https://www.youtube.com/watch?v=uq1yyI-TiAE

Can BP clean up its image?

Failed efforts by BP

Transparency is key

Get external assurance

Showcase Progress and Reporting

Highlight other initiatives

View video: http://www.bp.com/en/global/corporate/about-bp/bp-worldwide/bp-united-kingdom/glasgow-2014.html

Appendix – Sources for illustrations

Slide 6:www.inspiredbythis.com

Slide 9:www.fastcompany.com

Slide 10:www.smartappsforkids.com

Slide 11:www.interbrand.com

Slide 12:www.times.com

Slide 13:www.youtube.com

Slide 16:www.mashable.com

Slide 17: www.youtube.com

Slide 20:www.pingdom.com

Slide 21:www.bright-creations.com

Slide 22:www.iintothelook.wordpress.com

Slide 26:www.youtube.com

Slide 27: www.ted.com

Slide 28:www.youtube.com

Slide 29:www.apple.com

Slide 32:www.wallbeta.com

Slide 33: www.fool.com

Slide 34:www.plus.google.com

End of Seminar

Note: This recording is for your personal use only and not for further distribution or wider review.

© Pearson College 2013